Corporate identity in the digital economy: a global problem needs a global solution
GLEIF’s commitment to transforming corporate identity management worldwide is reflected in its new branding and mission to create a global identity behind every business.
Businesses today are under significant pressure to go digital. Government and private organizations around the world are striving to digitize processes, products and services – even national currencies – to eliminate friction, save money, streamline operations and improve user experience.
Despite the enormous benefits it offers, digital transformation is not a panacea for all problems in the business world. For example, if a service operates within the confines of a fragmented ecosystem, the digitalization process alone will not make it transversal. And as the digital divide widens, the barriers to accessing products and services become more apparent. And then there is the question of authenticity. As more partnerships emerge across jurisdictions and more transactions between these partners are conducted online, the important task of verifying the identity of the counterparty becomes increasingly complex, time-consuming and difficult to manage. Simply put, in today’s global digital marketplace, it is more difficult than ever for businesses to establish and maintain trust.
Successful digital transformation can only happen after thoughtful, strategic and real changes to policies, procedures and infrastructure. However, most leaders know that organizational change is difficult, and research suggests that digital transformation could be even harder: McKinsey & Company found that less than 30% of digital initiatives are successful and that transformation success is still the exception rather than the rule. A recent blog by the International Monetary Fund (IMF) illustrates this reality very well. According to the IMF, the success of African countries launching pilot programs for central bank digital currencies will depend on the extent to which countries are willing to invest in developing “expertise and technical capacity to address risks to data privacy, including potential cyberattacks, and financial integrity, which requires countries to strengthen their national identification systems to facilitate enforcement of customer identity requirements.” These countries need to make fundamental changes before they can embrace digitalization.
Global problems need global solutions. And it is precisely in this area of tension between accelerating digital transformation and improving fundamental business processes that GLEIF is bringing unique value.
Emerging from the 2008 financial crisis and officially established by the Financial Stability Board (FSB) in June 2014, GLEIF is a supranational, non-profit organization that regulates and supports the adoption and use of the Legal Entity Identifier (LEI). Its mission is to increase transparency by regulating a truly universal identification standard – a unique 20 alphanumeric code for a legal entity. This single code represents a single organization, so that anyone anywhere in the world can trust that an organization is who it says it is. Today, over two million legal entities around the world identify themselves internationally with an LEI.
From its inception, the LEI initiative has served as a “general public good”, most evident in the global financial markets, where its use has been widely mandated to create much-needed transparency and promote financial inclusion. In the fight against money laundering, terrorist financing and other forms of financial crime, more than 200 financial regulators worldwide mandate the use of LEIs for companies operating in the capital markets. It is fair to say that the LEI has transformed due diligence, KYC and anti-money laundering processes for financial institutions, regulators and businesses around the world. And it will continue to do so by making it easier and more valuable for organizations to obtain an LEI, while creating a business justification for organizations that require validated and verified identity practices to integrate the LEI into their own onboarding processes. It does this by working with identity industry stakeholders and its network of LEI-issuing organizations to further develop and expand its existing ecosystem to remove economic and operational barriers to LEI use.
At the same time, the organization is undergoing a transformation of its own – a transformation that will enable GLEIF to expand its horizons beyond regulated LEI use and help organizations see how the LEI can bring greater trust, efficiency and transparency to any identity management system in any sector. This new strategic direction is based on the recognition that the benefits to the wider business community will grow as LEIs become more widely adopted. Therefore, GLEIF will seek to drive the adoption of LEIs by legal entities everywhere and encourage wider, voluntary use of LEIs beyond the legally mandated use cases.
GLEIF also recognizes that enabling digital identity is critical. GLEIF will continue to build on and enhance the value of the LEI as an identity management tool for organizations by expanding its unique applicability in the digital world. While the world’s organizations are rushing to digitize their processes and transactions, trust in digital authenticity remains in short supply. To equip and empower the global economy in this regard, GLEIF leverages existing technologies such as digital certificates and a new model of decentralized corporate identity to enable businesses everywhere to use the Global LEI System to self-identify and verify the authenticity of counterparties without the need for human intervention. In both cases, ISO standards have been established to enable uniform implementation worldwide, industry-specific proofs of concept are rapidly maturing, and the network of GLEIF partners known as LEI-issuing organizations is expanding and diversifying in anticipation of future demand.
While GLEIF’s vision remains constant, GLEIF has modernized the way it presents itself to the world to reflect change. A fresh, clear brand identity has been created that includes a new logo, typeface and trust marks. The intention of this external redesign is to reflect the ongoing evolution of the LEI’s universal applicability and growing relevance in both the offline and digital worlds, and to help the GLEIF ecosystem better communicate the LEI’s core purpose: to create lasting and verifiable trust between legal entities everywhere – whether offline or online.
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