When does digital ID actually serve the common good?

Written by Olaf Grewe, Head of Product, Sign-up and Log-in at National Australia Bank, and Co-Chair of the ADT CG 

This was the question explored at an Innovation Day organised by the OpenID Foundation's Australian Digital Trust Community Group (ADT CG) earlier this year. 

Hosted by Mallesons in Sydney, Australia, the event brought together a broad mix of expertise from across Australia's public and private sector, with international perspectives also represented. It explored digital identity frameworks, Open Banking, education, and emerging issues around death and the digital estate.

Digital identity is most commonly framed as a technology or compliance challenge, a matter of standards, architecture, and regulation. But that framing can obscure a deeper problem, that even well designed systems fail to deliver their potential if the underlying incentive structures are misaligned. The ADT CG's Innovation Day started from that premise, that the structural and economic conditions shaping a digital ID ecosystem matter just as much as its technical design.

Why another lens is needed

Like telecommunications networks, energy grids, or payments infrastructure, digital ID only delivers value when many different participants work together. However, those participants have different commercial interests, different risk appetites, and different incentives to invest, optimising for their own position, rather than the health of the ecosystem. This means that while an individual organisation can make perfectly rational decisions for itself, the overall outcome can still be far below the potential of the digital ID ecosystem. 

The Innovation Day was designed to bring these tensions (or second order effects) to the surface, rather than push towards a single policy or technical fix.

The event combined presentations, open discussion, and structured breakout sessions. Using established economic concepts, participants examined in the breakout sessions how trust frameworks, market dynamics, behavioural incentives, and governance models shape digital ID ecosystems, as well as where they tend to go wrong. Expertise from the National Australia Bank, the University of Sydney Business School, and the Australian National University Research School of Economics was leveraged to prepare the sessions. 

What the workshop found

The practical lesson that emerged was equally clear - digital ID systems are more likely to work well for everyone when participants have genuine choice and can assess quality. Where competition can do its job, it should be allowed to. Where it cannot, due to coordination failures or market structure, targeted intervention is needed to address the specific problems that markets will not resolve on their own.

While technical standards are important, they are not enough. How a digital ID ecosystem is governed, and how it distributes costs and rewards among participants, will be just as important in determining its long-term social and economic value.

Why this matters

The ADT CG's Innovation Day addressed that gap directly, complementing the technical and regulatory perspectives that typically dominate digital ID policy with an economic welfare perspective. The paper that has come out of the workshop brings together multiple economic perspectives into a single framework, giving policymakers, regulators, and practitioners a more rigorous basis for assessing design choices and their knock-on effects. The OpenID Foundation has been central to enabling this kind of work

The OpenID Foundation’s role

Community groups are an important part of how the OpenID Foundation engages beyond its core standards work. The ADT CG brings together Australian practitioners to examine how global standards and frameworks apply in local contexts, and to generate insights that can inform the Foundation's work globally.

The death and digital estate discussion that featured in this Innovation Day is an area where the Foundation is also active globally, through its dedicated community group. The Australian event is a good example of how these workstreams can learn from each other, combining expertise across technical, legal, and economic domains. 

The paper detailing the full findings of the Innovation Day is available here: Workshop Summary Digital ID Economics OIDF.

About the OpenID Foundation

The OpenID Foundation (OIDF) is a global open standards body committed to helping people assert their identity wherever they choose. Founded in 2007, we are a community of technical experts leading the creation of open identity standards that are secure, interoperable, and privacy preserving. The Foundation’s OpenID Connect standard is now used by billions of people across millions of applications. In the last five years, OAuth2 - the FAPI standard for interoperable, high security - has become the standard of choice for Open Banking and Open Data implementations, allowing people to access and share data across entities. Today, the OpenID Foundation’s standards are the connective tissue that enable people to assert their identity and access their data at scale, the scale of the internet, enabling “networks of networks” to interoperate globally. Individuals, companies, governments and non-profits are encouraged to join or participate. Find out more at openid.net.

To learn more about conformance testing and self-certification, please visit the OpenID Foundation’s FAQ section.