Federated Identity as a Business Model

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Issue/Topic: Federated Identity as a Business Model

Convener: Douwe Lycklama (Innopay, the Netherlands)

Session: 1F

Conference: IIW-Europe October 11, London Complete Notes Page

Notes-taker(s): Jacob Boersma (Innopay, the Netherlands)

Tags for the session - technology discussed/ideas considered:

business models, scheme, paying for identity services, government and business cooperation

Discussion notes, key understandings, outstanding questions, observations, and, if appropriate to this discussion: action items, next steps:

This business model takes its inspiration from the payments industry, which also functions as a network. There are many roles for users and relying parties in transactions that require identification, resulting in a ‘keychain’ of identity solutions.

This leads to the idea that Identity is a two-sided market: there is room for service providers for users and service providers for relying parties. Such a market often starts with 1 service provider that wants to reach the entire world (platform approach), cf. American Express in payments world or Facebook.

Next step is a 4-corner model, where service providers for end-users and service providers for relying parties agree to be interoperable based on a universal set of agreements / in a standardized way.

In the project ‘eHerkenning’ (‘eRecognition’) in the Netherlands this standardized method of communication uses SAML on the technological level, but there are also agreements on the application and business level. The business case assumes that everyone pays for their own side of the model: users pay the user-side service providers, Relying parties pay the RP-side service providers. If there is an imbalance between the two sides, the service providers can pay each other an interchange fee to create a positive business case on all sides.

The Dutch eHerkenning system uses different levels of assurance based on the ‘STORK’ model.

Discussion issues:

  • where are the advertisers in this model? They could be relying parties themselves (looking for user identity information in order to provide targeted content) OR they could provide the revenue side of the business case by providing embedded advertisements.
  • how do we create a positive business case? If end-users are not willing to pay because they perceive no added value, how can you run this 4-corner model? Will a transaction-based fee be enough to finance all parties involved, considering that the first identification of an unknown end-user is the most valuable?

Summary: Electronic ID is a two-sided market. A business model based on the 4-corner model used in the payments world has been developed in the Netherlands (project ‘eHerkenning’, focused on Business-to-government transactions). Service providers on the end-user side and service providers on the relying party side connect to each other in a standardized way based on a scheme. Interchange fees allow for a working business case.