Authentication & Security

Daily Review: How BAT is Building the Future of Identity

MEDICIGlobal Head of Content

The next generation of identity solutions will be fully digitized and most likely smartphone-focused. So far, there is only one place in the world where the most advanced identity management and authentication solutions exist, with their parent companies extending capabilities into smartphone-powered digital identities.

Baidu, Alibaba, and Tencent, also known as ‘BAT,’ may not be household names in the Western part of the world yet, but in China, these companies are nothing short of complete control over one of the largest consumer markets in the world. The control comes from the power struggle to become the platform for the next generation of identity solutions in the country. As reported by SCMP in December 2017, a day after being used in a pilot program to replace state government-issued IDs, Tencent Holdings’ WeChat has been adopted by Beijing Court as a means for people to file lawsuits electronically. Parties in a legal case can submit documents, verify their identity, and pay legal fees through the WeChat prosecution service platform operated by Beijing Haidian court.

The service platform uses character recognition technology for document scanning and facial recognition for ID verification. It is also connected with information centers for China’s household registration system, which officially records all resident information including full name and date of birth.

Moreover, starting 2018, the Chinese no longer have to worry about leaving their identity cards at home, as long as they’re registered users on WeChat. The Guangzhou government in China released the country’s first batch of “WeChat identity cards,” allowing citizens to verify their identities through facial recognition technology. Verified users are supposed to be able to do anything that requires an identity card, including checking in at hotels and applying for government services, just by scanning their faces with their phones. Their identities are authenticated through an artificial intelligence system.

At Beijing’s airport, facial recognition software provided by Baidu is being tested as a means for verification for passengers to board their flights. The “face as boarding pass” capacity may be ready for implementation as early as this year.

Meanwhile, employees at Alibaba in Shenzhen can show their faces to enter their office building instead of swiping ID cards. MIT Review shares that a train station in western Beijing matches passengers’ tickets to their government-issued IDs by scanning their faces. If their face matches their ID card photo, the system deems their tickets valid and the station gate will open.

What’s missing? The government in the full scale of its public services. Whoever wins the race to host state-run ID services on their platforms will gain an unmatched advantage across industries, stepping on a fast track into a lifestyle choice.

Pick #1. China Is Putting ID Cards on Smartphones

Alibaba and Tencent are competing to host state-run ID services on their platforms.

ID cards are issued to every citizen at the age of 16 by the Public Security Bureau. They list the holder’s age, name, gender, address, ethnicity, birth date, and a photo. Without an ID card, it is extremely difficult to obtain a driver’s license, open a bank account, buy high-speed train tickets or travel by plane.

In December, WeChat, owned by Tencent Holdings, announced a pilot scheme providing a virtual ID card to registered users in the Nansha district of Guangzhou, Guangdong province.

Alibaba has announced an alternative digital ID scheme via its Alipay payment app in the cities of Quzhou, Fuzhou, and Hangzhou.

Read more.

Pick #2. Stripe Atlas for LLCs

“Founders can now use Stripe Atlas to form an LLC in days. The Stripe Atlas LLC has the features common to LLCs: limited liability for founders and the flexibility to be taxed as an individual. But LLCs are used for everything from holding companies to restaurants, and we wanted the Stripe Atlas LLC templates to help meet the needs of technology startups. Orrick designed the Stripe Atlas legal documents to match the ways founders tell us they want to work. For example, the Stripe Atlas LLC:

  • Enables founders to assign relevant IP to the company at formation, formalizing ownership of key technology.

  • Is designed to make the conversion to a C Corporation as simple as possible. (We can connect Stripe Atlas users to a lawyer to manage the conversion process with discounted, flat-rate packages).

  • Provides a simplified process for adding members after formation.

  • Is organized in Delaware, the jurisdiction of choice for many new LLCs.

Forming an LLC through Stripe Atlas will cost the same as a C Corporation: $500 gets you a new entity, tax ID, US business bank account, Stripe account, access to expert tax and legal advice from our partners, tools for handling taxes, and credits with a number of services.” – Patrick McKenzie, Stripe

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Pick #3. China’s Baidu to Sell Majority of Financial Services Unit for $1.9 Billion

Baidu will sell a majority stake in its financial services business for ~$1.9 billion to a consortium led by TPG Capital Management LP and Carlyle Group LP, as it seeks funding to take on established FinTech firms in China. The deal comes at a time when China’s government is tightening regulations on the loans market.

Baidu FSG runs payment system Baidu Wallet, an online credit service and an online wealth management platform. It owns several small financial licenses such as a third-party payment license and a fund sales license. Baidu will be left with a ~42% stake in the unit, renamed Du Xiaoman Financial, which will operate independently of Baidu.

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Pick #4. BBVA Issues Corporate Loan Using Blockchain

Spain’s BBVA has become the first global bank to issue a loan using the distributed ledger technology. BBVA said it carried out the entire process for a €75 million corporate loan – from negotiating terms to signing the loan – on a mutually distributed ledger that kept both the bank and borrower up to date on the loan’s progress. The process cut the negotiation time for the loan from “days to hours.”

Carlos Torres Vila, BBVA Chief Executive, said that the bank had “several more transactions in the immediate pipeline,” in addition to the pilot completed with Spanish telecoms company Indra.

For its pilot project, BBVA used a private blockchain for the negotiation & completion process and then registered the completed contract on Ethereum’s public blockchain.

“BBVA is involving its clients in project processes such as requirements definition, development, and implementation,” said Ricardo Laiseca, BBVA’s head of global finance for corporate and investment banking.

BBVA is also working on blockchain initiatives for international payments, international trade, and foreign exchange. The bank has been a zealous adopter of new technology & business models and has invested in a number of new ventures including the UK’s Atom Bank & German FinTech solarisBank.

Read more on FT.

Pick #6. One of the World’s Biggest Mobile Money Services Wants to Become a Social Network

Safaricom is launching a platform that will allow its customers to send and receive money while they chat in a move that is set to reinforce the dominance of one of the world’s biggest mobile money transfer service M-Pesa and advance its ambition to become an innovative global business, while also facilitating a further connection between tens of millions of subscribers.

The messaging service, known as Bonga, was partially-launched on April 26, in closed beta testing for select users on Android devices. The release of Bonga also positions Safaricom as a social networking site, allowing its near-30 million subscribers to not only send direct messages on a singular free platform but also help them conduct business meetings and enhance their commercial experience. Users will have access to a special M-Pesa button that will allow them to send and request money.

Kenya’s government holds a 35% share in Safaricom which is majority-owned by the UK’s Vodafone Group.

Over the last two years, through in-house development or partnerships, Safaricom has tried to diversify its products to help widen its mobile and FinTech network and attract more users.

Read more.

Pick #6. Fitbit Will Use Google Cloud to Make Its Data Available to Doctors

Fitbit plans to utilize Google’s new Cloud Healthcare API in order to continue its push into the world of serious healthcare devices.

The plan is to offer a centralized stop for doctors to monitor both electronic medical records and regular monitoring from Fitbit’s devices. The recently acquired Twine Health, meanwhile, will help the company give more insight into issues like diabetes and hypertension.

There is no word yet on a timeline for when all of this will become widely available.

Read more.

Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.