States Need Stronger Identity Verification as Online Services Grow

Most people want to conduct their business with state governments online, and state agencies are steadily increasing the number of digital services they provide to the public. Yet too many agencies use outdated online identity verification methods that are susceptible to fraud.

These findings come from a new State of Digital Identity report from the Center for Digital Government (CDG)*. The report is based on two national surveys: CDG polled 2,008 constituents in December 2023 and 125 state government leaders in January 2024 on issues related to online identity verification and fraud prevention.

The report focuses on the critical role played by state governments in the evolution of online service delivery and identity verification. State agencies are primary providers of public services ranging from drivers' licenses and auto registration to Medicaid and other social safety net programs — all of which are increasingly delivered digitally.

States also have held one of the many keys to identity. For decades Americans have relied on physical drivers' licenses and other state government-issued IDs to establish bona fides in everyday transactions. Digital identity takes an expanded approach to how we manage trust for individuals, especially for online interactions.

Key findings in the report include:

• Everything is going digital. Many constituents want to conduct all or most of their government interactions online, and state agency officials say they can deliver the bulk of their services this way. More than 80 percent of people surveyed said they want to conduct at least some state government transactions online. Sixty-eight percent of agency officials surveyed said their organization offers more than half of its services digitally, and almost 40 percent of agency respondents said more than three-quarters of their services are online.

• Identity verification needs an upgrade. State agencies are adopting more sophisticated identity verification methods like biometrics and risk-based approaches, but too many still rely on obsolete techniques like passwords and knowledge-based authentication (KBA). More than half of agencies responding to the survey use KBA — where users answer personal questions like, “What was the name of your best friend in high school?” to prove their identity — making it the most common verification method. The National Institute of Standards and Technology (NIST) recommends against using KBA because fraudsters have gotten too adept at answering KBA questions.

More than half of constituents surveyed said they used a username and/or password in their most recent online interaction with a state government service. Almost a third said they encountered KBA.

• Identity verification is getting trickier. Constituents want easy-to-use identity solutions but aren’t sure state agencies are doing enough to prevent fraud. More than half of constituents surveyed said they are “somewhat concerned,” “fairly concerned” or “very concerned” about the potential for fraud resulting from online interactions with state government.

People also have concerns about the use of artificial intelligence (AI), a key tool for strengthening and streamlining identity verification. Just 10 percent of constituents said they are “very comfortable” with AI making automated identity verification decisions. Many survey respondents said they have some degree of reservation around AI-driven decisions.

• Silos and other hurdles stand in the way of progress. State agency leaders cite pervasive difficulties in getting departments to work together on digital identity. Some of this stems from complex and evolving regulations, as well as challenges around integrating identity platforms with aging government systems.

Thirty percent of agency respondents cited regulatory and policy changes as their biggest identity-related issue. Twenty-nine percent pointed to privacy concerns surrounding the collection, use and storage of personal data. And 26 percent cited the complexity of integrating digital identity verification with legacy systems.

Download the full report for more details.

Matt Thompson is senior vice president and general manager for public sector at Socure.

*Note: The Center for Digital Government is part of e.Republic, Government Technology's parent company.