Simpson Grierson - New Digital Identity Framework

17/05/2023·3 mins to read

New Digital Identity Framework – what does this mean for you?

The Digital Identity Services Trust Framework Act 2023 (Act) was passed in April after first being introduced to Parliament in September 2021. The Act is set to streamline and regulate the use of digital identities in New Zealand.

In this article, we take a look at what the digital identity system to be established is, and what the Act means for consumers and businesses in New Zealand.

Key takeaways

A digital identity is a digital representation of an individual's identity information that is used to prove who they are online without requiring ongoing in-person identification, such as RealMe.
The Act establishes a Trust Framework for the provision of safe, secure and trusted digital identity services in New Zealand. The Trust Framework Rules will be published prior to the Act coming into force on 1 July 2024.
The Act aims to promote the use of digital identities and foster the growth of a digital identity network, enabling any business to use digital identities for access to their services, and allowing consumers to choose their preferred digital identity provider.

Please see our 2021 article here about key aspects of the Digital Identity Services Trust Framework Bill. These key aspects remain relevant to the Act as passed.

What is a digital identity and why should you care about it?

A digital identity is a digital representation of an individual’s identity information that is used to prove who they are online, removing the need for ongoing in-person identification when accessing certain products and services. The Act provides a framework for the provision of safe and secure digital identity services, and to encourage the use of digital identities by businesses and consumers.

Digital identities present the opportunity to increase accessibility for multiple business and personal transactions while maintaining the safety and security of personal information. For instance, a consumer could use their digital identity to open a bank account without the need to visit the bank branch with physical identification. Digital identities can therefore be highly attractive to businesses and consumers alike for the convenience and efficiencies they may provide.

Digital identities are a component of the “digital identity system”, a term used to describe:

providers of digital identities to consumers;
businesses that allow the use of digital identities to access their online services; and
consumers that use these digital identities.

New Zealand’s digital identity system is currently underdeveloped compared to its overseas counterparts. The Act aims to remedy this by establishing a Trust Framework for secure and trusted digital services for individuals and businesses.

What does the Act mean for the future of the digital identity system in NZ?

Currently, New Zealand has one major player in its digital identity network - RealMe. RealMe is administered (and regulated) by the Department of Internal Affairs, and is only used by government agencies and a handful of New Zealand businesses.

The Act is expected to foster the growth of a much larger digital identity network, facilitating the introduction of new providers, and enabling any business to use digital identities for accessing their services. Consumers will be able to choose their preferred digital identity provider to log their personal information with, and when required to provide their identity, use this digital identity across any businesses’ services - a bit like choosing a bank and then spending the money you have stored at that bank at any store.

Businesses in the online space should consider whether their services may benefit from the use (or offering) of digital identities, which could provide efficiencies that provide a competitive advantage. Consumers can be optimistic about the efficiency of their business and personal transactions increasing in the future.

What’s next?

The Act is set to come into force on 1 July 2024. Prior to this, we expect that the Trust Framework Rules will be published. These rules will apply to the provision of digital identity services to promote consumer trust in the digital identity system, as well as provide guidance for those service providers looking to provide digital identity services.

Looking forward, it will be interesting to watch how New Zealand’s digital identity system develops under the Act and accompanying rules. In particular, how the system will incorporate a consumer data right which the Ministry of Business, Innovation & Employment has announced will be introduced into New Zealand on a sector by sector basis, starting with banking.