A government official records biometric data from a woman for making her electronic ID card in Kediri, East Java, on April 13, 2021. (Antara Photo/Prasetia Fauzani)

Where Public and Private Meet: How Can Indonesia’s e-KTP Help Citizens and Businesses?


APRIL 16, 2021

While Asia has been developing national digital IDs for some time now, the race has just picked up speed. The Philippines and Thailand are among those beginning to see significant progress as they lay the infrastructural and regulatory foundations for digital IDs. Others, such as Singapore and Indonesia, are in the midst of rolling out facial verification in their national identity scheme.

In Indonesia, this facial recognition technology taps on the country’s e-KTP database to improve social aid disbursement. It allows citizens to claim social assistance simply by visiting a merchant with facial scanning technology to verify their identity.


Why are digital IDs getting so popular? They make sure everyone has a way of verifying their identity to transact with the public and private sectors online. This simple feature has profound implications for every country’s digital transformation journey and its development goals. More than a billion people around the world have no formal way of proving who they are.

This is especially true in Indonesia, where it can be challenging for many citizens to secure basic government services. This can include access to public healthcare, education, voting services, and benefit programs. Digital identity will make these services more accessible while improving quality-of-life for locals.

In the private sector, having the means to verify customers’ identities during online transactions through national digital identity helps improve the user experience while lowering the risk of online fraud. This is especially important in sectors such as banking and financial services, retail, and travel.

While the world is more familiar with physical IDs (which may then be linked to online government records), these continue to be inferior today, as they can be easily manipulated or purchased illegally.

With movement restriction orders impeding businesses’ ability to verify customer identities face-to-face, a reliable national digital ID program also ensures services can continue online and in a much quicker and safer way.

Building Strong Enrolment Levels

A national digital ID system is certainly the first step in building a digitally inclusive society. For this to be effective, having a high citizen enrolment is key to ensure that everyone has access to the same government services and experience the same level of simplicity and security when they are signing up for services or transacting online.

Furthermore, Indonesians living in rural areas are typically excluded from the financial system due to the inaccessibility of physical bank branches. A national digital ID system provides a means to verify citizens digitally and thus opens up the option to disburse support without a physical branch. This accessibility is important in driving financial inclusion in the country.

Opening and maintaining a bank account with nothing more than just your national digital ID enables everyone — including those in rural areas — to be included in the financial system. It can also help open up online lending options (including micro-financing), which would allow access to loans that will help small businesses.

Getting Everyone on Board

However, achieving high sign-up is a challenging hurdle that governments face when rolling out a national digital ID system. This is further exacerbated in rural regions where there could be a large number of undocumented citizens.

One way to get around this problem is reducing the friction points for enrolment. For example, designing inclusive and flexible documentation requirements while ensuring that enrolment points are accessible to all layers and segments of the population.

Another approach involves partnering with central banks. This allows governments to access users’ information, which is then enrolled into a national digital identity initiative. However, these methods demand significant capital investment. Also, central bank databases may not contain a full collection of citizen records and are vulnerable to hacks if they are not properly architected.

A new method to pushing past these hurdles lies in the use of the citizen’s own smartphone. Indonesia is the fourth-largest smartphone market worldwide — a number that is still continuing to grow rapidly.

Leveraging the biometric identification technology available on these devices is one of the most effective, convenient, and secure ways of capturing facial biometric data and supporting documents — helping as many citizens be enrolled in a national digital ID initiative as possible.

It’s All About Control (and Cost)

What about businesses wanting to incorporate a national digital ID system in their verification process? For instance, for Indonesia’s upcoming virtual banks, leveraging a national digital ID (along with a corroborating selfie to confirm their identity) is important in ensuring that the new account onboarding process is as secure and efficient as possible, even for banks with no physical presence on the ground. With 66 percent of the country’s population being unbanked, it will also be a game-changer for more than 170 million citizens.

However, before jumping on board, businesses have to carefully assess their needs and the macroenvironment when strategizing for the future. When it comes to integrating digital ID verification systems, it means understanding the level of control you have (if any) in terms of user experience, convenience, and security.

This can have a significant business impact. The verification stage is typically when new customers tend to drop out of the onboarding process.

A recent survey by Signicat reveals that 2  out of 3 people who begin an online application do not complete it because the process is too time-consuming, onerous, or clunky. Ensuring that the new account onboarding process is easy and intuitive to complete is crucial to converting prospects into customers.

For some, this may be the simple issue of evaluating how the technology can fit into their existing business processes and system operations. Or being able to fall back on other technologies when the national system is down for maintenance. For others, it is often the challenges that result from false positives (when fraudsters manage to create a new online account) or false rejection (when legitimate customers are kept out) rates.

In these cases, businesses have to look into the technologies underlying the national digital ID system and the threat landscape in their market to understand the regularity and likelihood of such occurrences.

Then, leaders can assess whether they are comfortable with any potential losses or missed revenue caused by the system. Afterall, any costs incurred from a national digital ID framework would likely be borne by the company and not the government.

Another key consideration is scalability. Depending on where the business is in its life cycle, expansion beyond borders may be a priority for different local ID systems that cannot efficiently and cost-effectively support.

Companies looking to expand beyond Indonesia may then choose verification services with global coverage, which can scale with the business. To complement this, national digital ID systems — such as Indonesia’s e-KTP — may also be leveraged when expanding within a key market for maximum local reach.

The role of national digital identities has risen in prominence over the past year. There is much to be gained for businesses in Indonesia that want to tap into national digital ID systems, including a better user experience, streamlined operations, heightened security, reduced fraud, and cost-efficiency.

However, it is worth taking a step back to clearly identify the business needs and objectives for adopting digital ID systems and decide if the macroenvironment of the country they operate in can deliver a resilient and agile solution in supporting current and future business growth.

Frederic Ho is the vice president of Asia Pacific at Jumio, a Palo Alto-based identity verification company specializing in AI-powered identity verification and authentication. The company can support identity verification against government-issued IDs from over 200 countries.