Scott Farrell, member of the Reserve Bank of Australia’s (RBA’s) Payments System Board and lead author of the financial services industry-defining payment systems review, has cautioned regulators and developers to avoid the temptation to simply ‘plug and play’ another country’s digital ID verification or payments system, warning that local users will resist any such system that does not align with their cultural values.

“What I have learnt is that – and it’s embarrassing how long it took me to learn this – every country is different,” Farrell said as part of a panel discussion at today’s AP+ payments and digital identity summit.

“Data is culture. Digital identification, money and information flows are data. And digital identification… is the closest thing to a sovereign country’s culture.”

“You can see everything you need about the way that the people relate to their businesses and their state through what they will accept in relation to digital identification.”

Applied in the Australian context, Farrell observed that Australians’ somewhat “healthy distrust of authority”, will ultimately manifest in a demand for a “right to choice”.

“The rules [in Australia] around – as a human – your rights, your duties and your relationships, we just know that our culture has it.

“Now, other cultures, particularly in the Indo-Pacific, won’t have that same aspect. Accordingly, they will focus very much on the technology, because that is a given.”

For instance, he asked, “Would you publish your income on a public website where everyone can see who you are and how much you get paid?, because that doesn’t happen here.”

Such cultural norms, potentially alien to local users, may “filter into some of the judgements” made by a system adopted directly from offshore.

As such, he stressed, technology innovation in the digital identity and payments space cannot be pursued in Australia without consideration of inalienable rights – to privacy, to free will, and therefore to an individual’s right to choice.

“We know we have to do them together – we can’t just do the tech. And that’s why you need both of those to talk together as well.”

Even between countries with a similar cultural heritage, one should not assume that a singular solution can be readily transplanted, he warned.

“What [my experience] has taught me is that whenever I am speaking with a government overseas, I tell them: ‘Please remember, this is a solution for you and your culture. You must not and cannot plug and play from another country!

“It won’t even work between Australia and New Zealand – and most other countries think we are the same country,” Farrell joked.

He caveated, however, that Australia should not necessarily be wont to fear outside solutions and simply “build everything ourselves”.

“We just have to be more sophisticated about getting Australians to want it. And then getting Australian businesses to want to provide it, rather than telling them all you’re going to do it, because that may not work in our culture.”

Be wary of bigtech monopoly on digital ID

Continuing Farrell’s thread, Adam Clark, CommBank’s EGM of digital economy, warned that the bigtech’s (namely Apple and Google’s) incursion into Australia’s digital identity space should not necessarily be met with open, and uncritical, arms – and particularly if they outmuscle local alternatives.

While he acknowledged the bigtechs’ “enormous” and “life-changing” contributions to innovation in payments and ID verification space, he stressed the crucial role of regulators and industry in reinforcing Australians’ right to choice.

“When it comes to things like digital ID, there’s no problem with Apple and Google and whoever else wants to offer a digital identity solution. The problem will be if they’re the only solution.

“We want to give people choice. We want to compete hard for consumers to be able to use our digital ID solution versus theirs,” Clark said.

Clark gave credit to local regulators for driving a local alternative to the bigtechs’ verification services.

“If you had Apple and Google being the predominant digital ID product in Australia, it’s very different to regulate them versus an Australian company. So, how do we get that balance right?

“For us, it’s making sure that they can’t rely on what they have in previous circumstances around regulatory arbitrage and avoid the same regulation that we have for the same service.

“But it’s also about making sure that the benefits the consumer has when they make payments today, through NAB or CBA or another institution, are the same benefits they get from other payments providers.”

The lessons learned from the ‘autarkic’ innovation environment of the Covid period have proved invaluable for developing solutions that serve both the national and consumers’ interests, he noted.

“Going back to Covid, one of the things that really shone through was the ability for Australian businesses to get together and work closely with government to come up with solutions to get us through that crisis.

“And there is an element of national sovereignty, there’s an element of ‘Team Australia’ that [came] through that that was extremely powerful.

“It would be a shame to lose that. And I think as much as bigtech has a presence in Australia, they’re not focused on what’s in Australians national interest – and why would they be?”