City of London Calls on Tech Firms to Build Digital ID Fraud Prevention Network

The City of London Corporation is calling on technology firms to assist in the development of a new digital identity verification network intended to combat financial fraud and reduce the escalating costs associated with scams.

Under the proposed framework, consumers would verify their identity a single time through a trusted provider. These credentials could then be reused across various banks and financial services firms, a process designed to eliminate duplication, accelerate the onboarding of new customers, and prevent bad actors from exploiting security gaps between different institutions.

The City Corporation estimates that the implementation of this system could unlock nearly £5 billion in economic benefits over a five-year period by improving the efficiency of digital infrastructure and reducing losses attributed to fraud.

The initiative arrives as regulators and banking institutions increase pressure on technology platforms following a surge in online scams. These fraudulent activities are increasingly powered by deepfakes and AI-generated advertisements.

According to government figures, fraud now represents approximately 40 per cent of all recorded crime in England and Wales, with the majority of these cases being cyber-enabled.

The proposed digital identity system would function as a coordination layer between financial institutions and identity providers. This would allow companies to confirm the identity of their clients without the need to repeatedly collect the same sets of documentation.

Chris Hayward, the policy chairman at the City of London Corporation, stated that fraud costs banks more than £1 billion every year.

Innovation enables new dangers – but it also solves them too. We’re asking companies who can provide this infrastructure to step forward and lead the sector’s fightback against fraud.—Chris Hayward

The City of London Corporation is currently seeking input and proposals from technology firms capable of building and operating this infrastructure, with a submission deadline set for mid-May.

Industry Tension Over Scam Advertising

The push for a more robust verification system comes amid growing friction between payment firms, banks, and the social media platforms that often host fraudulent content.

Industry groups, including the Payments Association, have argued that platforms such as X and Meta profit from the dissemination of scam advertisements. These groups contend that while tech platforms generate revenue from such ads, banks are left to shoulder the majority of the financial liability when customers are deceived into transferring money to criminals.

Research cited by the payments industry indicates that consumers in the UK now encounter an average of 185 scam advertisements online every month. It is estimated that fake advertisements generated approximately £3.8 billion in social media advertising revenue last year.

The financial burden on banks has increased due to regulatory changes. Since October 2024, tougher UK rules have required payment providers and banks to reimburse most victims of authorised push payment fraud.

A Whole-System Response

The digital verification project is intended to align with a broader “whole system” response championed by the government. This strategy seeks to coordinate efforts between law enforcement agencies, technology companies, telecommunications firms, and banks to create a unified front against fraud.

The City Corporation indicated that the project would support these wider efforts by establishing a secure and interoperable framework for identity checks across the financial services sector.

Industry experts suggest that the necessity for advanced digital identity systems will only grow as artificial intelligence makes scams more convincing and more difficult for traditional security measures to detect.

Ezechi Britton, the chair of the Digital Verification Orchestrator initiative, noted that fraud currently thrives on fragmentation.

Here’s a clear opportunity for technology firms to help scale UK-wide digital infrastructure that delivers real-world impact.—Ezechi Britton