Yesterday, I blogged about the inherent conflicts of interest that exist with most current or potential Identity Providers.  Is it just coincidence that today I would read a post on LinkedIn by Gary Rowe, CEO/Principal Consulting Analyst at TechVision Research, highlighting the TechVision Research report, “Banking on Identity?”

The report offers a compelling case: “The opportunities for banks to become identity service providers.” I was impressed when I read the downloaded report.  Here are a few excerpts:

Identity data in all its forms is going to power the global economy of the future and will become increasingly highly prized and sought after. Services that help manage the safekeeping and distribution of identity data could dominate that future.

This is certainly in harmony with the statements in my recent blog, “The Future of Digital Identity,” in which I quoted David Birch  author of “Identity is the new Money.”

For banks to proactively create a new set of identity services would not be that far removed from what they are required to provide today to comply with KYC (know your customer) and other regulations, both in Europe and the rest of the world. It would also offer a welcome opportunity to strengthen customer relationships and encourage customer loyalty at a time when other aspects of the banking business are being disrupted.

Yes, Identity is about relationships, and banks do seek to strengthen relationships with their customers. I place trust in the banks with which I do business.  Can I also trust them to safeguard my identity information, the “new money” of the global economy?

From a consumer perspective, the major initial attraction [in banks as identity service providers] will be convenience. Not having to repeatedly undergo the tiresome process of producing hard copy documentation verifying identity, as well as proof of residence, will be very attractive and remove an irritating barrier to getting business started as quickly as possible. Being able to use the trusted services of a bank will, in the majority of cases, likely be far more attractive than using the services of a social media or any other company.

As a consumer, I would definitely prefer my bank as identity provider over Facebook or Twitter!

For the banks, the principal advantage of becoming identity providers is about cost mitigation. Banks are already spending large amounts on KYC and other identity-related issues. Any opportunity to begin to monetize that sunk cost would provide a welcome additional income stream.

The report lays out a compelling case for benefits to banks in providing identity services.  The new ability to “monetize that sunk cost” is a benefit I hadn’t considered before.

Until recently the requirement for a customer-centric identity service was the stuff of long-term visions, and the idea that a bank would provide such a service would have been considered outlandish. But the demands of today’s heavy dependence on the Internet for every aspect of daily life has made the absence of safe, secure and reliable personal credentials one of the barriers to the growth of the digital economy.

I admit that I was one with long term dreams, if not visions, of a good identity service provider.  BofA, Chase, Wells Fargo — which of you will have the vision and courage to make it happen?