The Road to Identity 3.0: From Microsoft Passport to the Internet of Things

The proliferation of connected devices, from connected cars to toothbrushes, has led to a new ecosystem of gadgets that must be able to communicate with each other in order to work and create personalised user experiences effectively.

Historically, online registration and login have had fairly poor and disjointed user experiences. In the late 1990s, Microsoft tried to address a clear market need for a streamlined registration process by developing a simple way of authenticating on websites with pre-established identities.

With Passport, Microsoft introduced the concept of third-party identity across the web by enabling consumers to log in to various sites using a single username and password. This was the first step in virtualising the concept of identity - Identity 1.0.

Passport was supposed to provide consumers with a trusted online identity from a known company, Microsoft, that they interacted with all the time. It was supposed to allow businesses to gain more registered users by fixing the login user experience.

Unfortunately, Microsoft Passport got a cold reception from both consumers and businesses. The product suffered from frequent renaming confusion, starting in 1999 as Microsoft Passport, becoming .NET in 2001 and was renamed again to Windows Live ID in 2006. Passport failed to remember user preferences, and even Microsoft employees griped about the inconsistencies and abysmal user experience.

Fast-forward to 2010, and we began to see the onset of Identity 2.0 as Facebook and other social identity providers ushered in the second generation of online identity, allowing users to log in to websites via existing social media profiles. Facebook Login saw huge adoption, as online users logged into mobile applications and websites using their Facebook credentials more than 10 billion times in 2013 alone. More than 35 networks now allow for social authentication, ensuring consumers can log in to sites and apps with the identity of their choice.

Businesses started to understand the value of the data housed within social profiles as well. When users authenticate using pre-existing online identities, they give organisations permission to access rich, first-party social graph data. This data can be used to deliver hyper-relevant content, create memorable and personal customer journeys and target influential and high-intent users.

As consumers' real identities become increasingly intertwined with their virtual lives, we are seeing the emergence of Identity 3.0, which I predict will gain even more traction this year. Identity 3.0 goes beyond social identities to include next-generation authentication methods, increased security and most exciting of all, new applications of identity.

2014 saw the initial inception of Identity 3.0, as more consumers leveraged authentication solutions from payment providers such as Login with PayPal and Login with Amazon to verify their identities and streamline ecommerce checkout processes. Another innovative identification method includes Paym, which allows users to transfer money to friends and family using only their mobile phone number, eradicating the need to share bank account details.

Apple Pay's Touch ID, which uses biometrics and NFC technology to identify shoppers at the point of sale, also contributes to the constant evolution of identity. Apple's introduction of Apple Pay in 2014 was particularly interesting, as it pits the company against Facebook and Google as an identity provider of the future. Combining Apple Pay with Apple's existing Passbook mobile app effectively digitises a user's entire wallet, along with his or her identity as a consumer.

There is evidence that Apple is not alone in recognising the importance of tying identity to payments, as Facebook applied to the European Union last year for a license for money transferring capabilities. With such an immense number of registered users for its Facebook Messenger and WhatsApp applications, the latter being especially prominent in the developing world, the world's largest social network has a huge existing subscriber base for any payment technology it may introduce.

And as Identity 3.0 signals the marriage of payments and identity, the next phase of identity is also pushing us towards other, fascinating implementations on the most talked-about frontier of the web: the Internet of Things (IoT). The proliferation of connected devices, from connected cars to toothbrushes, has led to a new ecosystem of gadgets that must be able to communicate with each other in order to work and create personalised user experiences effectively. To date, many of these devices simply are not designed to work together because they lack a unified language that can enable different connected devices to share data. Identity is the connecting thread, the unified language, which will empower devices to learn and evolve together, based on user preferences, to create truly customised experiences for modern consumers. Until organisations start centralising customer identity, the IoT will remain the stuff of trade shows and Hollywood films.

Digital identity has come a long way since the days of Microsoft Passport. Though Passport was not embraced, it helped build the path for third-party identity providers such as Facebook, LinkedIn and Twitter to gain acceptance from both consumers and businesses as authentication systems across the internet. Now, as more complicated and integrated identification methods such as Login with PayPal and Apple Pay become commonplace, organisations must be prepared for the massive volumes of consumer identities they need to manage. Additionally, the growth of the IoT brings with it new challenges - the Identity of Things (IDoT) is a new extension to identity management that encompasses all device-based identities, whatever form those devices may take.

2015 will be an exciting year for the continued evolution of digital identity as Customer Identity Management (CIM) becomes more important to both businesses and consumers. The goal of providing consumers with innovative new authentication mechanisms for the purpose of creating truly relevant 1:1 experiences will become paramount, and the perils of not having an external, customer-centric identity management strategy in place will become more evident. With identity at the core, businesses can create lasting customer relationships that will result in levels of engagement and loyalty not previously seen.

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