Why the Future of Finance Depends on Digital Trust

With emerging identity-based risks creating an urgent need to bolster digital trust across the financial services ecosystem and beyond, there is increasing recognition of the potential for the verifiable vLEI (vLEI) to bring increased stability, transparency, and compliance to the global economy.

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Are you prepared for the future of finance?

This is the question posed in a new report by the Swiss Financial Innovation Desk (FIND), which highlights four fundamental technological trends that are shaping the future of the global financial system: artificial intelligence (AI), digital assets, quantum-safe technologies, and digital trust.

The need for digital trust comes as cybercrime threatens to spiral out of control. Projections vary, but some estimates suggest the cost to the global economy could be close to $14 trillion by 2028. In a bid to stem the tide, financial institutions face increasingly onerous and complex compliance and reporting requirements.

Challenges are compounded by a lack of harmonization within cross-border data flows and fragmented technology standards. As the World Economic Forum explains, this is driving an “urgent need for holistic digital trust frameworks that address vulnerabilities instead of applying piecemeal solutions.”

A new approach is clearly required, and this starts with a reliable, interoperable, and scalable approach to digital organizational identity.

Enter the vLEI

The good news is that for over a decade, all legal entities have been able to obtain a Legal Entity Identifier (LEI), a unique, globally standardized code which enables anyone, anywhere in the world, to trust that they are who they claim to be. GLEIF has now pioneered a new form of digital organizational identity – the verifiable LEI (vLEI) – and has established a governance framework and rapidly growing supporting ecosystem.

The vLEI promises to tackle emerging risks across the global digital economy, while unlocking significant efficiencies. Uniquely, it provides automated and non-repudiable verification of an organization’s identity, as well as that of the individuals acting on its behalf. It addresses the critical requirements of safe and well-functioning digital ecosystems, including the permissions and authentication of organizational identity and the digital signing and submission of official documentation (such as filings, reports, data), along with the signing of content therein.

Crucially, vLEI systems are based on internationally recognized ISO open data standards, meaning that any organization can utilize their services and enact them across all online platforms. GLEIF, which sits as the root-of-trust for all vLEIs, operates independently of geopolitical, technological, and commercial influence. This means that the vLEI system itself can be trusted, as well as utilized, by everyone, everywhere.

These capabilities stand to tackle both long-standing and emerging identity-based risks, promoting increased stability, transparency, and compliance across jurisdictions by:

• Reducing fraud and data alterations – digital signatures, cryptographically tied to the reporting entity, ensure that every submission is authenticated and make it nearly impossible for third parties to manipulate or alter.

• Enabling reusability across multiple regulatory and business processes – the portability of the vLEI enables the reuse of organizational identity and credentials across multiple platforms. This means that once the initial setup is completed, users can leverage the same verifiable credentials for different requirements – reducing the administrative burden and supporting various use cases.

• Enhancing operational efficiency – the vLEI can eliminate time-consuming verification processes and support a fully digital, automated approach that minimizes errors and inconsistencies. This aligns with broader industry trends toward digital transformation and reinforces regulatory compliance efforts.

Growing industry recognition of the vLEI

Given the clear benefits, financial institutions, regulatory bodies, and technology providers across the world are increasingly recognizing the transformative potential of the vLEI. In many cases, they are already playing a crucial role in supporting and advancing the vLEI framework:

The launch of the vLEI (…) enables verifiable digital authentication (for consumers, investors, regulators and other market participants) of organisational representatives, that can help financial services organisations to more effectively address targeted risk areas (e.g. money laundering, fraud in cross-border payments and in crypto-asset transactions) while lowering costs.

Financial Stability Board

Innovative solutions for managing organisational credentials for financial institutions, like [the] vLEI […] could significantly reduce the onboarding costs for the single EU hub.

European Supervisory Authorities (ESAs)

The verifiable Legal Entity Identifier (vLEI) holds immense potential to enable trusted, automated, and cross-border verification of organizations, enhancing transparency, reducing compliance costs, and unlocking new efficiencies in global digital ecosystems.

Swiss Financial Innovation Desk

The potential of the vLEI also extends far beyond the financial services sector. Momentum is building across various cross-border ecosystems and use cases, including payments, supply chains, environmental, and social and governance reporting (ESG):

vLEIs […] enable verifiable ways to establish reputations and help reduce the scope for fraud and data processing errors. While the vLEI system does not completely eliminate all risks for fraud, it (…) offers a mechanism for establishing accountability previously impossible in digital systems. Such a foundation can facilitate real-time adaptation and defensibility of supply chains.

World Economic Forum

[The vLEI] ensures that data sharing is done ethically, with due consideration for privacy and compliance with local regulatory standards.

United Nations Development Programme

The introduction of vLEIs is expected to significantly enhance the security and reliability of platform digital identifiers (…), This added layer of verification helps prevent fraud, increases accountability, and improves trust among stakeholders.

International Chamber of Commerce

An expanding and maturing vLEI infrastructure

With the vLEI standing on the cusp of mass utilization, GLEIF is committed to working with key stakeholders to expand the enabling ecosystem and facilitate its rapid integration across the global digital economy.

This is best demonstrated by a growing network of Qualified vLEI Issuers (QVIs) who are authorized to issue vLEIs to legal entities. The QVI network is set to expand significantly in the coming months, with a double-digit number of organizations worldwide currently undergoing the Qualification Program under the GLEIF vLEI Ecosystem Framework.

Achieving the status as a Qualified vLEI Issuer affirms our vision of being at the forefront of the digital transformation in identification and authentication.

Nord vLEI

Elsewhere, the cross-industry vLEI Technical Advisory Board is providing technical, governance, and developmental support to ensure the vLEI system’s scalability and technical interoperability:

The verifiable Legal Entity Identifier (vLEI) represents the culmination of over a decade of work and collaboration across countries – coordinated through GLEIF's efforts – to establish a secure, trusted digital organizational identity. Our participation with the vLEI Technical Advisory Board reflects our commitment to supporting the further success of the vLEI on the global stage.

healthKERI

As this work continues, we move ever closer to a future where verifiable organizational identity is hardwired into every business relationship – promoting increased trust, transparency, and efficiency.

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