German login alliances: The potential of Verimi and Net-ID

They both actually want the same thing, yet they haven’t joined forces. Sparing German users the need to remember and type in passwords while securing for themselves the wealth of valuable data about their users’ online behavior. For enterprises, this is a step in the right direction.

Net-ID went online in October and became the second of the two German login alliances. Most members of the alliance are players in the television landscape and the digital and advertising industry. Among others, they include the RTL Group, ProSiebenSat1, two heavyweights from the eCommerce world – Zalando and Otto. Also on board are Ströer Digital Media and IQ Digital on the marketer side – and United Internet. With their more than 30 million web.de and GMX accounts right off the bat, the latter members in particular bring a broad customer base that can use the service with the existing e-mail passwords without major effort. The idea behind this is simple: a user with such an account can log in to dozens of partners with using the same data, as one would with a skeleton key.

Approximately 60 partner websites were already launched and more partners are expected to join in the coming months. “Net-ID creates a system that gradually maps the entire digital value chain for users and partners alike,” explains Sven Bornemann, Board Chairman of the European Net-ID Foundation. In this way, each partner will contribute to awareness and expansion of Net-ID through its user base. “The legal form as a foundation also facilitates admission of companies that compete with one another,” explains Jan Oetjen, Chairman of the Foundation Council of the Net-ID Foundation.

Alternative approach at Verimi

Verimi also wants to be regarded as a virtual skeleton key. A network launched in April, Verimi is backed by Allianz, Deutsche Telekom, Deutsche Bank and Axel Springer, among others; they were joined several weeks ago by Volkswagen and the German railway Deutsche Bahn. Unlike Net-ID, here a user must first log in to use the service, but can then, for instance, conduct banking business with Deutsche Bank or integrate his or her Telekom data. As Dirk Backofen, the head of security at Telekom, explains, “the decision to participate in Verimi was motivated by a desire to advance secure digital identity under the protection of the strict German laws on data protection.” All in all, the focus at Verimi is more on security-relevant applications and less on media applications or online advertising. The potential and orientation of Verimi and Net-ID are thus somewhat distinguishable from one another.

Both systems advertise that customers will remain in control of their data and will only have to share the data they really want to share and as required to use the portal. Neither is an open standard in terms of code transparency, though; at most, they are open in the fact that partners are welcome and encouraged to join in. Subject to the specifications of the company to which login is sought, the user has to decide which data to retain for him- or herself, and which parts of the data record to share. After all, the requirement of data economy under GDPR ensures that customers do not disclose more than necessary.

No one can quite say why the two German login alliances didn’t manage to join forces; word has it that the participants’ business models and wishes were too divergent. Together, however, they intend to pit themselves against American competitors Google and Facebook, which provide simplified access control for numerous sites.

The bottom line: Easier logins bring more usable data

And because this succeeded, further companies in the digital sector can only be encouraged to implement one of the new standards in their own authentication. Companies should specifically avail themselves of the opportunity of an upcoming relaunch process to institute one of the systems. They not only simplify access for their customers but also ensure that they will provide them with more data and will be logged in more frequently. This increase in data, in turn, will help companies better understand their users and serve them more effectively with more targeted, personalized recommendations and advertisements – a privilege that the large US corporations have secured for themselves increasingly in recent months and years.

Incidentally, there is no need for customers or the participating companies to be concerned about data protection: Customer authentication takes place centrally and pseudonymously until the customer releases the required personal data (address, telephone number, etc.). But even if two German systems are better than none, the problem that remains is that of the chicken and the egg: Only with enough participants will it be possible to find like-minded parties in the economy – and only if there are enough companies involved will there be an incentive for the customer. To increase public awareness, the Net-ID Foundation is planning a major advertising campaign with the concentrated media power and necessary advertising by the participating companies: RTL, ProSiebenSat1 and United Internet.