Opening bank accounts, issuing credit cards, and other processes that require personal identification can be quite cumbersome and complicated. In this article, we interviewed Hikaru Kusaka, the representative of xID Inc., who is developing the digital ID app “xID.” This app aims to eliminate such obstacles by connecting with the My Number Card (it is an Individual Number Card created by the Japanese government to improve financial and administration services in Japan). We discussed Estonia’s vision of an e-nation, the application of blockchain technology, and Kusaka’s approach to product development in the public administration sector.

Hikaru Kusaka, xID Inc. Co-Founder / CEO

Hikaru Kusaka founded xID Inc. in 2012. In 2017, he went to Estonia and served as an advisor for eResidency and various government agencies. In 2019, he was appointed as a fellow for the promotion of regional revitalization, focusing on digitalization and smart cities.

A product to bring the future to Japan, as seen in the e-Nation Estonia

─ First, please tell us about “xID.”

Hikaru: xID is a digital ID app that allows you to create an ID by simply reading the digital certificate for signatures on your My Number card using the smartphone’s NFC. If you are connected to a participating local government, you can perform procedures that were only possible at a counter using the app. If businesses implement the API, it will be easier to confirm identities for opening bank accounts, credit card issuances, and real estate contracts. With xID, you can save the trouble of collecting and submitting identification documents multiple times or taking photos of your ID.

─ Where did the idea for xID come from?

Hikaru: It came from the vision of the “e-nation” I saw while living in Estonia for about four years starting in 2017. At that time, Estonia’s “e-ID,” equivalent to the My Number card, had spread to nearly 99% of the population and was already functioning as a social infrastructure. In contrast, the adoption rate in Japan was around 13%. In a way, it felt like I had seen the future in a time machine, and I found it interesting to apply what I had learned there to Japan, which was in the midst of moving toward that future.

─ How is Estonia building its e-nation infrastructure?

Hikaru: Estonia gained independence from the Soviet Union in 1991, and the government has since employed blockchain technology as a mechanism to ensure trust and credibility, with the goal of preventing corruption. I initially believed that digital trust and credibility could replace the money economy as a new indicator, and I was exploring ways to visualize it. At that time, blockchain was frequently discussed in the context of virtual currencies, but its core function is to guarantee trust and credibility in the digital world.

Achieve digital trust and credibility through blockchain

─ I understand that xID also uses blockchain technology.

Hikaru: To achieve digital trust and credibility, it was essential to integrate blockchain technology into xID, much like in Estonia. Blockchain is a mechanism that inherently guarantees trust and credibility fairly, which is often referred to as “trustless”. It can be technically proven that it cannot be tampered with, and that is a significant advantage. There is a vast difference between “not to do” and “cannot do.” Laws and ethics can act as pressure to “not to do,” but ultimately it depends on the individual handling it. However, with blockchain, trust can be guaranteed through technology.

Since there are still challenges legally, xID currently uses some of the components it needs from the underlying technologies that make up the blockchain, unlike before when it used blockchain as a proof of concept. 

One of them is the “timestamping system,” which is widely used in Estonia. Previously, specific institutions recorded information based on the time displayed by atomic clocks. Whereas, this technology aims to prevent tampering by leaving logs of time and access history everywhere, and connecting them fairly among everyone, creating a secure and transparent system.

Another is “PKI (Public Key Infrastructure),” a technology for securely exchanging information through encryption and decryption (returning encrypted data to its original state). In xID, PKI is used for proving that a particular person is logged in without a doubt, and for service providers to decrypt the personal information received.

Communication with local governments refines the product

─ Are there any references you used when creating the product?

Hikaru: Prior to xID, there was no digital ID app like it in Japan, and there were no examples to refer to when designing the UI/UX. The only existing app was Estonia’s “Smart-ID,” but Japan and Estonia differ in national character, cultural background, population size, and age distribution. Simply creating something similar wouldn’t be suitable, so a major focus during development was determining localization.

In particular, in Estonia, the “e-ID” card which combines a driver’s license and insurance card, was the sole choice for a digital ID. But in Japan, identity verification often involves a driver’s license or passport. So we were frequently asked to have those two involved. 

If we allow both driver’s licenses and passports, it would be possible for one person to create multiple accounts, and private companies wouldn’t be able to determine if it was the same person. Recognizing the difficulty of commercialization, we decided to start from a niche area and settled on our current policy. Fortunately, last year the adoption rate of the My Number card exceeded 50%, surpassing driver’s licenses based on the number of applications.

─ What aspects did you prioritize when working with the My Number card?

Hikaru: To work with the My Number card, compliance with the law is crucial. Therefore, when designing, we start by understanding the law first.

Additionally, ministerial certification from the Ministry of Internal Affairs and Communications, which oversees the My Number card, is required for collaboration. As a result, we can’t adopt a scrap-and-build approach like a startup. It’s highly challenging because we need to think about how to make it user-friendly within many constraints and focus on addressing these constraints rather than complaining about them.

Nevertheless, regulations can drive innovation, and innovation can change regulations, so the two should have a symbiotic relationship. Consequently, at xID, communication with related government agencies and experts is integrated into the early stages of the product decision-making process.

As a matter of fact, government officials and experts seek precedents, in order to ensure the system doesn’t end as just a theoretical concept on paper. Therefore, we developed together with the local government” from the beginning.

Hikaru: Local governments, in a sense, act as regulators and have the authority to enact ordinances within their respective regions. Through our interactions with them, we refine the product to make it practical and share information with related government agencies, exchanging opinions based on that. By doing so, we can present a prototype of the product that reflects “what can be achieved up to this point under current laws,” based on feedback from local governments. This makes it easier to get positive reactions from government officials, such as “What would be easier to accomplish if regulations were eased?”

The proposals made in these discussions are important because they have benefits not only for us, but also for those who create similar products later. The law will not change just for us, but if we can identify the bottlenecks for private companies to enter the market, it can be a concrete proposal. Making system reforms in a way that is not self-centered, such as asking to “change it for our sake,” is challenging. but it is part of the product development process.

Easy use for everyone and be open

─ What kind of feedback have you received from local governments?

Hikaru: The most common feedback was, What if elderly people can’t use it? We don’t collect user data such as age or residence with xID, so we don’t know the exact distribution, but considering the population ratio, there will naturally be many older users. Nevertheless, we decided not to focus too much on designs that are easy for the elderly to use.

That’s because I believe that the digital divide (the gap between those who benefit from information and communication technology and those who don’t) is less significant than people think. If we create a unified, easy-to-use basic experience, I believe that young people would teach the elderly. Even people in their 30s and 40s can’t answer questions about how to use smartphones designed for the elderly because they have never used them, but anyone can answer questions about iPhones. Therefore, we thought that aiming for universal design and creating something that everyone can use conveniently would ultimately help the elderly as well.

─ How do you address the issue that many people, not just the elderly, may feel fear or resistance to having personal information online, even with the technical guarantee of blockchain?

Hikaru: The only thing that can dispel fear and resistance is convenience that goes beyond. It needs to be so convenient that people can’t live without it. And to achieve that, being “easy to use” is more important than any words we can say.

On the other hand, to build trust and credibility, it is necessary to partner with those who already have it and borrow their trust and credibility. One of the reasons we work with local governments is that being a service used by so many of them leads to a certain level of trust and credibility.

Similarly, we are working extensively with major companies and other organizations. Communicating that the product is connected to and spreading among various companies and organizations, also helps build trust and credibility.

In addition, we plan to make the information, such as source code, as open as possible in the future, except for some parts related to security. Many people may not understand the source code, and it doesn’t lead directly to trust and credibility. Still, it’s essential to “provide options for those who can read the source code, to judge whether or not it is a safe product.” We believe that such a stance and attitude are also elements that shape the xID product.

The processes and mindset for design are needed in public administration

─ How do you perceive the value of design in the public administration sector?

Hikaru: “Govtech” is often thought of as the process of government agencies utilizing technology to advance ICT. However, I think it’s more about private companies using new technology to make pre-emptive investments and create products that benefit the public administration sector.

In public administration, the mindset and processes for product development including design philosophy, have not existed. So, I feel that there is significant value in introducing those elements. It is essential not only to introduce the product itself but also the mindset and processes, to make them aware of its value.

Therefore, we work with local government staff in a variety of areas, such as campaign strategy creation. By sharing the process of analysis, design, and copy creation, we aim to permeate the product development process, which should eventually lead to a deeper understanding and use of xID. I look forward to seeing more and more companies enter the market and continue to grow.

Related Links

xID Inc.