Testing the ID wallet functionality utilizing ‘Microsoft Entra Verified ID’, xID aims for the future of municipal DX with Microsoft.

This ID wallet function was developed using "Microsoft Entra Verified ID", a function offered by the ID management cloud service Microsoft Entra (formerly Azure Active Directory). Verified ID is amanaged verifiable credential service, based on open standards, where organizations can build unique user-owned digital identity scenarios through participating in a network of identity credential issuers, verifiers, and presenters to create trustworthy, secure, and efficient digital interactions between people and organizations.

“Verified ID, a new service from Microsoft, was the perfect solution for the development of the ID wallet function,” says Mr. Kuwahara.

Utilizing “Microsoft Entra Verified ID” for smooth development of the ID wallet function

The ID wallet function was developed to address the challenges faced by many local governments.

For example, one common problem many local governments face is the management of paper credentials. Residents often encounter cumbersome processes, such as filling out paper applications by hand and obtaining paper certificates to prove eligibility when applying for administrative services related to childcare, nursing care, and more. In addition, local government employees spend a significant amount of time reviewing and approving these applications.

Mr. Kuwahara says “If applications and confirmations can be digitized and collectively managed through an ID wallet function, residents will be able to access government services quickly and easily. This will also help to significantly reduce the workload of local government employees. In addition, the single mechanism of the ID wallet can be expanded to include various services such as reservations for public facilities and public transportation, and the issuance of coupons and discount tickets.”.

Local governments also face the challenge of determining ways to provide personalized services to each resident.

Mr. Kuwahara says “We hear that administrative services often do not reach the people who need them, or that residents are not aware that such services are available.”

In developing the ID wallet function, it was essential to comply with Verifiable Credentials, the international standard for managing IDs and other credentials in a verifiable state in a distributed environment. However, the task of quickly creating and maintaining features that meet these international standards can easily become a significant development hurdle, he says.

Mr. Kuwahara says “Verifiable Credentials are something that have already been used in vaccination certificates provided by the Digital Agency. However, developing a digital ID wallet service presents challenges, such as the technical difficulty of implementation and the man-hours required to handle specification changes. As a leader in the establishment of the Verifiable Credentials standard, Microsoft has Verifiable Credentials specialists and provides expert support and a variety of related services. They also delivered these services in the Verified ID format, ensuring close communication with our management and technical teams. So, it was only natural for us to use Verified ID in the development of the ID wallet function.”

Leveraging the benefits of cloud services to enable rapid service development and reduce operational costs

Verified ID serves as the infrastructure for exchanging information in the Verifiable Credentials format when using the ID wallet function.

The xID app generates a unique ID that is linked to the user's My Number Card to enable identity verification. With the user's consent, the name, date of birth, address, and gender data obtained from the My Number Card will be shared with the service provider, eliminating the need to re-enter this information each time.

The ID wallet function is a system that allows users to manage different IDs, such as citizen IDs, employee IDs, medical certificates, and coupons, all within the app by exchanging information using a unique ID in the Verifiable Credential format. Specifically, the Wallet SDK on Verified ID is used to present Verifiable Credentials in the ID Wallet to the app, and the app receives these Verifiable Credentials to verify authenticity.

Mr. Kuwahara talks about the advantages of using Verified ID in the development of the ID wallet function.

Mr. Kuwahara says “The advantage of Verified ID is that it allows us to delegate digital ID management to the cloud service provider. By using Verified ID instead of having to develop our own Verifiable Credentials system, we can significantly reduce the number of man-hours required for implementing communication in a distributed network. In fact, our development team was able to focus on the presentation aspects of the application, such as UI/UX, because we only had to focus on connecting to the Verified ID service when developing the wallet. And because it is delivered as a fully managed service, the amount of time and effort required for operational management is greatly reduced. In fact, we have found that it can significantly cut the number of operational processes compared to hosting and providing the entire ID wallet functionality in-house”.

As shown, by deploying Verified ID at the core of its service delivery infrastructure, xID has realized benefits such as rapid and efficient feature development, the ability to focus resources on application development, and reduced service management and infrastructure management workload.

Mr. Kuwahara says “xID’s relationship with Microsoft has also entailed technical verification to connect to Azure AD B2C, the predecessor to Microsoft Entra. Another example of our support for local governments using Microsoft technology is the case of Shimada City in Shizuoka Prefecture. Microsoft’s technology and support have also assisted us greatly in the adoption of Verified ID.”

Verifying the convenience of digital wallets with the participation of Hida City and Gero City in Gifu Prefecture in a joint verification

Starting in November 2023, xID launched the joint verification of the ID wallet function in cooperation with Hida City and Gero City in Gifu Prefecture.

In Hida City, the program involved the verification of two functions: the issuance process of a digital employee ID card and the application of discounts for citizens using bathing facilities. To verify the digital employee ID card, real employees used the xID app to scan the issuance QR code and display the digital ID card. In addition, with the cooperation of residents, some residents used the app to scan a QR code to confirm their citizenship in order to receive a hot spring tax reduction for discounted access to bathing facilities.

Ms. Yoko Matsui, Chief of Information Systems Section, General Affairs Department General Affairs Division of Hida City, says:

“When I learned about the ID wallet system from xID officials, I was amazed by its convenience. Because it uses a cloud service, no personal information is stored on your smartphone, so you can keep using the information even if you change your phone. In the future, it could function as a digital citizen ID by registering various types of information, such as medical certificates, medical institution consultation cards, certificates required for nursing care, and evacuee information. A digitized employee card can also be used for attendance management, skills acquisition, and training history management. It is a truly visionary system.”

In Gero City, the program worked on the verification of citizen discounts at Gero Onsen Gassho-mura, one of the city's main tourist attractions and facilities. A digital citizen ID is used to verify the user as a citizen and apply the discount. Mr. Asuka Nagao, an assistant to the Chief Digital Officer (CDO) of Gero City, reflects on this demonstration experiment:

“Gero Onsen Gassho-mura is free to citizens, but they had to show a driver's license or other form of identification to confirm their residency. While the facility has in the past tracked the number of citizens using the service, it has not obtained behavioral data such as age, gender, or time of use. The verification confirmed that the digital citizen ID can effectively track facility usage and analyze behavioral data, even though applying the citizen discount required some effort such as scanning a QR code. Capturing behavioral data for effective utilization in administrative services is a challenge faced by many local governments. Since local governments often find it difficult to analyze behavioral data on their own, the key lies in how they can co-create with IT venture companies and other partners. We aim to improve and digitize government services and drive digital transformation (DX) by providing excellent UI/UX and accumulating behavioral data.”

Partnering with Microsoft to support digital transformation of local governments

Mr. Kuwahara looks back on joint collaborative initiatives and partnerships with Microsoft:

Mr. Kuwahara says “Microsoft has made a significant investment in the development of technologies such as Verifiable Credentials. They generously support startups and are very proactive in promoting the spread of new technologies. Microsoft's solid support has helped us develop new services tailored to the needs of local governments. We are supported in many ways, with close communication at all levels, from senior management to design engineers.”

Microsoft's technology and support are said to be a great help to local governments.

Mr. Matsui of Hida City says, “We use Microsoft’s products and services in a wide range of municipal operations. Because of the high level of trust in their products, we find that our employees and citizens often understand them easily when we explain their features and mechanisms.”

Also, Mr. Nagao of Gero City has a vision: "I foresee a future where ID wallets will become the norm for local governments. When that happens, data analysis with tools like Power BI will become important. We will leverage the strengths of different IT companies to enhance the value of our administrative services."

Microsoft will work with xID to support local government DX initiatives.