Technologies: encryption, online banking, web hosting, password security, cloud computing
Identity theft never used to be a problem. It is the technologies and standard practices that we've employed that has led to this innovation.
We make it far to easy to steal an identity
Before online/remote banking the teller knew you by name and could verify your identity by memory. No such personal interaction is required today. We just have to input the correct information to get access to personal accounts. The main problems are we know exactly what information we need in order to gain access to the account (social security number, mother's maiden name, pin, etc) and we know exactly where to go to enter that information (bankofamerica.com, citi.com, chase.com, etc.). It's like parking a Ferrari in the ghetto and planning that no one will pick the lock.
My solution is to park your Ferrari in an undisclosed location, designing a custom key, and retaining all of the information on your person.
Back in the day people would bury their treasure. In order to steal this money, one would need to 1) know that such a treasure existed 2) know where it was buried (treasure map) and 3) traverse the desert/mountains/traps that stood in between the person and the treasure.
The closest approach employed today is a lock box. You must go to a bank, verify your identity, and enter a secure room to get at your belongings. It's like knowing that a treasure exists, having the map, and simply having to overcome the obstacles to get the reward. The problems with this is that you wouldn't keep currency in a locked box because it would lose value - you want your money working for you, not collecting dust. What we want is a digital lock box in a secret, and changing, location.
Solution: Imagine an infinitely large bank. You hold your money in a lock box in the bank. The beauty is that you get to determine where the lock box is located within this infinitely large bank. Additionally, you determine what type of 'key' is needed to open the box once it is located. Now if someone wants to steal your belongings they must know 1) that the box exists 2) where it is located within this infinitely large bank and 3) what type of key is used, and what that key is, to access the box. Much, much, much, much, much better than the current process.
So how do we do it? Use existing encryption techniques to pass secured web addresses between the user and the web server. After each time the box is accessed a new location is created and once again passed to the user. This special 'key' will exist on the user's phone/computer. In order to steal the money one would have to steal the phone/computer, know that the account existed (secret icon or hand gestures can exist to access it), know the special 'easter egg' password of slides, clicks, etc. and then know the username and password/passwords i.e., you would have to kidnap the victim in order to get at their account. This eliminates all remote thefts, and returns it to a person-on-person crime. BitCoins or other virtual currency can be used to further secure the funds.
Now I can enjoy all of the benefits of online banking with all of the security of old-fashioned banking. Make theft labor intensive and it will go away.
