Digital Identity Solution Market Size

Digital Identity Solution Market size was valued at USD 27.9 billion in 2023 and is anticipated to register at a CAGR of over 16% between 2023 and 2032. Rising workforces in the corporate sector and the proliferation of connected networking devices drive the demand for digital identity solutions, enhancing security for organizations. With the dispersed nature of offices, businesses are increasingly prioritizing real-time data access for their employees.

Moreover, larger enterprises are expected to adopt digital identity solutions more extensively, driven by factors such as heightened access risk detection. Furthermore, the increasing integration of biometrics in smartphones is a pivotal driver for the digital identity solutions market. Simultaneously, businesses are placing a strong emphasis on enhancing customer experiences, thus driving market growth.

A digital identity refers to an entity's data utilized by computer systems to portray an external agent. These solutions facilitate computer access and customer service provision. It encompasses a range of individual data, from birth dates to social media activities. Key benefits of digital identity solutions include heightened accuracy, improved compliance, cost-effectiveness, enhanced customer experiences, and bolstered security.

The growing use of digital identities has raised concerns about privacy and data security. As more personal information is stored and shared online, strong security measures are needed to prevent data breaches and identity theft. In addition, privacy regulations and the risk of personal data misuse can slow down the adoption of digital identity solutions. Further, the lack of standardized protocols and frameworks creates interoperability issues. Different industries, organizations, and regions have varying requirements and systems, making it hard to establish universally accepted digital identity processes. This lack of standardization restricts the adoption of digital identity solutions and reduces their effectiveness, thus hampering market growth.

Digital Identity Solution Market Trends

Biometric authentication, such as fingerprint, facial recognition, and iris scanning, is becoming more important in digital identity solutions. It offers high security and convenience, making user verification easy and safe across different devices and platforms. As smartphones become more common, the need for identity verification solutions is growing among manufacturers. Mobile devices are well-suited for this purpose, utilizing biometrics, secure elements, and mobile apps to verify users and facilitate secure transactions.

Moreover, self-sovereign identity (SSI) is a new trend in digital identity. This technology allows people to control their data and identity, thus enabling them to share specific information securely without relying on central authorities. This trend focuses on user privacy and control. Further, blockchain is being explored for secure and decentralized digital identity solutions. This technology ensures data cannot be changed and is transparent, reducing identity fraud and increasing trust in digital identity verification.

Digital Identity Solution Market Analysis

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Based on component, the market is divided into solutions and services. The solutions segment accounted for around 63% of the market share in 2023. This segment propels the market, empowering organizations to deploy robust and secure identity management systems. In addition, technological advancements in software, hardware, cloud platforms, integration services, and service offerings bolster the efficacy, scalability, and reliability of these solutions.

With a growing awareness of the significance of secure digital identities, this segment is poised to drive further innovation and growth in the digital identity solutions market. Various companies are focused on the development of innovative technologies such as face ID verification which enhances their product capabilities in the market. For instance, in February 2024, Microsoft unveiled 'Face Check' as a new feature in its Entra Verified ID platform. This feature leverages Azure AI's facial recognition technology to authenticate a user's real-time selfie against their official identification documents, like government-issued IDs or employee credentials.

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Based on organization size, the digital identity solution market is categorized into large enterprises, and small and medium-sized enterprises (SME). The large enterprises segment held around 68% market share in 2023. These organizations operate complex IT environments, comprising interlinked systems, applications, and databases. With the vast amounts of sensitive data among these organizations, robust identity management is considered crucial.

Moreover, sensitive data and resource abundance pose large businesses as a prime target for cyberattacks. A breach can cause financial losses, damage the company's reputation, and lead to legal consequences. To mitigate risks, these enterprises heavily invest in cutting-edge security measures, prominently digital identity management. Furthermore, their focus on embracing new technologies, such as digital ID systems, propels the market's expansion.

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North America led the global digital identity solution market with a share of over 36% in 2023. The presence of a well-established digital economy, fueled by a surge in online transactions, e-commerce, and digital engagements, contributes to the market growth. With both individuals and businesses increasingly shifting towards digital services, the necessity of foolproof digital identity solutions is becoming crucial. These solutions not only verify and authenticate user identities but also protect against fraud, ensuring secure access to online platforms.

Further, the regulatory landscape in North America is notably strict, especially in areas of data privacy, security, and identity verification. Key regulations, such as the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and those within the financial sector, propel the demand for compliant digital identity solutions. Consequently, organizations are compelled to adopt secure and compliant identity verification processes to align with regulations and safeguard user data, thus driving market growth.

Digital Identity Solution Market Share

Microsoft Corporation, IBM Corporation, and NEC Corporation held significant market share of over 17% in 2023. Microsoft Corporation is bolstering its digital identity solutions by integrating them with Azure Active Directory and Office 365, streamlining identity management for enterprises. Additionally, the company is focused on blockchain-based solutions, aiming to pioneer decentralized identity management.

IBM Corporation is harnessing the power of Watson AI to elevate its identity verification, anomaly detection, and threat prediction capabilities. Moreover, IBM tailors digital identity solutions for key sectors such as banking, healthcare, and government, ensuring strict adherence to industry regulations such as GDPR and HIPAA.

NEC Corporation remains at the forefront of biometric innovations, focusing on technologies like facial recognition, fingerprint scanning, and iris recognition. Complementing this, NEC is focused on identity solutions that safeguard IoT devices and efficiently manage identities within IoT ecosystems.

Digital Identity Solution Market Companies

Major companies operating in the digital identity solution industry include:

• Microsoft Corporation
• IBM Corporation
• NEC Corporation
• Thales Group
• TELUS
• IDEMIA    
• Okta, Inc.
• Ping Identity Corporation
• Jumio Corporation
• Onfido Ltd.
  

Digital Identity Solution Industry News

• In June 2024, Japan's three largest banks, MUFG, SMBC, and Mizuho, collaborated with two regional banks, Fukuoka Financial and Shizuoka, on a digital identity initiative based on distributed ledger technology (DLT). The aim is to enable individuals to store personal data such as name, address, date of birth, and driver's license on their mobile phones as a credential they can share.
  
• In January 2024, Incognia, a digital identity solutions startup, raised $31 million in a Series B funding round led by Bessemer Venture Partners. The funding has been planned to be used in further development of Incognia's innovative digital identity signals and expand the company's presence globally, particularly in North America, Europe, and EMEA.
  

The digital identity solution market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

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Market, By Component

• Solutions 
  • Identity verification
  • Authentication
  • Digital ID wallets
  • Access management
  • Others
• Services 
  • Professional
  • Managed

Market, By Authentication Type

• Single-factor authentication
• Multi-factor authentication (MFA) 
  • Two-factor authentication (2FA)
  • Three-factor authentication (3FA)

Market, By Deployment Mode

• On-premises
• Cloud-based

Market, By Type

• Biometric
• Non-Biometric

Market, By Organization Size

• Large enterprises
• Small and Medium-sized Enterprises (SME)

Market, By End-user

• BFSI
• IT & telecom
• Healthcare
• Education
• Manufacturing
• Retail & E-commerce
• Government & Public Sector
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Netherlands
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia 
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • South Africa
  • UAE
  • Saudi Arabia