Identity Verification Market

Global Identity Verification Market Forecast

The Identity Verification Market is expected to grow from USD 14.9 billion in 2026 to USD 32.5 billion by 2033, reflecting strong industry expansion and registering a CAGR of 11.8% during the forecast period from 2026 to 2033.

Major Report Findings - Fairfield's Perspective

1. The market's growth can be attributed to the rise in identity theft and cyberattacks as well as the increased awareness among businesses and governmental organisations about the need to use identity theft protection services to prevent such fraudulent activities.
2. There is a rising demand among people to protect their personal data, which includes a lot of financial information, as a result of the increase in internet use around the world and the increase in users of online banking services. This is fuelling market expansion.
3. In terms of revenue, biometrics category dominated the market in 2022. It is the most often used technique for confirming someone's identity, and it relies on one or more biological traits to establish the subject's veracity.
4. The BFSI vertical category is expected to have the greatest market size. The increased digitisation of banking procedures, such as digital onboarding and digital payments, which aims to enhance customer experience, is also increasing the need for identity verification all around the world.
5. In 2022, the cloud segment took the lead in the growth of the market for identity verification. Solutions for identity verification in the cloud assist businesses reduce costs while also enhancing corporate awareness.
6. With the biggest revenue share in 2022, the solution category was the market leader. Depending on its componentry, the market is divided into solutions and services. The solution's three sub-categories are digital identity verification, identity authentication, and ID verification.
7. In 2022, the market was driven by the large enterprises category. Large organisations have opted for identity verification systems because of cost-cutting on manual processes, rising fraud, identity theft, money laundering, processing of high-risk transactions, and compliance with numerous laws.
8. North America region is anticipated to account for the highest share of the global identity verification market. The expansion of government projects like smart infrastructure, smart cities, and digital identification-based driver's licenses is anticipated to fuel the demand for identity verification.
9. The Asia-Pacific will have the significant rate of growth in the identity verification market during the forecast period because it has adapted new technology, becoming technologically ready. Government attempts to prevent identity-related fraud and the strengthening of eKYC to authenticate identities are some of the causes driving the growth.

A Look Back and a Look Forward - Comparative Analysis

The growth is mostly attributable to the increase in digitisation, the expansion of the usage of digital identities across businesses, and the rise in identity theft and cyberattacks. Market participants should benefit from more regulation and mandatory compliance with standards across all businesses, particularly in the financial one. Additionally, one of the key causes influencing the adoption of identity verification is the rise in identity theft and cyberattacks.

Throughout the historical period of 2018-2022, the market had staggered growth. The market was already rising during this time due to growing worries about fraud, identity theft, and data breaches. Businesses from a variety of industries, including as finance, e-commerce, healthcare, and government, have realised the value of strong identity verification solutions to improve security and adhere to strict requirements. Additionally, the popularity of mobile and online transactions increased the need for frictionless and seamless identity verification experiences, which led businesses to invest in user-friendly solutions.

Governments and companies have also taken a number of steps to focus on digitalisation and adoption of new technologies, like ML, AI, and automation in identity verification systems, and this will provide lucrative opportunities for identity verification suppliers. Another element driving up use of VR is the rising accessibility of 360-degree cameras, which are increasingly becoming separate smartphones gadgets.

Key Growth Determinants

• Increasing Internet Access, and Digital Literacy

The expanding trend of smart services that various business organisations are offering for their customers is anticipated to lead to an increase in demand for new trends in the virtual identity verification market in the coming years. Globally, there is a growing need for corporate identity verification due to the rise in online transactions, including online onboarding and financial transactions.

The burgeoning need for digital services has engendered and proliferated third-party identity verification enterprises worldwide. These companies can use a variety of online sites to confirm the identities of their clients. Furthermore, the growing number of people in developing nations who use the internet to buy a range of online services is one factor driving the growth of the market for online identity verification.

• Rising Digitalisation

Entrepreneurs were forced to take extraordinary measures to preserve intellectual property on account of the widespread intellectual property fraud that came with the digitalisation of the world. Identity verification is now more crucial than ever where verified ownership is required, such as for border control and access to digital services, thanks to the widespread use of digital by all national governments and commercial businesses worldwide.

The most crucial aspect of these sites' online security comes from global initiatives like electronic cards (eID), smart border controls employing face recognition authentication, smart cities, and smart airports where video analytics and health detection are accessible to validate IDs.

• Rising Adoption of Biometric Devices

Self-service identity verification has become possible because to powerful mobile devices that can give true multi-factor authentication in a variety of ways. These smartphones also feature increasingly advanced cameras, microphones, and GPS capabilities. This kind of technique has excellent potential for digital identity verification when combined with other data-based verification.

Due to its distinctive qualities, biometrics, as a form element for digital identity, allows for greater attribution to an individual and is therefore less susceptible to impersonation, provided that the acquisition method is properly regulated. To take advantage of this expanding market, numerous businesses are developing mobile applications and SDKs. Passports and licenses can be recognised and verified as authentic by performing document verification tests like blinking and nodding.

Major Growth Barriers

• Prohibitive Costs

The technology's high deployment and upkeep costs will slow the rate of growth. Additionally, the potential for expansion will be limited by increased overhead expenditures.

Most businesses offer pricing based on the amount of IS verification checks included, as well as per verification, per month, and annually. For select annual packages, some providers also offer variable pricing per verification. The difficulty is in the various prices the sellers of I.D. verification charge. The absence of standards and restrictions by the government will again impede market expansion.

• Lack of Technological Expertise

The market will face obstacles to a smooth increase in market value due to a lack of expert knowledge and technical skills, particularly in developed and developing economies, as well as a shortage of experienced professionals and management level employees.

Additionally, the market development rate would be hampered once more by a scarcity of experienced specialists and a low experience quotient.

Key Trends and Opportunities to Look at

1. Rising Safety Issues, and Cyberattack Intensity

The increasing complexity of IT-based tools, solutions, and security information platforms will probably have a big influence on how the corporate security system is administered. Furthermore, the alarming growth in cyber security incidents has raised the requirement that all businesses have complete security solutions.

2. Increasing Use of Cutting-edge Technologies

Increased use of cutting-edge technologies including big data, cloud computing, AI, and ML will have a beneficial impact on market expansion.  The adoption of bring your own devices (BYOD) in organisations, know your customer (KYC), and anti-money laundering (AML), as well as identity verification in the healthcare industry are all being actively addressed by verification services like blockchain-based identity verification.

3. Rising Adoption of Electronic IDs

One of the most important technological trends at the moment is electronic ID, which is taking centre stage. The increasing usage of digital identity is transforming communication between people and institutions, and in the upcoming years, it is expected to spread through the commercial sector.

A new idea in identity management and online verification procedures is electronic authentication. Data breaches and identity theft are becoming more frequent as the importance of electronic IDs increases globally.

How Does the Regulatory Scenario Shape this Industry?

Identity verification market development is heavily influenced by the regulatory environment. Businesses must put in place comprehensive identity verification procedures to comply with regulations like the GDPR in Europe, KYC requirements, and AML rules. To ensure compliance, this increases the need for identity verification systems.

Additionally, tighter data protection legislation has resulted from growing worries about data breaches and identity theft. Identity verification tools must abide by these rules to protect user data, which will result in the creation of more secure technologies.

Furthermore, regulatory authorities frequently establish guidelines for identity verification, fostering industry-wide uniformity and interoperability. As a result, standardised verification techniques and technologies are more likely to be adopted.

Fairfield’s Ranking Board

Top Segments

1. Biometrics Category Dominant over Non-biometrics

The biometrics segment dominated the market in 2022 due to an increase in the usage of fingerprint identification, better authentication security to battle emerging threats, stronger data security and customer satisfaction, a rise in the use of contactless biometric solutions, and a growing reliance on digital technologies.

Furthermore, it is common practise to employ fingerprints, iris and retinal patterns, as well as other biometric verification methods. Lock-and-capture techniques are used by biometric solutions to verify identities and help grant access to a small number of services.

The biometrics category is expected to grow significantly over the forecast period. In comparison to biometric alternatives, conventional non-biometric methods are less secure and more widely adopted. The demand for compliance management, frictionless onboarding, and fraud prevention from consumers is expanding, which is driving the industry for biometric solutions to expand significantly.

For detecting fake ID, automating corporate processes, onboarding remote customers, and maintaining KYC/AML compliance, non-biometric technologies are primarily employed.

2. Adoption Across BFSI Category will be the Maximum

In 2022, the BFSI category dominated the market, and it is predicted to grow significantly over the course of the forecast period. The demand for identity verification is rising globally as banking processes, such digital onboarding, and digital payments, become more digital.

The vertical is susceptible to various security weaknesses because of its high level of technology adoption, which hackers might use to steal sensitive data including credit card numbers, bank account information, and personal information.

Furthermore, the retail and ecommerce category is expected to expand significantly. The e-commerce sector is a prime target for fraudsters, who increasingly use stolen or fake identities to target online transactions. Credit card fraud, account takeovers, and phishing attacks—where con artists send messages appearing to be from merchants—are just a few of the dangers that exist.

3. Preference for Cloud Deployment Higher

The cloud category led the market in 2022. Solutions for identity verification in the cloud are appropriate for businesses with tight security expenditures. Small firms can improve customer service by identifying vulnerabilities and reducing threat landscapes at a cheaper cost with a cloud-based approach. Identity verification solutions delivered via the cloud help businesses control costs and boost productivity.

Moreover, the on-premise category is expected to grow at a substantial rate over the forecast period. The business can authenticate its clientele and save their data on their servers with the use of an on-premises solution. After a one-time installation, no outside party has access to the customer data, hence no further vendor or service provider is required. Through the use of this service, businesses may guarantee a secure customer onboarding process while protecting the collected data from fraud.

4. ID Verification Solutions Most in Demand

The solutions sector held a commendable share of the global identity verification market in 2022 as a result of a number of factors, including the shift to digital transformation in many industries, the the growing support from the government for data protection laws, regulations, and requirements, increasing need to combat fraud and data breaches, the requirement to satisfy KYC and AML compliance, and the ease with which both customers and employees could be onboarded.

During the forecasted years, the service category is growing at the fastest rate. Digital identity verification has grown in importance as more public and private sectors use digital tools for border controls and business transactions. In smart cities around the world, facial recognition is used for identification and verification, along with e-IDs, smart airports, liveness detection, and video analytics.

5. Large Enterprises Lead Adoption

The large enterprise market segment dominated in 2022. Due to the surge in fraud, money laundering, high-risk transactions, identity theft, cost savings from eliminating manual procedures, and compliance with multiple laws, large corporations have started using identity verification systems. An increasing number of businesses are using identity verification services to guarantee the consistency of their security tools and platforms.

On the other hand, the small and medium-sized enterprises (SMEs) category is projected to grow at a significant rate in the forecast period. SMEs are anticipated to have the quickest rate of growth. SMEs now have access to a simple, affordable, user-friendly, intuitive, and secure identity verification solution. These companies largely rely on identity verification software because there aren't many IT resources accessible, which helps them save time, money, and resources.

Regional Frontrunners

North America Accounts for the Largest Share of Market Size

The region with the biggest market share for identity verification is expected to be North America during that forecast period because of its sophisticated technology infrastructure, large population of early adopters, and presence of key industry players. The development of government initiatives such as smart cities, smart infrastructure, and digital identity-based driver's licenses, as well as the growing integration of various technologies including ML, AI, and blockchain for securing digital identities, are expected to be the main drivers of the demand for identity verification.

Furthermore, in terms of installation, the US controls the identity verification business. It is a highly developed technical nation in North America that adopts cutting-edge solutions and invests much in novel technologies.

Alarming ID Fraud Instances Push Prospects of Asia Pacific

The market for identity verification is expanding at the fastest rate in Asia Pacific, which presents a significant opportunity for the industry. The government is taking more steps to combat identity-related frauds, expanding demand for cloud-based identity verification, and rising identity-related cyberattacks because of the increased usage of new technologies.

For instance, GBG, and NAGA partnered in December 2020. For its online trading and investment stage, the business anticipated properly and safely verifying consumer IDs. The need for a lengthy manual verification process was reduced thanks to GBG's IDscan, and ID3global arrangements, which allowed NAGA to validate candidates' identities remotely within minutes. Additionally, the government's expanding efforts to combat identity-related frauds are encouraging industry expansion in this area.

Fairfield’s Competitive Landscape Analysis

The global identity verification industry is currently highly fragmented due to multiple regional and international market competitors. Additionally, software businesses' expansion into the realm of online identity check and verification operations has increased the importance of the global market.

The main tactic used by software businesses to generate a profit from the selling of identity verification solutions is to get contracts with large institutions that require ID verification solutions in significant quantities.

Who are the Leaders in Global Identity Verification Space?

• Experian (Ireland)
• GBG (UK)
• Equifax (US)
• Mitek Systems (US)
• Thales Group (France)
• LexisNexis Risk Solutions (US)
• Onfido (UK)
• Trulioo (Canada)
• Acuant (US)
• IDEMIA (France)

An Expert’s Eye

Demand and Future Growth

Growing digitisation initiatives, identity theft, a rise in fraudulent activities over the past ten years, and an increase in the use of digital identities across sectors are the main market drivers for identity verification. Governments and businesses have also undertaken numerous measures to focus on digitalisation and use of new technologies, such ML, AI, and automation in identity verification solutions, and this will present attractive potential for identity verification vendor.

Supply Side of the Market

According to our analysis, many of the technology and cybersecurity businesses that provide identity verification solutions are based in the United States. Numerous cutting-edge start-ups and established businesses in this sector are located, specifically in Silicon Valley.

Additionally, the US economy is both broad and diversified, encompassing a wide range of sectors, including financial services, e-commerce, and healthcare. To meet legal requirements and improve security, many of these industries need reliable identity verification systems.

Furthermore, the US is more cognizant of identity theft problems and cybersecurity concerns. This has prompted the adoption of identity verification tools by both organisations and customers to safeguard sensitive data.

Global Identity Verification Market is Segmented as Below:

By Type

• Biometrics
• Non-biometrics

By Vertical

• BFSI
• Government and Defence
• Healthcare & Life Sciences
• Retail and eCommerce
• IT & ITeS
• Energy and Utilities
• Others (Education, Travel, and Gaming)

By Deployment

• On-premises
• Cloud

By Component

• Solution
• Service

By Organisation Size

• SMEs
• Large Enterprises

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East & Africa