The Rise of IDtech: Next-Gen Digital Identity Verificationby Fintechnews Switzerland November 9, 2022
A revolution is taking place in the field of digital identity, driven by advances in technology, rapid adoption of digital tools and online channels, and soaring identity fraud activity.
So-called IDtech providers are arising on the back of COVID-19 and leveraging technologies and principles including biometrics and decentralization to bring digital identity to the next level, says Riley Hughes, co-founder and CEO and Trinsic, an infrastructure for building decentralized identity products using digital wallets and verifiable credentials.
In a guest post on Forbes, Hughes introduces the emerging IDtech industry, arguing that the convergence of factors including technological developments and accelerated digital adoption brought about the pandemic has led to a surge of new-age digital identity and verification companies.
Firms like Clear Secure, Merit and Airside are empowering users to take control of their identity, share their data safely and more securely access the things they need, Hughes says, helping streamline millions of consumers’ lives, whilst maintaining the elevated levels of security that people and organizations expect.
Clear Secure is an American technology company that operates biometric a travel document verification system at major US airports and stadiums. The system uses both fingerprint and iris identification technology to confirm a traveler’s identity.
Incode Technology is another American identity solution provider that makes use of biometrics. The company applies artificial intelligence (AI), machine learning (ML), computer vision and facial recognition to create a secure and privacy-enabled identity verification process that eliminated the need for documentation. Using biometrics as the primary means of verification implies that authentication is streamlined.
And because it also uses advanced risk measurement techniques such as identification (ID) document liveness detection, biometric facial profiling and data mismatches, Incode Technology is able to reduce fraud attempts by up to 99%.
Merit, formerly known as Sigma, is a verified identity ecosystem for trusted organizations and individuals. It offers a universal clearinghouse for verified identity and provides licensing and certification verifications for everyone. Agencies and industries benefit by having a common standard to check credentials and compare qualifications. Individuals, meanwhile, benefit by having all their licenses and credentials in one place. They also get notified when it’s time to renew.
And, Airside builds digital identity technology that focuses on protecting users’ personal information and meeting privacy regulations around the world. Users remain in control of their personal information at all times with transparent consent protocols, and businesses can protect against fraud, reduce the burden of complying with privacy regulations and ensure that sensitive information are managed appropriately.
Airside’s first product, the Airside Mobile Passport App, has enabled 10 million US and Canadian passport holders to streamline their international journey through most major US airports and cruise ports.
Data breaches and identity fraud running rampant
These new digital identity solutions have risen in popularity over the past few years, fueled by the COVID-19 pandemic and the ensuing shift to online channels, Hughes says. And with IDtech products getting easier to build, and as the world continues to digitize, new startups and solutions will continue to emerge, he says, introducing new techniques and ways to prove one’s identity swiftly and accurately.
These developments come on the back of an evolving cybercrime landscape with data breaches and privacy incidents running rampant.
In the US, the 2017 Equifax data breach saw the private records of 147.9 million Americans, along with 15.2 million British citizens and about 19,000 Canadian citizens, being compromised. Information accessed in the breach included first and last names, US Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers.
Most recently, a cyberattack targeting Australia’s second largest telco company, Optus, exposed the personal details of almost ten million customers, including their names, dates of birth, phone numbers, email addresses, addresses, as well as ID document numbers such as driver’s license and passport numbers.
In 2018, a group of technology, finance and healthcare companies came together to form the Better Identity Coalition, an American organization focusing on developing a set of consensus, cross-sector policy recommendations that promote the adoption of digital identification systems.
These organizations, which include JPMorgan Chase, Mastercard, Experian, Microsoft, and LexisNexis, believe that, if widely adopted, the technology could cut down on massive regulatory costs involved in identity verification and legal costs following breaches.
In 2021, traditional identity fraud losses, caused by criminals illegally using victims’ information to steal money, exploded in the US to US$24 billion. The amount represents an alarming 79% increase over 2020, according to the 2022 Identity Fraud Study by Javelin Strategy & Research. Further, the number of adults in the US impacted by this type of fraud grew more than 50%, reaching over than 15 million victims.
Losses from identity fraud scams, in which a fraud operator influences a victim to divulge or expose their personal information, added another US$28 billion in impact and victimized an additional 27 million US adults.
Taken together, identity fraud total US$52 billion and affected 42 million US adults.
Digital identity is a booming sector that’s projected to see total revenue double within the next five years. A 2022 study from Juniper Research expects revenue for digital identity vendors to exceed US$53 billion globally in 2026, soaring from just US$26 billion in 2021.
Increased demand for digital onboarding frameworks and improved fraud mitigation will drive much that growth, the firm says.
Featured image credit: Freepik