Digital Identity Market Trends

Growth Drivers

• Regulatory compliance driving adoption - The stringent regulatory landscape, marked by laws like the General Data Protection Regulation (GDPR) and other data protection standards, is a significant driver for the digital identity market. Organizations are compelled to adhere to these regulations, promoting the implementation of robust digital identity solutions to ensure compliance.
  
  Compliance not only mitigates legal risks but also builds trust among consumers regarding the secure handling of their personal information. According to a survey, 92% of consumers in the United States believe it's extremely important for companies to protect their privacy, indicating a growing demand for stringent data protection measures.
• Surging integration of AI - The importance of AI is growing significantly since it enables to simulation of human intelligence, further making learning, reasoning, and making decisions autonomous. Hence, AI may notably improve preciseness, efficiency, and accuracy when integrated into digital identity verification. AI-powered facial recognition technology is one of the instances of identity verification.
  
  With this technology, AI algorithms might effectively verify the identity of the person by studying facial attributes and contrasting them to pre-existing data. Another instance could be AI-powered natural language processing which improves understanding of the system of human language and also extracts meaning from it. Some of the applications that use this technology include chatbots and virtual assistants which offer real-time guidance for identity verification processes. Therefore, the digital identity market is predicted to gather growth.
• Surge in number of people working from home - The number of people working remotely across the globe rose from over 19 percent in 2020 to approximately 27 percent by 2023. This trend is estimated to grow more in the future owing to its ability to offer flexibility and also boost worker productivity. However, with the challenges of identity verification, data security, and compliance also increases.
  Conventional methods of onboarding and managing remote employees lack in tackling these issues, causing huge inefficiencies. Consequently, the digital identity market is set to experience growth.

Challenges

• Privacy concerns and data protection: The collection, storage, and sharing of personal information raise significant privacy concerns hindering the expansion of market. Users are increasingly cautious about how their data is handled, demanding transparent and secure processes. Lack of trust in the handling of personal data can hinder the adoption of digital identity solutions, affecting user participation and engagement. Implementing robust data protection measures, adhering to regulatory frameworks, and transparent communication regarding data practices are essential to address privacy concerns.
• Interoperability and standardization
• High cost of digital identity - When deploying digital identity additional hardware and infrastructure is required. However, this could add up on extra costs making the end product expensive. As a result, the digital identity market’s development is set to be hindered.