Identity Verification Market Size, Share, Forecast, & Trends Analysis by Offering (Solutions, Services), Deployment Mode, Organization Size, Application (KYC, KYB), Sector (BFSI, Retail & E-commerce, Healthcare, Government, Education), and Geography - Global Forecast to 2031

Identity Verification Market Size & Forecast

The Identity Verification Market is expected to reach $30.6 billion by 2031, at a CAGR of 14.7% from 2024 to 2031. The growth of the identity verification market is driven by the rising incidence of identity fraud and cybercrime and the increasing adoption of identity verification solutions in the BFSI sector. However, concerns regarding privacy & data breaches restrain the market's growth.

The integration of advanced technologies such as AI and ML in verification methods, coupled with the growing need to secure business processes and ensure regulatory compliance, is expected to create growth opportunities for market players.

Identity Verification Market Growth Drivers

• Rising Incidence of Identity Fraud and Cybercrime

Online fraud and identity theft are becoming increasingly prevalent due to advances in technology. As technical capabilities continue to expand, cybercriminals are becoming more proficient in executing sophisticated attacks on both individuals and organizations. The rising incidence of identity fraud and cybercrime has prompted several businesses to adopt identity verification solutions to mitigate these attacks. Additionally, organizations are increasingly employing two-factor authentication, database methods, and ID document verification approaches to enhance cybersecurity.

The increasing adoption of advanced technologies in businesses to deliver valuable services to customers necessitates identity verification solutions to minimize fraudulent activities. The rise in identity fraud and cybercrime has prompted market players to launch advanced identification verification solutions. For instance, in March 2024, authID Inc. (U.S.) partnered with Verified Inc. (U.S.) to launch 1-Click identity verification. Leveraging authID's patented biometric identity platform and Verified Inc.'s identity wallet, the companies jointly offer instant, secure, and automated customer onboarding with the highest identity assurance. Such initiatives by market players drive the growth of the identification verification market.

• Rising Adoption of Identity Verification in the BFSI Sector

The adoption of identity verification solutions in the BFSI sector is on the rise, providing a secure and efficient alternative to traditional onboarding methods. As online transactions become more prevalent, banks encounter the challenge of verifying customers' identities remotely while adhering to regulatory requirements. Thus, the adoption of identity verification solutions aids banks and financial institutions in securing digital transactions while enhancing customer experiences.

 In the BFSI sector, identity verification is used for various applications, including:

• KYC compliance
• Anti-Money Laundering (AML)
• Customer Due Diligence (CDD)
• Risk Assessment.
• Fraud Prevention
• Streamline Onboarding Processes

The increasing adoption of digital solutions in the BFSI sector has raised concerns regarding security and data breaches. In response, numerous companies are forming partnerships to launch advanced identity verification solutions. For instance, in March 2024, Sandbox Banking, LLC (U.S.) partnered with Plaid Inc. (U.S.) to tackle key challenges in the financial sector. Leveraging Plaid's product, Sandbox Banking equips financial institutions with a comprehensive suite of tools to enhance customer or member engagement, mitigate risks, and reinforce account security. Such initiatives by market players are expected to drive the adoption of identity verification solutions in the BFSI sector during the forecast period.

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Identity Verification Market Trends

• Rising Adoption of eKYC

eKYC (Electronic Know Your Customer) is an automated process that enables companies to digitally verify customer identities, serving as an alternative to traditional methods that rely on physical documents. The adoption of eKYC provides businesses with a more agile, scalable, and dependable approach to conducting KYC. Various methods and technologies can be employed for eKYC implementation, including biometrics, document recognition, two-factor authentication, one-time passwords (OTP), and trusted data sources.

In response to the increasing adoption of eKYC by banks and financial institutions, numerous companies are launching advanced eKYC solutions. For instance, in August 2023, Liquid Inc. (U.S.) partnered with Binance Holdings Ltd. (Malta), the world's leading cryptocurrency exchange by trading volume and users. LIQUID eKYC offers top-tier facial authentication through its unique AI-based image processing capability, facilitating seamless identity verification in compliance with the respective legal and security frameworks in each country.

Identity Verification Market Opportunity

• Integration of Advanced Technologies such as AI And ML in Identity Verification Methods

The rapid evolution of Artificial Intelligence (AI) and Machine Learning (ML) has revolutionized how organizations manage and protect digital identities. The increasing integration of AI and ML in identity verification is attributed to their ability to accurately and swiftly detect patterns and anomalies, facilitating real-time threat identification and response for businesses. Moreover, machine learning models aid in defending against emerging threats. Furthermore, AI-powered solutions help identify anomalous patterns and flag potential risks by rapidly analyzing vast datasets.

With the integration of AI and ML technologies, identity verification processes have become faster, more accurate, and less prone to inherent biases. This advancement benefits businesses of all sizes, from small-to-medium enterprises (SMEs) to multinational corporations, in verifying the identities of customers and ensuring compliance requirements. Additionally, an increasing number of businesses are leveraging identity verification to automate onboarding processes, combat fraud, and uphold regulatory compliance. In response, numerous solution providers are launching AI-powered identity verification solutions to enhance efficiency and customer service. For instance, in November 2023, Woolly Labs, Inc. DBA Vouched (U.S.) launched its latest solution, VouchedAuto, designed to streamline the customer verification process for both traditional and online automotive retailers and rideshare businesses. This new AI-powered solution automates the identity verification (IDV) process, aiming to enhance efficiency, customer service, and cost savings, while also mitigating fraud and ensuring regulatory compliance.

Identity Verification Market Analysis: Key Findings

By Offering: In 2024, the Solutions Segment to Dominate the Identity Verification Market

Based on offering, the global identity verification market is segmented into solutions and services. In 2024, the solutions segment is expected to account for the larger share of 82.0% of the global identity verification market. The segment's large market share is attributed to the growing adoption of identity verification solutions across organizations to minimize fraudulent activities, enhance customer experience by streamlining and securing the onboarding process, and reduce the need for manual verification and the integration of advanced technologies such as AI and ML in biometric verification methods. Additionally, the integration of identity verification with reputable external data sources, including government databases, financial institutions, and credit bureaus, further enhances its effectiveness and reliability.

Moreover, the solutions segment is projected to register a higher CAGR during the forecast period of 2024 to 2031.

By Deployment Mode: In 2024, the Cloud-based Deployments Segment to Dominate the Identity Verification Market

Based on deployment mode, the global identity verification market is segmented into on-premise deployments and cloud-based deployments. In 2024, the cloud-based deployments segment is expected to account for the larger share of the global identity verification market. The segment's large market share is attributed to the increasing adoption of cloud-based identity verification across businesses for high-volume identity checks, the growing preference for subscription or usage-based pricing models to mitigate upfront infrastructure costs, the rising utilization of cloud-based identity verification to authenticate identities across multiple locations, the increasing reliance on APIs for seamless integration with other business systems and platforms, and the rising deployment of cloud-based identity verification solutions across businesses to ensure compliance and mitigate potential risks.

Moreover, the cloud-based deployments segment is projected to register a higher CAGR of 19.0% during the forecast period.

By Organization Size: In 2024, the Large Enterprises Segment to Dominate the Identity Verification Market

Based on organization size, the global identity verification market is segmented into large enterprises and small & medium-sized enterprises. In 2024, the large enterprises segment is expected to account for the larger share of 67.0% of the global identity verification market. This segment's large market share can be attributed to factors such as the rising adoption of identity verification solutions among large enterprises to mitigate risks associated with unauthorized access, insider threats, and data breaches, the increasing integration of identity verification with access control systems to facilitate seamless and secure access to diverse resources, and the growing utilization of identity verification to enable the tracking of employee attendance, monitoring of remote work, and management of timekeeping systems within large enterprises.

However, the small & medium-sized enterprises segment is expected to register a higher CAGR during the forecast period of 2024 to 2031. The growth of this segment is driven by the increasing adoption of identity verification solutions among SMEs to enhance security by verifying the identities of customers, employees, and partners, the increasing deployment of cloud-based identity verification solutions to establish robust security measures without substantial capital investments, and the rising utilization of identity verification to mitigate the risk of data breaches and avoid costly repercussions.

By Application: In 2024, the Know Your Customer (KYC) Segment to Dominate the Identity Verification Market

Based on application, the global identity verification market is segmented into Know Your Customer (KYC), Know Your Business (KYB), access control & user monitoring, fraud management & regulatory compliance, and other applications. In 2024, the Know Your Customer (KYC) segment is expected to account for the largest share of the global identity verification market. This segment's large market share can be attributed to the growing need to ensure compliance with KYC guidelines to protect financial institutions against fraud, corruption, money laundering, and terrorist financing and the increasing use of identity verification to streamline customer onboarding and enhance customer experience while reducing manual processes, human errors, and administrative costs.

However, the fraud management & regulatory compliance segment is projected to register the highest CAGR during the forecast period. The growth of this segment is driven by the increasing adoption of identity verification solutions in the BFSI sector to ensure trust, security, and regulatory compliance, the rising utilization of identity fraud management solutions to ensure compliance with KYC and AML guidelines, and the increasing government regulations directed towards organizations for consumer privacy and data protection.

By Sector: In 2024, the BFSI Segment to Dominate the Identity Verification Market

Based on sector, the global identity verification market is segmented into BFSI, retail & E-commerce, healthcare, government, education, IT & telecom, aerospace & defense, energy & utilities, and other sectors. In 2024, the BFSI segment is expected to account for the largest share of 29.0% of the global identity verification market. This segment's large market share is attributed to the growing adoption of identity verification solutions in the BFSI sector to enable real-time customer identification and simplify KYC processes and the increasing need to enhance customer satisfaction rates by reducing wait times at branches and improving efficiency by automating AML processes, customer verification, and fraud detection.

However, the retail & E-commerce segment is expected to register the highest CAGR during the forecast period. The growth of this segment is driven by the rising adoption of identity verification solutions in the retail & E-commerce sector to reduce shipping errors, ensure safer hiring practices, improve digital identity management, and prevent theft.

Geographical Analysis

In 2024, Asia-Pacific is expected to account for the largest share of 36.0% of the global identity verification market. Asia-Pacific's significant market share can be attributed to the increasing digitalization in businesses driving the adoption of identity verification solutions for KYC processes, stringent regulatory frameworks in the BFSI sector to prevent fraudulent activity, and the rising adoption of identity verification in the public sector to authenticate documents such as driver's licenses, passports, or nationally issued identity documents.

Moreover, the market in Asia-Pacific is projected to register the highest CAGR of 16.0% during the forecast period.

Identity Verification Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players' product portfolios and geographic presence and the key growth strategies adopted by them over the past 3–4 years. Some of the key players operating in the identity verification market are GB Group plc (U.K.), Equifax Inc. (U.S.), LexisNexis Risk Solutions Inc. (A Subsidiary of RELX Group plc) (U.S.), Experian plc (Ireland), Trans Union LLC (A Subsidiary of TransUnion) (U.S.), Intellicheck, Inc. (U.S.), IDEMIA France SAS (France), Mitek Systems, Inc. (U.S.), HyperVerge Technologies Private Limited (India), AuthenticID Inc. (U.S.), Nuance Communications, Inc. (A Subsidiary of Microsoft Corporation) (U.S.), iDenfy (Lithuania), Securekey Group (Mauritius), Onfido (U.K.), and PXL Vision AG (Switzerland).

Identity Verification Industry Overview: Latest Developments from Key Industry Players

• In October 2023, Clear Secure, Inc. (U.S.) launched a reusable Know Your Customer (KYC) solution, CLEAR's one-click KYC solution. This solution delivers a frictionless consumer experience, aiding financial services companies in combating the traditional drop-off in signups associated with cumbersome KYC checks.
• In July 2023, Onfido (U.K.) partnered with Magic Access Management Ltd (U.K.), an innovative Know Your Customer (KYC) marketplace company, to offer document and biometric verification services. This partnership aims to streamline KYC processes and mitigate fraud.
• In January 2023, Trulioo Information Services Inc. (Canada) launched an industry-leading global identity platform for person and business verification. The Trulioo platform helps businesses worldwide establish trusted user experiences, ensure regulatory compliance, and optimize growth.

Identity Verification Market Research Summary:

Key questions answered in the identity verification market report: