Amidst the dazzling lights and bustling atmosphere of Las Vegas, the stage was set for an extraordinary gathering at the renowned Identiverse conference. With over 2,000 attendees converging to explore the realms of digital identity and cybersecurity, the event buzzed with a renewed sense of purpose and determination. The agenda was dominated by discussions on cutting-edge topics like generative AI, passwordless authentication, and emerging solutions that captured the innovative minds of participants. The overarching theme that echoed throughout the conference was the need for trust and safety in a customer-centric world. As the industry grapples with the rising challenges of cybersecurity, it’s clear that digital identity remains at the forefront of innovation, seeking to strike the delicate balance between consumer, business, and regulatory needs. Liminal took center stage, captivating audiences with compelling presentations, including a keynote panel discussion on Investing in Identity, while also unveiling at their booth, its groundbreaking market intelligence platform, Link™. The palpable energy and enthusiasm witnessed at the event were undeniable, showcasing the shared anticipation and excitement among solution providers, buyers, and investors for the transformative future that lies ahead.
Here are 5 digital identity themes we had the privilege to share at Identiverse:
- Investing in Identity: How can digital identity companies differentiate themselves to attract investors amidst industry consolidation?
- The Future of Trust and Safety: What are the key challenges and opportunities in ensuring trust and safety in the face of AI, deepfakes, and age assurance?
- Emerging Use Cases for Verifiable Credential Management: What are the emerging use cases for verifiable credentials, and how do they enhance identity management?
- Unlocking the Power of Business Verification: What is the market opportunity for business verification, and how is KYB contributing to combating financial crime?
- The Evolving Digital Identity Landscape: How can businesses leverage the Liminal Landscape to unlock advantages within the dynamic digital identity ecosystem?
Key Takeaways from Identiverse:
Investing in Identity: The digital identity landscape has grown significantly in the past seven years, fueled by the pandemic, and resulting in a flood of deal flow. Macro market conditions are changing again, and consolidation is expected. Companies must focus on solving customer pain points and have a defined path to commercialization. Investors and corporate strategy teams are watching verifiable credentials, identity wallets, verifying children online, and how the regulation of biometric identification vs. authentication is playing out. In 2023, we can expect slower but thoughtful acquisitions that combine capabilities to solve customer problems, and investors will be looking for uniqueness as consolidation occurs. As Bob Anderson at Great Hill Partners pointed out, “Investors are looking for differentiated technology that provides a long-term competitive advantage.”
Key takeaways:
- The Liminal Digital Identity Landscape has grown significantly, with 2,000 solution providers in 2023, up from 300 in 2016.
- The pandemic fueled this growth, resulting in a flood of deal flow in 2020 and 2021, amounting to over 124 deals and $100B.
- Market conditions are changing, leading to anticipated consolidation.
- Solution providers should focus on solving customer pain points and have a clear path to commercialization.
- Investors and strategy teams are interested in verifiable credentials, identity wallets, verifying children online, and biometric identification vs. authentication.
- In 2023, we expect slower but thoughtful acquisitions and a focus on uniqueness.
The Future of Trust and Safety: The world of AI, deepfakes, and age assurance presents opportunities and challenges for trust and safety. Ensuring user security is critical for building trust and loyalty. Protecting children online is another crucial area of focus. As Filip Verley, Product Manager at Google, states, “There’s a call to action by regulators, politicians, parents, and the tech community to solve this [age] problem.” The market for age assurance solutions is a $10 billion opportunity expected to grow at a 16% CAGR. However, businesses face significant challenges in ensuring trust and safety, including balancing the need for more information to verify consumers with the need to protect user privacy, managing privacy concerns to align with specific use cases, and addressing the new threats posed by AI and deepfakes. Regulation is necessary to improve trust and safety, and new technologies are emerging that can help address some of the challenges and opportunities presented by AI, deepfakes, and age assurance.
Key takeaways:
- Age assurance solutions have a $10 billion market opportunity growing at a 5-year CAGR of 16% by 2028.
- User security is critical for building trust and loyalty.
- Protecting children online is a pressing concern, and better safeguards are necessary.
- Balancing the need for user information and privacy is a challenge, as over-collection can erode trust and increase exposure to fraud.
- Age regulation compliance is more likely after the first fines are issued, similar to GDPR.
- Developing inclusive solutions and addressing bias in age assurance is essential for accuracy and sustainability.
Emerging Business Cases for Verifiable Credential Management (VCM): Decentralized identity and verifiable credentials play pivotal roles in identity management. Despite their complexities, embracing these technologies allows companies to enhance trust and security while streamlining identity verification. As Gilad Rosner, Principal Advisor at Liminal, framed it, “If decentralized identity is the gold rush, Verifiable Credential Management companies supply the picks and shovels.” To leverage verifiable credentials and mitigate liability, organizations must prioritize data privacy, security, compliance, and user trust. Success in this era demands staying informed, adaptable, and user-centric. Business leaders must explore the use cases, trends, consortia, communities of interest, and economics to understand the factors for navigating the dynamic landscape effectively. By embracing a decentralized identity, companies can enhance trust and security and streamline identity verification.
Key takeaways:
- Verifiable credentials enhance data privacy and security and combat identity fraud.
- Crypto technology and decentralized storage reduce unauthorized access.
- VCs must become commodified for decentralized identity to take off.
- VCs moving into regulated sectors require standardization to comply with standards.
- VCM providers that can bridge a Web2/Web3 hybrid future are in a good position.
- Small players dominate the current market, but the few large companies out there may be better at solving collective action problems.
Unlocking the Power of Business Verification (KYB): Business and entity verification, known as Know Your Business or KYB, processes are crucial for financial institutions and money services businesses to understand their enterprise customers, assess risks, and combat financial crimes. KYB extends identity verification, document authentication, and identity proofing to ensure thorough due diligence. Will Charnley, Managing Director at Liminal, shared valuable insights into enhancing business verification and leading practices to improve KYB compliance and drive overall business growth. By implementing these strategies, organizations can strengthen their verification processes, mitigate risks, and foster sustainable business expansion.
Key takeaways:
- Current tech stacks are complicated and feature clunky waterfall solutions that limit efficiency and effectiveness.
- Businesses face challenges with mixed success and limited global solutions, hindering scaling into new regions.
- Data robustness issues create gaps, requiring manual processes to fill in the missing information.
- Emerging vendors address specific use cases, such as addiction/treatment centers in the healthcare industry, to ensure product/service delivery integrity.
- Regulatory pressure drives the need for KYB compliance, with 205 jurisdictions committed to FAFT standards.
- $1.2B has been invested into KYB, offering opportunities for well-capitalized vendors to capture the estimated $8.2B total addressable market (TAM) in 2023.
The Evolving Digital Identity Landscape: As a dynamic and evolving ecosystem, the digital identity landscape has transformed over the last year to reflect technological and business model innovations. Each segment within the Liminal 2023 Digital Identity Landscape offers its own products, solutions, and services to create a competitive advantage. Furthermore, each segment can be broken down into distinct product features that serve specific use cases and have their own customer purchasing criteria. Companies can discover how to use digital identity products to create new customer experiences, improve security, and reduce fraud risk by exploring the ecosystem’s go-to-market trends, recent product developments, and buyer sentiment. In the words of Travis Jarae, CEO at Liminal, “When someone asks about digital identity, it’s often centered around passwords and identity theft – two common concerns that need addressing in today’s interconnected world. I envision a future where it encompasses so much more – a world of enhanced trust.”
Key takeaways:
- Privacy in digital identity must be prioritized, addressing unintended consequences of more robust authentication.
- Cultural discomfort with biometrics is valid; education and nuanced discussions are crucial for trust-building.
- Secure devices and wallets are essential as technology becomes our proxy in different stages of life.
- Retailers adopting passwordless onboarding via embedded finance streamline user experience and security.
- Mobile phones democratize access, but equity considerations must be addressed.
- Emerging trends will center on passwordless adoption, the rise of eIDs, and the consolidation of solution providers around Integrated Identity Platforms.
See you next year!
