In today’s increasingly digital world, the importance of secure and reliable digital identities is growing as more services and transactions move online, creating a greater need for interoperable digital identities. As predicted, reusable identity technologies have emerged as a potential solution, providing opportunities for trust frameworks that enable this interoperability across platforms and different use cases. However, despite the growth potential, low adoption rates, and limited support from relying parties, the reusable identity market faces some challenges.
According to our revised market estimation, the reusable identity market is expected to grow from $53.0B in 2023 to $328.4B in 2027, with significant opportunities for businesses in the digital identity landscape. The deployment of reusable identity is currently being led by the public sector, with opportunities for the private sector to provide underlying technology through public-private partnerships.
In exploring the potential of the reusable identity market, we examine recent advancements in the US and EU, global regulatory changes, the emergence of big tech players, and the opportunities and obstacles ahead. Additionally, we analyze the benefits of adopting reusable identity technologies for businesses and consumers while considering the challenges that must be addressed before realizing the full potential of reusable identity.
Market Changes Driving Demand for Reusable Identity Solutions
Global regulatory changes are driving market demand for reusable identity frameworks, eID/mDL solutions, and low-friction identity and age verification due to the adoption of data privacy legislation in 70% of countries worldwide, online child protection laws, and the tightening of age verification laws for online purchases of alcohol and tobacco, according to the recent UN Conference on Trade and Development. The legalization of cannabis and online gambling in the US is also creating new markets with age restrictions.
The European Union (EU) is also on track to deploy an interoperable European Digital Identity Wallet (EUDI) framework. New revisions to eIDAS 2.0 mandate each EU member nation to create at least one national wallet application under a national eID scheme. Open wallet standards mandated by eIDAS 2.0 will encourage private-sector participation in the EU. However, consumers can choose not to use eID, requiring greater orchestration between public and private sectors across a fragmented consumer identity credential landscape.
Big tech companies are starting to launch digital identity solutions that have helped to create consumer interest and awareness. Apple has launched mDL capabilities in three US states and plans to add nine more states in 2023, while Google is launching a competing Android DL wallet in Maryland and plans to support all the states Apple has targeted. However, consumer education remains a significant barrier to widespread adoption, which big tech marketing budgets aim to address this year.
>> Related content: Research Report: The Market for Reusable Identity and How to Get There
Challenges and Opportunities of Reusable Identities
Reusable identities offer numerous opportunities, such as greater consumer control over personal data, efficient and cost-effective onboarding processes, and improved customer experiences. However, they also present certain challenges that must be addressed for widespread adoption.
One of the main challenges for reusable identities is the issue of interoperability. Different identity systems need to be able to communicate and interact with each other seamlessly and enable a frictionless user experience. Another challenge is the need for strong security measures to protect personal data, prevent fraud and identity theft, and ensure privacy.
Ensuring strong security measures to protect personal data, prevent fraud and identity theft, and ensure privacy is a challenge for reusable identity because it involves implementing effective and reliable security protocols across different identity systems while ensuring that the customer experience remains convenient and seamless. It requires balancing the trade-offs between security and usability and coordinating and integrating various security protocols and technologies. Additionally, as technology advances and threats evolve, security measures must be continuously updated and improved to stay effective, making it an ongoing challenge.
Moreover, while reusable identities offer consumers greater control over their data, there is a need for adequate education and awareness to help them understand the benefits of this model and how to use it effectively. Additionally, implementing reusable identities requires investment in technology infrastructure, standardization, and collaboration between various stakeholders.
Despite these challenges, reusable identities offer significant opportunities for innovation and growth. As more companies adopt reusable identity solutions, a new ecosystem of digital services and products can be created, leading to new business models and revenue streams. Furthermore, reusable identities have the potential to enable greater financial inclusion, especially in developing countries, by enabling access to financial services and other essential services.
The Promise that Reusable Identity Holds in the Digital Identity Ecosystem
Deploying multiple digital identity solutions can be viewed as inefficient and time-consuming, increasing fraud risk due to their reliance on the 1:N relationship model. Moreover, the centralized databases required for these solutions are vulnerable to data breaches, resulting in a high potential for privacy violations and or fraud risk. Interoperability between different identity systems is lacking, leading to further frustration and inefficiency for users. Thus, there is a need for a fundamental shift towards more secure, efficient, and user-centric models of digital identity solutions.
Reusable identity offers a more efficient and secure alternative to traditional digital identity solutions. The N:N or many-to-many relationship model used by reusable identity solutions enables entities to have unique identifiers that can be used across different contexts and interactions, eliminating the need for redundant onboarding processes and centralized databases filled with personal data. This approach gives users more control over their personal data and privacy by enabling them to share only the necessary information for a given use case. Additionally, reusable identity solutions are designed to be interoperable and portable, enabling identity federation and secure identity verification across different service providers and ecosystems. This can help reduce fraud and enhance trust in digital interactions, particularly in finance, healthcare, and government industries.
Overall, the promise of reusable identity lies in creating a more secure, efficient, and user-centric digital identity ecosystem that respects users’ privacy and enables greater control over their personal data. As global regulatory changes and market demand drive the adoption of reusable identity frameworks and solutions, we expect to see a shift towards more decentralized and interoperable digital identity systems that support the needs of both individuals and enterprises. With reusable identity, we have the potential to create a more seamless and efficient digital experience for consumers and enterprises alike while also prioritizing security and privacy.
The Role of Personal Identity Ecosystems in Implementing Reusable Identity Solutions
Personal Identity Ecosystems (PIEs) are networks that empower users to manage their digital identities across multiple platforms and service providers. PIEs provide an ideal framework for implementing reusable identity solutions, which enable secure and seamless authentication and identity verification. In a PIE, a user’s digital identity can be linked to multiple accounts across different platforms, allowing individuals to share their personal information in a secure and privacy-preserving manner. PIEs also provide individuals with tools to manage their reputation, protect their privacy, and facilitate commercial transactions.
PIEs typically comprise various digital identity platforms and services, including self-sovereign identity (SSI) solutions, decentralized identity (DID) systems, and blockchain-based identity platforms designed to be interoperable and compatible. Reusable identity solutions can facilitate the development and adoption of PIEs by providing a secure and interoperable digital identity ecosystem. By giving individuals greater control over their data and identities, Personal Identity Ecosystems can help create a more trusted and transparent digital environment, enabling innovation and economic growth while also protecting user privacy and security.
>> Related content: Research Report: The Life of PIEs, The Journey to Personal Identity Ecosystems
Different Approaches for Deploying Reusable Identities
Reusable identities can be deployed through various approaches, including direct government issuance, public-private partnerships, private-led business-to-consumer (B2C) platforms, decentralized platforms, and private-led business-to-business (B2B) platforms.
- Public-led reusable identity deployments are operated directly by a national government, allowing for issuing a reusable digital identity credential from an authoritative government source.
- Public-private partnership approaches rely on private sector institutions to create and manage digital identities, with direct integration into government agencies for consumer access to public services and linkages to public records for initial identity proofing for account creation.
- Private-led B2C platforms place digital identities directly in the hands of consumers through a hardware or app-based wallet contained in a smartphone or a cloud-based credential.
- Private-led B2B platforms largely abstract the existence of a reusable identity from the end-user and avoid the challenge of driving consumer adoption. For example, a consumer opening a new account is notified that the form can be auto-populated based on an existing reusable identity by entering a bank login.
The emergence of reusable identity technologies has provided a trust framework that enables interoperability across platforms and different use cases, addressing the need for secure and reliable digital identities in today’s increasingly digital world. However, the reusable identity market faces challenges, such as low adoption rates and limited support from relying parties. Despite this, the reusable identity market is expected to grow, creating significant business opportunities in the digital identity landscape. Challenges such as interoperability, security measures, and consumer education must be addressed to realize the full potential of reusable identities. However, reusable identities offer numerous opportunities, such as greater control over consumers’ personal data, efficient onboarding processes, and improved customer experiences. They also offer significant opportunities for innovation and growth, leading to new business models and revenue streams. Overall, the promise of reusable identity lies in creating a more secure, efficient, and user-centric digital identity ecosystem that respects users’ privacy and enables greater control over their personal data.