Identity Verification Software Market

Market Overview

The global identity verification software market was valued at USD 10.9 billion in 2023. It is estimated to reach USD 36.44 billion by 2032, growing at a CAGR of 14.43% during the forecast period (2024–2032). With the proliferation of online services and e-commerce, the risk of fraud and identity theft has escalated. Businesses are investing in identity verification software to protect themselves and their customers from fraudulent activities, driving market growth. Moreover, the shift toward digital transactions, including online banking, e-commerce, and remote onboarding, has increased the need for secure identity verification.

Identity Verification Software is a digital solution that uses advanced technologies such as biometric verification, facial recognition, and document verification to authenticate and verify individuals' identities during various processes, including account opening, loan applications, and financial transactions. This program compares an individual's information, such as biometric data or identification documents, to verified data sets to guarantee that the person is who they claim to be. Identity Verification Software is critical in preventing fraud, guaranteeing compliance with requirements such as Know Your Customer (KYC) and anti-money laundering (AML), and improving security in digital interactions. Identity Verification Software uses a combination of automated procedures, AI algorithms, and manual monitoring to help organizations, governments, and financial institutions establish trust, prevent fraud, and optimize client onboarding processes securely and efficiently.

Highlights

• Solution dominates the component segment
• Cloud dominates the deployment mode segment
• BFSI dominates the deployment mode
• North America is the highest shareholder in the global market

Market Dynamics

Global Identity Verification Software Market Drivers:

Expanding Digitization Efforts

The surge in identity-related theft incidents drives businesses to reinforce security measures as the world undergoes rapid digitization. Reliable identity verification is increasingly critical, particularly for border controls and accessing digital services where verified identity is essential. Initiatives like electronic ID cards (eID), facial recognition-based intelligent border control, and the integration of video analytics and liveness detection in smart cities and airports underscore the growing importance of secure identity verification in online security. Moreover, businesses and governments are at the forefront of digitalization, adopting advanced technologies like automation, artificial intelligence (AI), and machine learning (ML) in identity verification systems. This trend is expected to boost the adoption rates of identity verification solutions, providing vendors with exciting new opportunities.

As internet usage and eCommerce continue to grow, large corporations increasingly rely on these technologies to ensure secure transactions and customer safety. The broad adoption of innovative biometrics technologies further fuels the demand for reliable identity verification solutions. In order to improve security and user convenience, biometric identification techniques, including fingerprint, face, and iris scanning, are becoming more widely used. An example of this trend is discussed in an April 2024 Forbes article titled "Why Banks Are Embracing Digital Identity Verification for a Smoother Onboarding Experience." The article highlights how banks increasingly adopt digital identity verification solutions to streamline customer onboarding processes. This approach reduces wait times and improves overall customer satisfaction, reinforcing the value of reliable identity verification in modern business practices.

Global Identity Verification Software Market Restraint:

Absence of Technical Know-How and the Need for Security Awareness and Instruction

The rise of the identity verification systems industry is being hampered by a lack of knowledge about security risks and the potential losses they can cause. As organizations attempt to upgrade their identity verification processes, integrating new technologies with legacy IT systems presents a significant challenge. Inexperienced system integrators and security professionals can disrupt existing IT infrastructure, leading to critical system failures.

The problem is further exacerbated by a lack of technical expertise and security knowledge within organizations, making it difficult for them to meet the increasing demands for secure identity verification. Many businesses employ security personnel who lack the specialized training to fully understand the intricacies of modern identity verification systems. This deficiency leaves companies vulnerable to repeated security breaches and cyberattacks, jeopardizing sensitive data and operations.

To address these challenges, security companies offer a range of essential services, including employee skill development, enhanced security measures, and on-site training for the client's team after new solutions are implemented. These services are crucial in helping organizations adapt to new technologies and strengthen their security postures.

Global Identity Verification Software Market Opportunities:

Adoption of Biometric Devices in Identity Verification Systems

The use of biometric devices in identity verification systems offers significant potential to enhance efficiency and security. Biometric authentication methods, such as fingerprint recognition, facial recognition, and iris scanning, provide a more reliable and secure means of identity verification compared to traditional techniques like passwords or PINs. This trend enables businesses and organizations to implement more robust identity verification systems, reducing the risk of identity fraud and unauthorized access while providing a seamless and frictionless user experience.

As biometric technology continues to advance and becomes more accessible, there's an increasing demand for innovative biometric solutions across a range of sectors, including government, healthcare, and finance. These solutions drive further growth and innovation in identity verification as organizations seek to improve security and streamline user authentication processes.

An example of this trend is discussed in a March 2024 BBC News article titled "Smartphone Facial Recognition Gains Traction for Secure Online Payments." The report highlights how major online payment platforms integrate facial recognition technology to provide secure and convenient online smartphone transactions. This shift towards biometric authentication underscores the growing acceptance of biometric devices as a reliable means of identity verification.

Regional Analysis

North America Dominates the Global Market

Based on region, the global identity verification software market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America is the most significant global identity verification software market shareholder and is expected to expand substantially during the forecast period. This leadership is underpinned by the region's heightened concern over identity breaches and the increasing need for sophisticated security measures. The aggressive adoption of cutting-edge technologies like artificial intelligence (AI) and machine learning (ML), along with growing public awareness about the importance of security, contributes to the strong demand for identity verification solutions in North America. The market's growth in North America is closely linked to the proliferation of vendors offering innovative identity verification solutions. Companies like Mastercard, Equifax, Trulioo, and LexisNexis Risk Solutions are industry leaders, developing and delivering advanced products that address the changing needs of businesses seeking robust security. Their focus on innovation has played a crucial role in the region's dominance in the identity verification market.

North American businesses are actively adopting identity verification solutions to protect against unauthorized access, fraud, and other security risks. This broad adoption is facilitated by the region's forward-thinking approach to technology and a comprehensive regulatory framework that encourages businesses to implement strong security practices. The combination of diverse vendors, widespread adoption of technology, rising security concerns, and increased public awareness solidifies North America's position as the market leader in identity verification. The region's commitment to technology-driven security solutions allows it to spearhead global advancements, setting the standard for other regions.

Segmental Analysis

The global identity verification software market is bifurcated into type, component, deployment modes, and industry verticals.

Based on type, the global identity verification software market is segmented into biometric and non-biometric.

The biometric segment plays a significant role in the global identity verification software market, offering a secure and efficient means of user authentication. Biometric technologies, including fingerprint recognition, facial recognition, voice recognition, and iris scanning, provide unique and hard-to-duplicate identifiers that greatly reduce the risk of identity fraud and unauthorized access. This segment's popularity is driven by its superior security features than traditional methods like passwords and PINs, which can be more easily compromised.

Moreover, the growing adoption of biometric-based identity verification in various sectors underscores the importance of this technology. Government agencies are implementing biometrics for national ID programs, border control, and law enforcement applications. In the healthcare industry, biometric identity verification ensures patient confidentiality and restricts access to sensitive medical records. Financial institutions use biometrics to enhance customer authentication and prevent fraudulent activities in online banking and transactions.

Based on components, the global identity verification software market is segmented into solutions and services.

Solution dominates the component segment. The segment encompasses a range of solutions designed to meet the needs of businesses and organizations seeking robust identity verification. These solutions include biometric authentication systems, multi-factor authentication (MFA), document verification, and database checks, among other tools. Biometric authentication, for example, utilizes unique physical characteristics like fingerprints, facial features, or iris patterns to verify a person's identity. This technology has gained major traction due to its accuracy and resistance to forgery, providing an additional layer of security.

Multi-factor authentication combines multiple verification methods, such as security tokens, passwords, and biometric data, to ensure a higher level of security. Document verification involves analyzing government-issued IDs, passports, or other credentials to confirm authenticity. At the same time, the database checks cross-reference user information with public or private databases to detect discrepancies or fraudulent activity.

Based on deployment mode, the global identity verification software market is bifurcated into cloud and on-premise.

The cloud segment owns the highest market share. This rapid adoption of cloud-based deployment is driven by several factors, including the widespread availability of Software as a Service (SaaS) and Infrastructure as a Service (IaaS) models, the cost-effectiveness of cloud services, and the rising need for robust security measures within the cloud environment. The rise of remote work during the COVID-19 pandemic reinforced the importance of cloud services. Companies had to ensure that data accessed remotely complied with legal and regulatory requirements, making cloud-based identity verification a critical component for businesses adapting to new work arrangements. Cloud technologies are crucial in preventing identity fraud, providing organizations with the tools they need to maintain security while enabling remote access to sensitive information.

Based on industry verticals, the global identity verification software market is segmented into BFSI, healthcare and life science, government and defense, retail and e-commerce, IT, energies and utilities, and others.

BFSI dominates the industry verticals segment. The BFSI sector handles sensitive and highly confidential information, such as clients' financial data, login credentials, and other personally identifiable information. The BFSI sector has increasingly adopted robust security measures to safeguard this information from theft and fraud, with identity verification playing a central role. The use of identity verification services and solutions in the BFSI sector is becoming more widespread to protect online services from cyberattacks and bolster consumer trust in digital identities. As the industry relies heavily on digital transactions and online banking, ensuring secure access and preventing unauthorized use is critical. Identity verification provides a key defense against fraudulent activities and cyber threats.

Recent Developments

• November 2023- Vouched launched biometric ID verification software for auto retailers. Car retailers and rideshare businesses have a new identity verification product for biometric customer onboarding and fraud prevention. ID verification firm Vouched has launched VouchedAuto and has already revealed its first client.
• April 2024- The world leader in digital identity, Prove Identity, Inc. ("Prove"), announced that its digital customer experience, identity verification, and identity authentication solutions are now accessible through AWS Marketplace. This online marketplace features thousands of software listings from independent software vendors and makes it simple to search, test, purchase, and install software that utilizes Amazon Web Services (AWS).