There’s not much that hasn’t already been said about 2020. Last year provided the world a historic level of uncertainty due to the pandemic. Companies worldwide had to suddenly adjust to employees working from home out of necessity while also responding to consumers and customers that were similarly homebound. Despite this uncertainty, the Digital Identity (DI) space saw a tremendous amount of forward momentum, as enterprises were forced to utilize DI technologies on a grander scale, simply to conduct business. This transition came with some downsides as well, most notably the lack of innovation. Still, the issues that arose from this response led to some exciting shifts in the DI space, including more investment and awareness.
Now that we’ve officially put 2020 behind us, it’s time to look forward. With the new administration in the US, the rollout of vaccines and the ongoing maturation of DI, there’s plenty more opportunity and enthusiasm ahead.
Surely there will be some unexpected hiccups and macroeconomic issues that we can’t predict in 2021 – let’s just hope not on the scale of another global pandemic – but we do see some intriguing trends in digital identity that we believe will shape the space this year. While plenty of other potential possibilities exist, as others have highlighted, these five trends standout to us due to the momentum we’ve seen build over the past number of years. And if you have some thoughts or predictions of your own, drop us an email to let us know.
OWI’s 2021 Predictions
Incumbent fraud prevention platforms go on a buying spree
Coming off of a record year for the eCommerce and eCommerce fraud space, most companies across the fraud prevention and risk management market saw revenues and profits rise in 2020. Based on the advantages of large-scale networks to deliver superior fraud detection signals, top platforms separated themselves from the field, opening up opportunities for industry consolidation of lagging players. Those companies that did well outperformed their targets by levels of 30% to 50%, while those left behind only saw 10% to 20% of growth beyond targets. Those that outperformed gained an edge due to basic advantages, like network data size, to provide more accurate models and offerings. Since these advantages will continue to widen, the companies that only had a good year will need to raise significant capital or be acquired in order to keep up with those that had a great year.
This will push the industry towards more comprehensive, integrated digital identity platform solutions, including everything from identity resolution, customer onboarding, to ongoing account management.
Identity confirmation becomes common at checkout and when watching mature content online
We expect large platforms, such as Youtube and Netflix, to comply with regulations that seek to protect children and consumers, which is the goal for the Audiovisual Media Services Directive out of the EU, as an example. This will force these companies to know more about their users in order to mitigate this risk, leaning towards convenience and frictionless identification, whenever possible.
Digital identity wallet adoption grows worldwide as contact tracing becomes mandatory for everyday activities
Companies with digital identity wallet capabilities and offerings have waited for a major catalyzing event to take a good idea and make it applicable for a massive population. COVID-19 contact tracing applications will normalize proving your identity through your device, confirming any close contacts, and potentially providing your vaccination status. It’s similar to the impact that Apple’s release of Face ID had on normalizing facial recognition.
Privacy concerns remain the major barrier to adoption for these tools. Since the COVID response will play out on a worldwide scale, it offers a catalyzing event, which will improve initial adoption rates this year and increase digital identity confirmation uses moving forward. If the wallets can ease privacy concerns with the technology, particularly since consumers will often be utilizing the tool for the first time, then that worldwide adoption can lead to ongoing use far beyond tracking COVID.
Digital identity initiatives get the Biden Bump
In 2012, the Obama administration unveiled the Consumer Privacy Bill of Rights as part of a “comprehensive blueprint” to improve consumers’ privacy protections and ensure that the Internet remains an engine for innovation and economic growth. Better ID Coalition, led by former Obama administration executives, recently unveiled their blueprint and helped introduce the bipartisan Improving Digital Identity Act of 2020 in Congress.
With the Biden administration tapping many of the same people that guided Obama, expect these issues to have a place at the table. This effort becomes even more operable, since the Biden administration will be working with a supportive Congress.
The passwordless revolution finally arrives
Last year saw behavioral biometrics company BioCatch and multi-factor authentication company Trusona raise $168 million and $19.4 million, respectively. The funds came from serious investors, like Amex Ventures, Bain Capital, Citi Ventures, and Kleiner Perkins. This marks the moment of institutional buy-in to kill the password, once and for all.
We expect to start seeing that shift this year with more investments and an increase in awareness about tactics in DI that go beyond the password to reach enterprises and consumers.