Voice of the Industry

The market opportunity for reusable identity

Tuesday 16 August 2022 09:30 CET | Editor: Raluca Ochiana | Voice of the industry

Jennie Berry, President and Managing Director at Liminal, explains why we need to prepare for a shift from digital identity to reusable identity.


The digital identity space is going through a rapid transformation. A shift is currently underway that focuses on customer-centric solutions that enable consumer services well beyond initial onboarding and KYC. Today’s consumer is burdened with managing dozens of one-to-one online relationships with service providers (just think of all the unique logins and passwords that you own and consequently manage). Resultantly, consumers resort to their unique strategy of cybersecurity hygiene – one that’s likely to err on the side of convenience over security, despite the best intentions. 

So, how did we get here? When the internet was first introduced, it wasn’t created with an identity layer that was designed or equipped for the rise of the digital consumer. As companies came online during the dot com era, they were required to build unique, non-interoperable identity and payment tech stacks to enable ecommerce. To complete a transaction, individual consumers would onboard separately with each entity, creating an environment in which consumers manage hundreds of individual accounts and passwords. In the 2000s, the introduction of single-sign-on (SSO) shifted the paradigm from one-to-one relationships to 1:N (one-to-many) relationships. Many digital companies started to adopt social logins to federate identities to cloud applications. Consumers became accustomed to social logins – when available, you can use your Amazon, Google, or Apple account to make a transaction across a wider number of online entities. 

Despite the incredible progress that has been made, digital identity as it stands today is still broken. The collective consumer experience is still fraught with the likes of fraud, identity theft, data breaches, KYC challenges, and cybersecurity vulnerabilities. Not only do companies suffer, but consumers also suffer. Many of today’s consumer media and ecommerce platforms are responsible for setting the new standard in consumer expectations – just juxtapose the ease of opening a Spotify account versus a new bank account, which can require as many as 120 clicks (Holland, N., Berry, J., and Jarae, T. ‘The Life of PIEs: the Journey to Personal Identity Ecosystems.Liminal, November 2021).

From an identity architecture standpoint, the one-to-one relationship of consumer-to-account needs to be redesigned. These singular relationships are made by service providers on behalf of customers, yet, with a cumbersome verification and authentication process for each, user friction is exacerbated. The transition away from 1:N digital identity solutions towards N:N (many-to-many) reusable digital identities also eliminates the fundamental risks posed by centralised databases filled with personal data collected through repeated onboarding processes. When we think about ‘reusable identity’, we’re talking about the seamless and interoperable sharing of trusted information, including verifiable credentials. The promise of reusable identity is akin to the benefits proposed by Open Banking. The evolution to reusable identity enables a ‘many-to-many’ relationship – one where consumers with unique identities can share the minimum required personal information necessary for any given use case. 

What better time than now? Globally, government-backed eIDs have been gaining traction in the last five years. The number of eID schemes has almost doubled from 2017 to 2021. The Scandinavian BankID (with over 8 million users and 5 billion recorded transactions in 2020) is just one example of an eID that meets the official requirements for identity verification and eSignatures. BankID users do not have to create new accounts and passwords with different actors, and BankID is accepted by thousands of companies and authorities as official proof of identification. Many of the use cases that continue to drive the demand for reusable identity span across customer onboarding – identity verification and KYC, document verification, identity proofing, biometric authentication, and fraud prevention. 

We crunched the numbers and calculated that the global market size for reusable identity will reach USD 266.5 billion by 2027, with a CAGR of 68.9% (Jarae, T., Berry, J., D’Ambrosi, C., Charnley, W., Li, Y., et al. 'The Market Opportunity for Reusable Identity and How to Get There.' Liminal, February 2022). Globally, there are 40+ true eID schemes currently being piloted or rolled out officially; subsequently, public-led reusable identity schemes account for 72% of the total addressable market in 2022.  With more private sector players joining forces with government agencies, we expect future reliance on reusable identity to further consumer adoption. By 2024, we anticipate an inflexion point whereby private initiatives will surpass public schemes. Of all the industry verticals we analysed, financial services present the most opportunity, with a total addressable market of USD 13.8 billion in 2022, with a CAGR of 72% by 2027. Key use cases driving the demand for financial services include digital banking, payments, remittance, lending, Buy Now, Pay Later (BNPL), and crypto.

Today, we are at the beginning of a paradigm shift, and we see three milestones critical to facilitating this global transition: the maturity of private identity ecosystems, enhanced interoperability, and public-private partnerships. First, the introduction of personal identity ecosystems will enable user-centric networks that connect multi-sided platforms. If designed correctly, they offer people increased control over their digital identities while also enabling privacy, personal reputation management, commercial transactions, and data protection. Second, enhanced interoperability requires omnichannel solutions, serves various use-cases, and covers cross-border scenarios. Personal identity ecosystems flourish where stakeholders truly embrace the networking effects offered by standardisation and interoperability – the more (trusted) contributors, the better. Lastly, we anticipate that private initiatives will surpass public schemes by 2024, and consumers will need solutions only enabled by public-private partnerships and fully-fledged ecosystems – with supporting standards, policies, and trust frameworks – that provide consumers with data mobility.

As we continue to progress through digital transformation initiatives, more users create higher assurance digital identities by establishing new bank accounts online, interacting on sharing economy platforms, and exploring more ways to engage with the gig economy. Eventually, we will move beyond solving onboarding problems and focus on better and safer experiences within platforms and ecosystems. To get there, we need to begin working together to explore ways to be more efficient while improving all aspects of the consumer's digital identity. We need to prepare for a shift from digital identity to reusable identity.


This editorial was first published in our Financial Crime and Fraud Report 2022, which showcases the innovation and development of the best practices and instruments used by financial institutions in their fraud prevention activities, to improve the digital onboarding process of their customers while fighting against financial crime. 


About Jennie Berry

Jennie Berry is the President and Managing Director at Liminal, responsible for operations, marketing, and research. Prior, Jennie was a management consultant at Deloitte, advising clients on digital transformation across financial services and technology. Jennie holds a B.A. in economics from Columbia University and an M.B.A. in finance and strategy from New York University.



About Liminal 

Liminal is a boutique strategy advisory firm serving digital identity, fintech, and cybersecurity clients, and the private equity and venture capital community. We offer objective, strategic advice and analytical services, supporting clients in crucial business decisions at all stages of the product and business lifecycle. We’ve advised many of the world’s most innovative business leaders, investors, and governments on the next generation of integrated digital identity platforms and technologies.

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Keywords: digital identity, cybersecurity, KYC, financial crime, fraud prevention
Categories: Fraud & Financial Crime
Companies: Liminal
Countries: World
This article is part of category

Fraud & Financial Crime


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