3 trends driving the digital identity market in 2022

By Rodger Desai, Prove Co-Founder & CEO

As we evolve into a more phone-centric and mobile-first world, digital identification is becoming a powerful tool to enable safer and more secure transactions and digital interactions. In tandem, the digital payments industry is rapidly expanding alongside us and constantly innovating to make digital transactions a quicker, safer, and more painless experience for both customers and merchants.

Digital payments are now so convenient and widespread that many brick-and-mortar locations are opting to go completely cash-free – and the benefits continue to increase. As a result, the global digital payment market size is expected to grow from $89.1B in 2021 to $180.4B by 2026.

With the digital identity and payments markets and the demand for safer and more secure transactions growing in lockstep so quickly, retailers and institutions will need to pivot. The new focus? Fraud. Verification of those paying through their mobile device has never been more critical for many reasons, including safety for the customer and business and the overall customer experience, where speed has become a top priority for consumers. With these considerations in mind, retailers must consider where the future of digital identity technology is headed – not only in 2022 but beyond.

Digital identity trends to watch for

Following are several key trends we expect to gain momentum this year.

5G Will Fire Up Fast Authentication: As a growing number of 5G-enabled devices come to market (ranging from smart fridges to headsets that serve as a portal to the metaverse), the number of digital transactions the average consumer will make throughout the day will skyrocket. Regardless of whether they are banking on the go, buying oat milk on their new fridge touch-screen, or purchasing designer goods on Roblox, consumers will expect a secure, speedy, and convenient way to authenticate their identity and complete their purchase. To meet this omnichannel demand, companies must embrace centralized technology such as phone-centric identity to provide secure and streamlined identity authentication for all channels.
Biometrics Tech Adoption to Skyrocket: As the hardware on smartphones grows more advanced, our capacity to authenticate consumers via biometrics (body measurements related to human characteristics) grows exponentially. While it’s already de rigueur to undergo a face scan to access your banking app, the next generation of biometrics will be even more frictionless, often taking place entirely in the background. One new technology, for instance, can verify a user based on the unique way in which they walk.
Financial Inclusion is Finally a Priority for Banking/Fintech: Credit bureaus have a long history of fueling a vicious cycle in which a consumer’s history of financial instability prevents them from accessing affordable credit, which then causes more financial instability (and on and on and on). For far too long, too many people have been left out altogether from the records of major credit bureaus and, as a result, left behind when it comes to economic progress. Today, a staggering 11% of the adult population in the US (26 million people) don’t even have a file at the major credit bureaus, and 8.3% of the adult population (19 million) have too little credit history on file to even generate a credit score. Changes in consumer behavior (49% of millennials don’t even have a credit card) will only accelerate this trend. To remain relevant, companies need to meet the needs of the financially invisible by finding (or creating) equitable alternatives to credit scores.

Payments accelerating and digital identity protection adapting quickly

The power and quick evolution of technology shouldn’t come as a surprise to businesses today. Some verticals, especially payments, have accelerated and adapted very quickly – because they were forced to do so. In fact, according to a study by McKinsey, several companies rapidly underwent two years of digital transformation in a matter of months. This is important for several reasons, but one particular reason – businesses cannot afford to scramble in the future. Activating digital identity and protecting their business, along with their most valuable asset, their customers – is a must.

If the development of digital identity technology has taught us anything so far, it’s that the potential applications are limitless. As the digital payments industry continues to experience exponential growth, safety, fraud prevention, and financial inclusion are paramount concerns for institutions and merchants. In 2022 and beyond, ensuring that consumers have a safe and accessible way to engage in digital transactions and interactions starts with unlocking and exploring the seemingly unlimited applications of digital identity technology.

Rodger Desai is Co-Founder & CEO of Prove. Rodger is a mobile and digital identity expert featured in The Wall Street Journal, Forbes, CNBC, TIME, and the MIT Technology Review. After beginning his career in engineering management positions at ExxonMobil and GE, Rodger served as an executive at Accenture’s telecom practice before becoming CEO of Rave Wireless, a mobile homeland security notification platform deployed at over 8,000 universities, colleges, cities, and emergency management organizations.

Rodger is passionate about how technology can solve human and societal issues. In addition to his work at Rave Wireless, his business ventures have ranged from using mobile phones for microfinance village programs in emerging markets to enabling financial inclusion by leveraging Prove’s mobile identity technology to allow underbanked and credit-invisible consumers access to financial services. Rodger graduated from RPI and attended Harvard Business School.