'Digital Identity' trends in India during 2023

Between the looming recession, new privacy regulations, and an ever-adapting fraudster ecosystem, 2023 has a lot of opportunities and challenges to offer the digital identity space.

The importance of digital security has grown along with the development of digital identity and inclusiveness. Around,?3.63 million?cybersecurity incidents were reported in India between January 2019 and June 2022 highlighting the digital domain still requires the deployment of some robust mechanisms to secure digital identity.

Latest Juniper Research’s ?Digital Identity?research report provides a comprehensive study of the growth of the digital identity market, resulting changes in how national IDs are issued, the way identity is authenticated and regulatory compliance around identity.

The number of digital identity apps in use will exceed 4.1 billion globally by 2027; rising from 2.3 billion in 2023. This represents a growth of 82% over the next four years. This increase will be driven by the use of government-backed digital identities to replace physical identity documents as a source of verification for third-party apps, such as banking and financial services. This will be critical, as businesses aim to reduce identity theft and meet increasingly stringent KYC (Know Your Customer) regulations. Report says:

• The market is moving away from reliance on passwords for identity verification, with this being replaced by biometric verification and MFA under a zero-trust model, where identities are authenticated continuously. This approach is more resistant to traditional hacking methods, such as phishing, reducing the risk of data breaches.
• Zero trust will be delivered via SSO (Single Sign On), which allows the user to access multiple accounts via a central, secured system. Critical to SSO is the use of mobile subscriber identity, with the number of mobile devices using their mobile number for SSO being predicted to reach 2 billion in 2027, up from 922 million in 2023. Consumers are highly motivated by convenience, making a streamlining of user experience significant for attracting and retaining them. SSO can achieve this, whilst also appealing to security-conscious users.
• The primary competition for dedicated digital identity apps will come from digital wallets, which offer payment functionality alongside a digital identity capability. For instance, in some US states, digital driver’s licences held within Apple Wallets are fully recognised. However, these digital wallets will struggle to monetise identity in the same way as they have payments, due to competition from government-run schemes limiting adoption.
• Stakeholders will be looking for ways to optimize and consolidate their ID solutions in 2023, focusing on how to cover the most users for the least costThe value of digital ID goes beyond fraud prevention—it’s key to promoting growth as wellThe widespread adoption of real-time payments could mean a big payday for fraudsters using social engineering scams, and regulators are questioning whether banks should have to foot the bill for swindled accountholders

Listed below are some major digital identity trends which will have a prominent impact in the year 2023:

e-KYC:?

Consumer identification and verification are crucial in the customer due diligence process in digital financial services. New e-KYC solutions are being made possible by developing technology, biometric information, distributed ledgers, and artificial intelligence. By utilising these technologies, e-KYC develops novel strategies that are both more affordable and successful.

The use of Aadhar in India has played a major role in digital inclusion and establishing digital identity. Further, the inclusion of face-powered authentication currently subject to regulators’ approval will play a significant role in digital identity establishment in the year 2023, as it is capable of capturing the live face of individuals other than demographic and photographic information which are generally used in the e-KYC process.

AML (Anti Money Laundering):?

Anti-Money Laundering (AML) solutions will be a key trend in the digital realm from the year 2023. It enables financial institutions and governmental bodies to track, examine, and report individuals’ data and transactions in order to identify, stop, and report shady money-laundering operations and enhance AML compliance. Further, the organization’s readiness for AML compliance will strengthen by deploying AML solutions leveraging advanced analytics, artificial intelligence, and machine learning to predict potentially fraudulent activity.

Digital KYC:?

One of the most essential tools for organisations and a big trend that is on the rise in digital KYC verification. The year 2023 will see increased acceptance of the assisted mode of digital verification, also known as video-based verification, for digital onboarding. In India, the government has initiated the process of video verification through the amendment to the Prevention of Money Laundering (PMLA) Act 2002. Further, RBI has legitimized the Video-Based Customer Identification Process(VCIP) as a means to verify customers, promoting the growth of video KYC authentication and onboarding of individuals.

The other form of digital KYC methodology which will be one of the key trends in the year 2023 is non-assisted KYC. The growth of?digital technology like Optical Character Recognition (OCR) and the use of API are going to see major adoption within the financial institutes to reduce fraud risk through real-time analysis and validation of customer data and thus eliminating the time spent on enhanced due diligence (EDD) which often slows down the process of verification.

Forensic checks:

Identity documents are the most important source for verifying user information, and all organisations have developed various techniques for online consumer verification. The use of AI will continue to aid in the data verification process in the year 2023. The AI algorithm is constantly evolving and the fintech solution providers with their latest technologies will play a crucial role in aiding organisations to validate the authenticity of the uploaded documents during the digital onboarding process.

The digital sphere is constantly evolving and with it, the threats also evolve. The technologies of the past require upgradation and new technological developments need to be taken into account to counter the cyber threat and establish a secure identity which is beneficial for individuals, organisations and governments. The development of new digital trends can also be attributed to the emergence of digital solution providers who have enabled businesses to maintain an expanding number of identities in the digital era through the deployment of their smart technologies.