It is projected that the identity verification industry will grow at a cumulative annual growth rate (CAGR) of 16% during the forecast period of 2019-2024. The industry is estimated at $6 billion in 2019 and is projected to reach $12 billion by 2024. It says that all that glitters is not gold same is the case with this growth, it is driven by good and bad factors.
The identity verification industry is a vast industry and has several use cases. Key players in this industry are companies that provide identity verification solutions. These companies offer KYC, AML and KYB screening solutions using next-generation technologies such as artificial intelligence, machine learning, and biometrics. This growing industry has several use cases such as customer due diligence, AML/KYC compliance, fraud prevention, user onboarding, risk prevention.
Below is a list of factors that affect the growth of the identity verification industry.
The evolution of technology
Identity verification companies are well aware of the importance of technology and the need for utilizing it in the services offered by this industry. The identity verification companies are using face biometrics to verify the people in real-time. It also uses artificial intelligence and machine learning to deliver high accuracy in verification services. The solutions and services delivered by market leaders are developed with a futuristic approach so it guarantees the growth of this industry.
The increase in fraud
49% of organizations globally said they’ve been a victim of fraud and economic crime in 2018 (PwC’s 2018 Global Economic Crime and Fraud Survey). This increase in fraud is a headache of businesses operating around the globe. Fraud prevention and fraud management is a daunting task. Identity verification provides useful insights about customers so it helps businesses in proactive fraud prevention.
Identity theft is increasing at a global level. The stolen identities are used to defraud businesses, banks, and government agencies. The businesses providing KYC screening services help businesses cover against the frauds committed through stolen identities. As per the Insurance Information Institute of the U.S. 14 million identity theft reports were filed during 2018. And most of those stolen identities were used to commit credit card fraud with businesses and banks.
Money laundering and terrorist financing
Money laundering and terrorist financing are global disasters. They cause losses for businesses and destroy the balance of financial infrastructure fo economies. As per the report by the United Nations, an amount equal to 2 – 5% of global GDP is laundered annually. Businesses are aware of this loss and are keenly taking steps to mitigate this fraud. As the customers are the major source of financial fraud, businesses are moving towards identity screening solutions to verify their customers coming from evry corner of the world.
Regulatory authorities are giving significance to digital ID verification
Regulatory authorities are finally accepting digital identity systems and it has increased the value of solutions provided by this industry. The Candian authority now allows the reporting entities under AML compliance to use photocopied or scanned images for identity verification of their customers.
Also, FATF issued the first draft of its digital ID systems to help businesses adopt automated identity screening solutions aligned with the regulations of FATF. The solutions aligned with this guide will gain acclaim from the businesses.
It is a fact that automated processes are preferred by businesses as they make things easier for businesses and helps them perform efficient AML/KYC compliance. So this shift in the attitude of regulatory authorities has affected the growth of the identity verification industry.