Digital Identity Solutions Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Digital Identity Solutions Market is projected to expand significantly, growing from USD 33.68 Billion in 2025 to USD 87.78 Billion by 2031, reflecting a compound annual growth rate of 17.31%. Digital Identity Solutions consist of comprehensive platforms and technologies aimed at verifying, authenticating, and managing unique user identities across diverse digital channels.

The market is primarily driven by the rising frequency of sophisticated cyber threats, stringent regulatory compliance requirements, and the rapid digital transformation occurring within both the public and private sectors. These factors collectively create a need for robust security frameworks that surpass traditional verification methods, thereby fueling a critical demand for seamless access management. Underscoring this urgency, the Identity Defined Security Alliance reported that in 2024, 90% of organizations faced at least one identity-related incident, highlighting the essential need for these advanced security mechanisms.

Despite this strong growth potential, the market encounters a major hurdle regarding the complexity of integrating modern identity frameworks into legacy infrastructure. Organizations frequently face considerable technical challenges and high costs when attempting to retrofit or replace outdated systems, which can severely delay widespread adoption. Consequently, the difficulty of balancing strict security protocols with a frictionless user experience within complex IT environments remains a primary obstacle for enterprises seeking to scale their digital identity capabilities globally.

Market Drivers

The rising incidence of identity theft and cyber fraud acts as a primary catalyst propelling the global digital identity solutions market. As threat actors increasingly leverage artificial intelligence to execute sophisticated attacks like deepfakes and synthetic identity fraud, organizations are forced to move away from traditional verification methods in favor of advanced identity proofing systems.

This surge in fraudulent activity not only jeopardizes user trust but also inflicts heavy financial penalties on enterprises that fail to secure their digital boundaries, creating an urgent operational need for better security layers. According to Sumsub’s November 2024 "Identity Fraud Report 2024," the global identity fraud rate in verification checks rose to 2.50% in 2024, more than doubling the rate seen just three years prior. The financial impact of such security failures is intensifying, further driving investment in robust defensive technologies, with IBM reporting that the global average cost of a data breach hit a record high of $4.88 million in 2024.

Concurrently, the increasing integration of biometric authentication technologies is reshaping the market landscape by addressing the dual requirement for heightened security and frictionless user experiences. Enterprises are rapidly shifting away from vulnerable password-based systems toward passwordless architectures that utilize physiological and behavioral biometrics to verify users with greater accuracy and speed.

This transition is particularly evident as businesses aim to support remote workforces and secure digital transactions without compromising operational efficiency or user convenience. According to Okta’s March 2024 "Businesses at Work 2024" report, the number of organizations deploying biometric authenticators and security keys grew by 25% year-over-year, reflecting a decisive move toward high-assurance credentials. This trend highlights the pivotal role of modern identity frameworks in enabling secure digital transformation while meeting growing consumer expectations for seamless access across devices.

Market Challenges

The integration of modern digital identity frameworks into legacy infrastructure presents a significant barrier to the expansion of the Global Digital Identity Solutions Market. Many enterprises depend on outdated systems that lack the flexibility necessary to support current verification standards. When organizations attempt to modernize these environments, they frequently encounter technical incompatibility and escalating implementation costs. This friction discourages businesses from upgrading their security protocols, as the process requires substantial time and financial investment to ensure interoperability between new solutions and existing databases.

These technical hurdles directly impact the speed at which organizations can deploy identity management tools. Instead of prioritizing expansion, IT departments often divert resources to retrofitting old architecture. This struggle to balance modernization with existing operations significantly slows the procurement cycle for new identity products. According to the Identity Defined Security Alliance, in 2024, 37% of security professionals identified the complexity of their IT environment as a top barrier to implementing identity-first security outcomes. Consequently, this operational rigidity limits the market reach of digital identity vendors.

Market Trends

The proliferation of Government-Backed Mobile Identity Wallets is fundamentally transforming the verification landscape by migrating credentials from physical cards to secure digital repositories. This trend is driven by state-led initiatives, such as the European Digital Identity Wallet and mobile driver’s licenses (mDLs) in North America, which enable citizens to assert their identity across borders and sectors seamlessly. These wallets prioritize user control and privacy, allowing for the selective disclosure of attributes rather than sharing entire documents, thereby creating a reusable identity ecosystem that reduces reliance on fragmented databases. According to the OpenID Foundation’s August 2025 report, "Adoption now and ahead: mDL Day," over 5 million mobile driver's licenses have been issued to date across the United States, reflecting the rapid scaling of these government-certified digital credentials.

Simultaneously, the widespread adoption of Zero Trust Identity Frameworks is establishing identity as the new security perimeter, replacing traditional castle-and-moat architectures. Organizations are increasingly implementing "never trust, always verify" policies that require continuous authentication of every user and device, regardless of their location within the network. This approach mitigates the risks associated with compromised credentials and lateral movement by strictly limiting access privileges based on real-time risk context, ensuring that trust is transient and constantly re-evaluated. According to StrongDM’s June 2025 "State of Zero Trust Security in the Cloud Report," 81% of organizations have fully or partially implemented a Zero Trust model, underscoring the critical pivot toward identity-centric defense strategies to secure modern cloud environments.

Key Players Profiled in the Digital Identity Solutions Market

• Oracle Corporation
• Microsoft Corporation
• Okta, Inc.
• IBM Corporation
• NEC Corporation
• Thales Group
• IDEMIA
• ForgeRock, Inc.
• Jumio Corporation
• Experian

Report Scope

In this report, the Global Digital Identity Solutions Market has been segmented into the following categories:

Digital Identity Solutions Market, by Component:

• Solution
• Services

Digital Identity Solutions Market, by Identity Type:

• Biometric
• Non-biometric

Digital Identity Solutions Market, by Solution Type:

• Identity Verification
• Authentication
• Identity Lifecycle Management
• Other

Digital Identity Solutions Market, by End-user:

• Banking
• Financial Services
• Insurance
• Retail and Ecommerce
• Travel & Hospitality
• Government and Defence
• IT and Telecommunication
• Others

Digital Identity Solutions Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Digital Identity Solutions Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.