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Verifying and authenticating digital identities while managing and preventing ever-increasing online fraud remains a top challenge for businesses. To meet these increasing needs, the identity solution landscape is evolving on both ends of the ecosystem in exciting ways.

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Sector Snapshot: Identity Software

Identity Software Market Overview

Personal identifiable information (“PII”) is digitalization’s Achilles heel

  • Increased reliance on technology and digitally identifiable personal information to deliver goods and services produces numerous outlets susceptible to attack
  • As consumers continue to shift their financial and retail habits online, ever growing amounts of personally identifiable information (PII) have been placed into the hands of businesses
  • Rapid enterprise migration to the cloud makes consumer data increasingly vulnerable across network that is difficult to monitor
  • Proliferation of mobile devices used in business-critical functions adds additional levels of exposure and creates an ever-growing set of entry points for hackers to execute major breaches

Personal identity has become a critical attack surface for bad actors, who seek out critical applications and data

  • With an increasingly distributed tech architecture, limited or single-point solutions are no longer effective as bad actors constantly adapt to new methods of hacking
  • In 2019 alone, 1,500+ data breaches led to 900+ million individuals being impacted and 15+ billion records being exposed
  • Attackers continue to leverage multiple types of attacks to gain stolen credentials, using this information to wreak havoc on consumers and businesses, with the average data breach costing $3.9 million in 2020

Verifying and identifying customers throughout their journey remains a top challenge

  • Identity theft continues to become more complex as hackers become more sophisticated in finding ways to break barriers surrounding confidential data
  • Synthetic ID theft is as prevalent as ever, accounting for 80 – 85% of all identity fraud cases, while YoY bot attack volume increased by 13% in 1H20
  • KYC processes, meant to combat fraud, are currently failing, as they do not confirm the individual applying or transacting is the legitimate identity owner
  • To prevent fraud, a multi-layered and risk-based identity solution is required to differentiate a trusted user from a fraudster and combat all types of fraud, beginning with account origination to the transactions that follow

Multiple protection solutions or capabilities are necessary to implement an effective end-to-end strategy

  • The identity solution landscape is evolving on both ends of the ecosystem to meet increasing needs:
    • There is an increasing convergence among fraud detection, authentication and proofing, with all three being required across the customer journey, and vendors offering services that fall into more than one of these categories
    • Data aggregators have been the first to recognize the sensitivities around having an abundance of digital PII available and have begun to consolidate by acquiring assets in the prevention, detection and remediation spaces
    • Meanwhile, historical fraud detection providers, which have historically focused on the moment a customer selects to “buy” a product, have begun working up the identity ecosystem by focusing on login process and ATO prevention
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