Blockchain, iris recognition and more: digital identity solutions market expands to respond to fraud explosion

Blockchain, iris recognition and more: digital identity solutions market expands to respond to fraud explosion
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August 14, 2021

The integration of machine learning, artificial intelligence, blockchain, and cloud computing technologies will take the digital identity solutions market to the next level, which by 2026 could more than double in size from the current US$23.3 billion to US$49.5 billion by 2026.

This trend is related to the "increase in cases of identity-related fraud and data breaches and the need to comply with various upcoming regulations," highlights a report published by ResearchAndMarkets.

The government and defense sectors will be the drivers of demand for these solutions, with Asia-Pacific being one of the regions with the highest growth for this analysis period, thanks to organizations increasingly aware and focused on adopting cloud tools for this purpose.

In a scenario of high diversification of attacks related to digital identity fraud, attackers are trying to penetrate various industries and devices in sectors ranging from finance, one of the main focuses, to tourism and entertainment platforms.

According to a recent TransUnion report, in the second quarter of 2021, the rate of suspected digital fraud attempts increased by 16.5% globally versus the same period in 2020. In the U.S., that rise was even above average at 17.1%.

An interesting aspect to keep in mind is that as security solutions block attackers, they look for other ways to carry out fraudulent operations by moving from one industry to another. In the second quarter, they targeted industries way beyond financial services as usual.

In this regard, the senior vice president of Global Fraud Solutions at TransUnion, Shai Cohen, said that fraudsters "tend to look for industries that may be experiencing a huge growth in transactions," which is why a higher percentage of fraud schemes were detected in gaming platforms, as well as travel and leisure and online video games.

In addition, at a time when millions of people continue to work from home and learn about the evolving health crisis on virtual platforms, one in three consumers said they had experienced covid-19-related digital fraud between April and June, demonstrating people's vulnerability to these attackers and the diversification of their strategies.

Artificial intelligence leverages innovation

Aware of this reality, companies are already studying the future of identity fraud-related attacks and are aiming at the next revolution in this sector, as stated by the Miami-based firm Preventor.

Preventor sees that in this context, a single layer of security will not be enough. Therefore, companies are increasingly investing in facial recognition technologies, combining voice authentication solutions, allowing artificial intelligence to recognize recorded voices and configure phrases as passwords.

On the facial recognition side, these solutions now make it possible, for example, to identify faces covered with masks and, thanks to high-definition video, to focus on precise details of the iris of the eye, offering extremely high reliability.  

These same technologies can compare one or more identities in a database thanks to facial or eye recognition solutions to prevent information theft. This practice can also prolong the analysis of documentation in companies that require these studies, as is the case of fintech, which is also increasingly betting on blockchain solutions to shield end-to-end operations.

In cloud-based tools, ResearchAndMarkets anticipates in the report that these will proliferate "due to their features, such as ease of use and reduced installation and maintenance costs."

The challenges and disruption ahead in 2026

The widespread adoption of biometrics in smartphones and a stronger focus on improving the customer experience, open up opportunities for companies to develop more machine learning, artificial intelligence, and blockchain tools.

In this regard, the report on Blockchain Regulation and Digital Identity in Latin America, released by the Inter-American Development Bank (IDB), points out the challenges regarding the protection and use of personal data in an ethical manner, one of the strategic points on which the ecosystem will need to continue to advance.

"Any digital identity system based on blockchain technology or distributed records should put the interests of the owner of the personal data above the interests that third parties may have over them," he explains in this regard.

With the massification of these tools within the reach of users, it is critical that companies seek advice from specialists in the area to comply with the strict regulations and at the same time direct all investments in technologies that genuinely fit the real needs of the business, generating millions of dollars in savings not only represented in money but also in productivity with the strength and experience that only companies with expertise in digital identity can offer.

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