A digital ID, representing an individual online with personal information and credentials, is widely recognized across various sectors for establishing and authenticating identity. However, if not secured properly, this technology may be susceptible to fraud and identity theft.
According to the latest study by Regula, a global developer of forensic devices and identity verification solutions, most organizations globally anticipate a notable reduction in identity fraud after implementing digital IDs. Expectations regarding the extent of this decrease vary by region.
North American respondents are the most enthusiastic about this trend—36% of organizations from this region expect up to a 29% reduction in fraud, surpassing the global rate. Europeans align with global trends, with 26% of respondents expecting a 20% to 29% reduction in fraud. The Middle East paints a different perspective, with 35% of respondents expecting up to a 39% reduction in fraud thanks to digital IDs.
While the study praises digital IDs as "a critical evolution that offers a strategic edge in the ongoing battle against fraud," companies are still battling a surge in identity threats. According to an earlier Regula survey, every fourth bank had experienced over 100 identity fraud incidents in the previous year, with the median cost of identity fraud in the banking sector being over $310,000.
“The results of the Forrester Consulting study prove that there is a strong belief in the effectiveness of digital IDs in enhancing security measures. That is true to a certain extent. For example, by verifying the authenticity of issuing certificates and digital signatures, it is rather reliable to prove the authenticity of a digital ID. But no form of ID, physical or digital, can ensure that you are dealing with a genuine person or even a person at all. Sophisticated identity fraud, including deepfakes and other AI-generated threats, is evolving rapidly, and to address this challenge, we need continuous advancements in fraud detection technologies and adaptive security measures,” says Ihar Kliashchou, Chief Technology Officer at Regula.
The same survey also revealed that the most common form of fraudulent activity experienced by organizations was the use of fake or modified physical documents. The most alarming threat was the rise of AI-generated identity fraud like deepfakes, with 37% of organizations experiencing deepfake voice fraud.
After all, it all comes down to security. If digital IDs are implemented and used, they need to be as secure as possible. For 50% of respondents, the biggest con of digital IDs is the increased risk of data breaches and cybersecurity threats. In addition, 40% have privacy concerns due to surveillance and data tracking. It's no secret that digital IDs would enhance customer engagement and streamline customer journeys. However, strong security measures are essential to maintain customer trust.
