Out with Physical Documentation and in with Mobile Identity (ID)
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Market Overview
- Mobile identity (IDs) take physical documentation, such as national IDs, passports, driver’s licenses, and healthcare cards, and digitalize them onto a mobile device. With an enormous existing smartphone installed base and strong growth in developing economies, the market opportunities for these derivative forms of ID are significant.
- Growing at a Compound Annual Growth Rate (CAGR) of 19.2%, the number of mobile IDs in circulation will increase from 322 million in 2021 to more than 1 billion by 2027.
- Europe will easily be the largest mobile ID regional market, accounting for 21% (216.7 million) of the worldwide installed base.
- 132.4 million European mobile national IDs and 51.1 million mobile driver’s licenses are expected by 2027.
- North America is a key market for mobile driver’s licenses, notably in the digital wallet form factor, with 70.9 million credentials anticipated by 2027. This will be a penetration rate of 26.7%.
- The Asia-Pacific region currently accounts for the majority of the mobile ID market, with 201.8 million mobile IDs in 2021. A large portion of this is made up of mobile national IDs, at 189.3 million. By 2027, there will be 556.5 million mobile national IDs and 38.1 million mobile driver’s licenses in circulation in Asia-Pacific.
- In Latin America, mobile national ID credentials can be expected to increase from 8.1 million to 34.1 million between 2021 and 2027. Together with mobile ID growth, primarily from the Brazilian credential, from 5.1 to 34.7 million across the forecast period, Latin America’s mobile credentials in circulation will hit 68.8 million by 2027.
- Nigeria employs a mobile ID app, though with relatively low penetration. Additionally, South Africa is preparing to launch a mobile driver’s license in 2024, following the introduction of a new physical smart driver’s license in 2023. These projects will help see the Middle East & Africa’s figure for mobile IDs in circulation hit 45.4 in 2027.
“For the year 2021, ABI Research estimates a total of 322 million government mobile IDs in circulation globally. While not an insignificant figure by any means, and despite an array of existing mobile ID solutions already used worldwide, the mobile ID market can be considered far from mature, and set to see major developments and growing adoption in the coming years.” – Lucas Stewart, Analyst at ABI Research
Key Decision Items
Digital Wallets Should Be Seen as Future-Proof
As societies increasingly shift toward a contactless economy, the next generation of mobile IDs will come in the digital wallet form factor. Similar to the payments industry, digital wallets serve as a unified platform where users can use a mobile ID in online and in-person scenarios (e.g., healthcare ID, driver’s license, etc.). This added convenience will improve the user experience, which will be key to sustaining success in the mobile ID market.
ABI Research anticipates strong uptake in the use of digital wallets, notably in Europe. Ecosystem players like app developers that fail to provide digital wallet solutions will be setting themselves up for disappointment in the long run. For these reasons, it’s imperative for mobile ID companies to strongly consider how to work mobile wallet offerings into their product portfolios. Until your digital wallet mobile ID installed base reaches a sufficient level, it’s wise to maintain the availability of mobile ID apps with strong customizability/modularity.
Understand the Importance of Public-Private Partnerships in Expanding Mobile ID Use Cases
Public-private partnerships should be seen as one of the top priorities for mobile ID ecosystem players. This collaboration, as seen in the European Union (EU) with EU Digital Identity Wallets (EDIWs), will drive innovation and functionality beyond just government services. A public-private convergence sees the conjoining of government-based services (e.g., social welfare, taxation, etc.), while at the same time, giving trustworthy privately-owned enterprises the opportunity to access and use citizens’ digital IDs for services. As an example, the mobile ID may be used for seamlessly authenticating the credentials of banking or insurance customers—benefiting both the customer and the enterprise.
Devise an SSI Solution for Mobile ID Security
Self-Sovereign Identities (SSIs) is an emerging digital identity technology that transfers data control over to the end user. In most cases, SSI decentralizes with data that are tied to a distributed ledger. Normally, when someone has to provide a physical document, all citizen information is shared with the services provider. However, through cryptographic proofs, SSIs remove this requirement under mobile ID applications. Instead, only the essential citizen ID data is pulled for verification/authentication contexts.
ABI Research recommends that mobile ID companies seek technical support and Research and Development (R&D) in blockchain and Distributed Ledger Technology (DLT) for storing sensitive data. Doing so will ensure mobile ID product alignment with the potentially major market opportunities that will go hand-in-hand with SSI adoption. Given the prevailing citizen privacy concerns, this is a great possibility.
Follow ID Standards like eIDAS to Ensure Interoperability
Founded in 2014, the Electronic Identification, Authentication, and Trust Services (eIDAS) EU regulation is one of the most influential standards shaping the mobile ID space. Through the eIDAS 2 initiative (new revision), all EU member states must provide their respective citizens an option to use a digital ID wallet by September 2023. These EDIW solutions, interoperable in nature across borders in the EU, provide clear guidance on requirements for mobile ID products. While public services will be the first to accept the new wallet-form mobile ID under the eIDAS revision, the private services sector will follow shortly. Mid-2024 will be a major inflection point when eIDAS 2 support will be more widespread across Europe.
The global effect of eIDAS 2 on the mobile ID market cannot be understated. Although the technology isn’t brand new, the EU’s ambitions are the first of its kind in terms of organization, scale, and modularity. As eIDAS mobile wallets continue to evolve in the region and technological investment proliferates, other regional players will be watching intensely to see the best course of implementation. Moreover, eIDAS’ support for SSIs will be an adoption strategy that governments will likely pursue given citizens’ security fears.
Some other notable standardizations and initiatives for mobile ID market players to pay attention to include:
- The International Organization for Standardization (ISO)
- The International Civil Aviation Organization (ICAO)
- The General Data Protection Regulation (GDPR)
- The REAL ID Act
- Identity for Development (ID4D)
Participate in Digital ID Wallet Pilots
To test out the technology and identify any weak points, mobile ID pilots are playing an integral role in furthering the market. It’s important that mobile ID solutions are vetted in order to gain the trust of the ecosystem and citizens who will engage with mobile IDs. These tests are being used for both mobile ID implementations of a credential and in private use cases like banking, insurance, or at universities. There are multiple pilots currently underway or slated for imminence on the European continent, such as France’s digital health insurance card pilot.
To gain favor, mobile ID solution providers should aim to get involved in pilots and work side-by-side with governments and enterprise sectors. In the process, these implementers will be more likely to be selected for wide-scale commercial deployments.
Leading up to the September 2023 eIDAS deadline, a number of digital ID wallet pilots are expected to launch in early 2023. These pilots will ensure that European service providers will be in a good position to gain compliance to use the new format of digital ID within their proofing and authentication processes.
Key Market Players to Watch
Dig Deeper for the Full Picture
For a more detailed breakdown of the mobile ID market, download ABI Research’s The Future Shape of the Mobile Identity Market: New Technologies, Regulations, and Standards research report.
Not ready for the report yet? Check out our How the Payments Market Is Solving for Environmental Concerns Research Highlight. This content is part of the company’s Citizen Digital Identity and Trusted Device Solutions Research Services.
Related Research
Report | 4Q 2022 | AN-5575
