Digital trust challenges and opportunities in the year ahead
A thought piece by Alan Goode, CEO & Chief Analyst at Goode Intelligence
As we approach the month dedicated to Janus, the Roman god of doors and transitions, we can look back at 2022 and look forward to 2023. In the world of digital trust[1], we are certainly in a very transitional phase. 2022 has been a difficult year for much of the world with extreme weather, the war in Ukraine, the risk of recession, and friction between existing and emerging world superpowers.
Although Covid is still with us, for much of the world we can say we are in a post-Covid period. After the burning platform of having to rapidly stand-up digital services including the move from face-to-face to remote onboarding and remote working, the pendulum has swung back towards pre-covid commerce and work. Although the work from home trend – at the very least as a hybrid work model – is here to stay. A recent report found that 26 percent of U.S. workforce are now working remotely – versus 42 percent at the height of Covid lockdown in 2020, and up from 6 percent pre-covid in 2018.
2022 has seen increasing economic tailwinds for the world economy with high inflation, increasing interest rates and a heightened risk of recession. This is having a negative effect on the growth of digital trust services with less funding available and higher costs of borrowing.
Goode Intelligence monitors funding and M&A activity for the digital trust industry and we are seeing a decline in both the number and value of transactions, especially in the second half of 2022. Lower valuations provide an opportunity for companies that are looking to acquire competitors and partners. We expect an uptick in M&A activity going into 2023.
For eCommerce and B2C services, people are tightening their belts and spending less. Although 2022 Black Friday sales were up by 2.3 percent on 2021 figures in the U.S., the rate of growth has dropped from the 8.6 percent growth notched up in 2021. For service providers that operate on a per transaction fee, this will have a negative effect on revenue.
Turning to two critical aspects of digital trust technology, authentication, and digital identity, 2022 has seen several important events that point to a future of phishing-resistant passwordless user authentication and portable reusable digital identity. 2020 has been a good year for FIDO authentication with Apple, Google, and Microsoft announcing plans to support FIDO and Apple launching its Passkey solution based on FIDO standards. Goode Intelligence believes that this provides the foundation for wider FIDO adoption going into 2023.
The industry has made great strides in 2022 for the development and adoption of portable and reusable digital identities. The EU is pressing ahead with a digital identity and wallet that can be used across the Eurozone based on standards including eIDAS 2 and Digital Identity Wallet. The EU has announced that all EU states must have a Digital Identity Wallet available to its citizens by September 2023.
In the UK, the Digital Identity and Attributes Framework (DIATF) is at the centre of the country’s digital identity strategy initially targeting the right to work, right to buy and Disclosure and Barring Service (DBS) checks. Identity Services Providers (IDSPs) have already been certified against DIATF to support these digital identity services and it is likely that this will provide guidance and impetus for digital identity within the UK during 2023 and beyond.
I look forward to what is ahead in 2023 and expect another interesting year for the digital trust industry. Wishing you peace and prosperity for 2023.
Alan
[1] Digital Trust is a term that we are using to define several interconnected areas that Goode Intelligence covers including digital onboarding (identity verification), digital identity, authentication, privacy, and fraud management. Digital Trust World is our annual conference that brings the community together to discuss the latest developments and trends in this area with our next event scheduled for 3 November 2023 in London.
DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.
