Gartner predicts 500 million will use digital ID wallets by 2026

Gartner has forecasted that by 2026, at least 500 million smartphone users will be regularly using a digital identity wallet (DIW) to make verifiable claims. This shift in identity verification is anticipated to significantly impact how personal credentials are managed and shared in the digital realm.

Identity verification (IDV), commonly utilised today, usually involves a user taking a picture of their identity document alongside a selfie. This method establishes a degree of confidence in a person's identity during digital interactions when curated credentials either do not exist or provide insufficient assurance. Akif Khan, Vice President Analyst at Gartner, commented, "The market is entering a transition period as PDI solutions are starting to mature, which in the next five years, will reduce the demand for standalone IDV."

Challenges with the current IDV model have prompted the development of portable digital identity (PDI) solutions. Khan explained, "The processes in place today are focused and limited to core identity data—name, date of birth, address, etc. As more processes move online, there is a need to tie many other attributes to a user's identity, such as educational or workplace qualifications, proof of employment, not to mention healthcare data."

PDI is defined as a digital identity encompassing all necessary attributes for identifying someone online. It allows users to maintain some control over security and privacy. The principle behind PDI involves a user proving their identity initially with a trusted entity. Once authenticated, this proof of identity is recorded as an identity assertion. Depending on the model, the assertion may be stored centrally with the verifying party or saved in a DIW on the user's smartphone, leveraging verifiable credentials. This approach allows users to make claims without revealing unnecessary data, such as verifying they are over 18 without disclosing their date of birth.

The government's new digital ID Trust Exchange, or TEx, currently in its proof-of-concept phase, will influence PDI adoption in Australia. TEx aims to connect to users' digital wallets, enabling identity verification using official information already held by the government. The forthcoming Digital ID Act 2024, expected to commence in December 2024, will further support this transition.

Various vendor products are currently available, enabling organisations to adopt PDI technology for specific use cases. Khan suggested, "Chief information security officers (CISOs) don't need to wait for a government to provide all citizens with a PDI solution. For example, in the workforce, CISOs can use a readily available decentralised identity wallet product and issue it to their employees. The wallet could then be integrated into their employee onboarding, account recovery, and IT help desk workflows. This ultimately improves security by introducing strong authentication and improves UX by removing the need for repeated IDV."

These advancements in digital identity management highlight the ongoing transition towards more secure, user-friendly methods of verifying identity in the digital age, with significant strides expected in the coming years.