As essential services continue to digitise at an increasing rate, there is no doubt that digital identity will remain a central focus for businesses and government entities for many months to come.

In many cases, digital identity has been recognised as the first line of defense in protecting funds and data from cyber threats. 

As a result, business attitudes to digital identity are evolving fast. iiDENTIFii’s inaugural Identity Index 2024: South Africa Edition maps out some of the trends we can expect in digital identity in the coming year.

1. Concern about AI-based fraud will continue to rise

One of the core reasons companies are pursuing digital identity solutions is to counter rising cyber threats and identity fraud. 

The Southern African Fraud Prevention Service found that impersonation fraud increased by 356% between April 2022 and April 2023. With AI and other technologies maturing all the time, this figure will only continue to grow.

With these looming threats, there is cause for concern with only 24.5% of the 200+ companies participating in iiDENTIFii’s index rating their identity management processes as Very Effective. 

Out of the larger companies, 68.8% exhibited heightened concern, and medium-sized companies showed slightly less concern (47.8%). The study found that AI-driven fraud was identified as a key emerging threat across all sizes and authentication levels, with smaller companies (63.2%) and businesses authenticating more than 10,000 individuals (77.4%) especially noting this risk.

There are other significant threats that will continue to challenge businesses including internal fraud, synthetic identities and a general trend towards more sophisticated fraud tactics.

2. Businesses are experiencing the limits of password-based authentication

In the fight against fraud, there is a growing understanding that passwords and OTPs alone are no longer sufficient to ward off growing threats. While passwords still have a role to play, security is more effective when it is enhanced with two-factor authentication, and especially with additional layers of biometrics. For example, enhancing OTP, or even replacing OTP, with 4D Liveness and face biometric authentication.

3. AI powered biometrics

While AI may be powering certain cyber threats, it is also an engine of positive innovation in fraud detection. The Identity Index found a shift towards AI solutions, with larger companies and those authenticating over 10,000 individuals showing an inclination towards AI-based fraud detection (60.9% and 77.5%, respectively) as well as biometric methods (30.2% and 43.4%, respectively).

The possibilities of AI go beyond security. Deep data analytics and reporting is growing in sophistication, allowing businesses detailed insight on their onboarding process and highlighting any potential points of friction.

4. Verifiable credentials are an imminent reality

In the future, consumers will be given the power to decide exactly what digital data is shared about them. This will be made possible through ‘verifiable credentials,’ an online wallet which will allow consumers to keep a range of personal, private details that various people may need access to. 

Verifiable credentials give consumers a secure, accessible digital equivalent to identity documents, university certificates, passports and more, empowering them to decide who is given access to these documents.

4. Digital identity solutions need to be continually evaluated

Gartner’s 2025 Trends Report highlights disinformation security as an emerging technology category aimed at systematically discerning trust. They illustrate how continuous risk scoring, contextual awareness and a continuous adaptive trust model have a powerful role to play in protecting organisations.

iiDENTIFii’s index also illustrated a trend towards continuous assessment, with 45% of businesses authenticating more than 10,000 individuals reassessing their solutions on a quarterly basis. 

There remains room for improvement, with only 33.3% of medium-sized companies reviewing their solutions quarterly. In future, companies of all sizes and authentication levels should find systematic ways to keep pace with fraud tactics.

6. Evolving policy on digital identity and need for collaboration

Digital identity will remain central in protecting data and resources for the foreseeable future. There is a growing trend towards greater collaboration and advocacy within digital identity.

Interestingly, the Identity Index showed that smaller companies (1-200 employees) are expressing a high demand for stricter regulations (70.6%), while businesses authenticating more than 10,000 individuals also show significant support (85.0%).

Businesses are seeing the value of enhanced consumer education and better industry collaboration, with 53.1% of larger companies seeing it as critical. Internationally, regulation and collaboration are also being viewed as a priority, with the National Academies Facial Recognition Report being used to inform US policy on digital identity.

Conclusion

While trends continue to evolve at pace in the market, collaboration, stronger regulation and education will ensure that digital identity continues to evolve and protect businesses and consumers.