Research and analysis

Digital Identity Sectoral Analysis 2024: Interim Findings

Published 21 December 2024

Executive summary 

The Office for Digital Identities and Attributes (OfDIA), part of the Department for Science, Innovation and Technology (DSIT), has commissioned Oliver Wyman, Perspective Economics and Projects by IF to conduct a study of the digital identity sector in the UK. This interim sectoral analysis has been undertaken by Perspective Economics. Additional research including market adoption, barriers and opportunities for growth, and consumer understanding of digital identity is underway, and will be shared in 2025. 

This report highlights a strong market with significant economic contribution and growth potential. We find: 

Sectoral structure and scale 

• 270 firms operating in the UK digital identity market. Of these, 231 are dedicated providers focused on digital identity, and 39 are diversified firms offering digital identity alongside other services  

• These firms generated £2.05 billion annual revenue in 2023/2024, with £858 million Gross Value Added (GVA) and 10,813 full-time equivalent (FTE) employees 

• Geographic distribution shows approximately half of firms are registered in London, with clusters in the South East (15%) and North West (9% of firms, 15% of employment) 

• Nearly half (49%) of firms operate at small or medium size (10 to 249 employees), representing significant mid-market provision in the sector. This also indicates a market where most companies have scaled beyond initial startup phase and may be well positioned for future growth

• Of the 270 firms identified, 200 (74%) are headquartered in the United Kingdom, with strong international presence primarily from US-based firms 

Market capability and demand 

• 70% of providers offer identity or attribute verification services, and over half (52%) support digital identity creation and management 

• Key services include document verification (54%), identity management (51%), and biometrics (46%). Over a third (34%) offer solutions aligned to ‘trust services’ (e.g. digital signatures, seals and certificates) 

• The sector serves a wide range of industries. Review of web and customer data highlights strong demand from financial services (85% of providers), health and public sector (58%), and technology sectors (57%) 

Growth and investment 

• The sector demonstrates strong productivity, with GVA per employee (£79,366) approximately 42% higher than average UK employee estimates 

• Employment has grown consistently (average of 11.7% per annum) over the past five years 

• We estimate that, if current growth rates continue, the sector could reach £4 billion (mid-scenario) in revenue by 2030 

• Dedicated UK firms have raised £826 million in external investment since 2015, with £148 million raised across 34 deals in 2023 (19% growth), suggesting a resilient market 

Introduction and background 

Introduction 

The government is enabling the use of trusted digital identity services in the UK. Digital identities give people another way to securely prove things about themselves, such as who they are or what their age is, without having to present physical documents. 

This work is led by the Office for Digital Identities and Attributes (OfDIA), which is part of the Department for Science, Innovation and Technology (DSIT). To understand the size and scale of the digital identity market and to examine current and potential take-up of digital identity solutions, a market analysis is required to: 

• Develop an initial and shared understanding of how the digital identity market can be defined and measured: This includes firms that have been certified against the rules of the UK digital identity and attributes trust framework and providers whose service has been certified against rules specified in the Right to Work, Right to Rent and Disclosure and Barring Service (DBS) supplementary codes. This analysis also identifies additional relevant firms offering products or services such as identity verification, and age and identity checks 

• Understand the size and scale of the market in the UK: The firms identified are combined into a single dataset to explore the size and scale of the sector through measures such as firm count, revenue, employment and external investment 

• Consider the growth opportunities for the digital identity market, and explore market dynamics: This explores growth trends, areas of demand, and market use cases for digital identity solutions 

Scope and methodology 

The UK’s digital identity sector, like other technology markets (such as the cyber security sector measuring in the DSIT Cyber Security Sectoral Analysis), lacks a formal Standard Industrial Classification (SIC) code. This necessitates the development of a robust definitional framework to identify and measure relevant market activity. The research approach combines two key scoping considerations with a multi-stage methodology. These include: 

• High-level definition: Developed through DSIT and industry consultation to establish clear boundaries of what constitutes ‘digital identity’ 

• Functional scope: Firms must be UK-registered, commercially active, and provide digital identity products or services with identifiable revenue or employment 

The research methodology includes: 

Stage 1: Desk review and definitional scoping 

A comprehensive review of trust framework providers, industry events, and an initial web review to identify provider terminology and service offerings. 

Stage 2: Identification of providers 

Review of over 1 million active UK company descriptions, and use of web data review to develop an initial longlist with relevancy scoring and filtering. 

Stage 3: Taxonomy development 

The use of stakeholder workshops to validate definitional scope and to create and refine a digital identity sector taxonomy (see ‘Defining digital identity’ section). 

Stage 4: Market shortlisting 

All firms were matched against Companies House and web data, reviewed to confirm active status, and included in a final dataset for analysis and enrichment. 

Stage 5: Data enrichment 

The research team has used web data, company accounts, and proprietary datasets to develop a digital identity sectoral dataset, including key measures such as registered entity, size, location, revenue, employment, investment, and description data. 

Stage 6: Market analysis 

This document sets out an economic assessment of sector revenue, employment and Gross Value Added (GVA). 

This report presents initial findings on market size and definition, providing a snapshot of the UK’s digital identity landscape. A comprehensive ecosystem analysis, including partnerships, innovation metrics and demand assessment is underway, and is expected to be published in 2025. 

Defining the digital identity ecosystem 

This section establishes a framework for understanding the UK’s digital identity ecosystem, setting out both the core market definition and the wider value chain. It provides a structured view of key market segments and activities, enabling analysis of the UK’s current capabilities and future opportunities in digital identity provision. 

Defining digital identity 

As part of the research, we developed an initial definition to help identify and assess relevant market providers:

“The digital identity sector provides solutions for creating, managing, and verifying digital representations of individuals. This enables secure, trusted, and effective proof of identity and attributes across online and in-person interactions, and a way to gain verified access to products and services.”  

^{(Working definition, 2024)}

Further, the research team has also considered practical and wider applications for digital identity solutions that help to inform the definitional and scoping aspect of this research. This refers to where providers can help customers and individuals through: 

• Creating, managing, and verifying digital identities, attributes and credentials for individuals and organisations 

• Providing authentication, authorisation and biometric solutions for secure access to digital services 

• Providing identity verification services to establish the authenticity of digital identities 

• Enabling regulatory and compliance checks, such as background screening, Right to Work verification, and DBS checks 

• Developing systems that give users control over their digital identity and data sharing 

Digital identity solutions have a range of direct benefits for organisations and users, such as: 

• Ensuring compliance with privacy and data protection regulations and standards 

• Improving accessibility of digital services through inclusive identity solutions 

• Enhancing security measures to prevent identity fraud and unauthorised access 

• Streamlining identity processes to reduce friction in digital interactions 

A digital identity sectoral taxonomy 

The purpose of a sectoral taxonomy is to explore areas of product and service provision to help understand the strengths and capabilities of the market. The taxonomy was developed through identifying and reviewing digital identity firms in scope and analysing web data regarding product and service provision. This involved extraction and analysis of hundreds of unique keywords, and a workshop with DSIT and the wider research team to identify areas of relevance, market knowledge, and policy context. Each company identified can offer multiple products or services, tagged against the taxonomy. 

The taxonomy comprises five primary categories, each representing distinct but aligned capabilities across the identity lifecycle. This begins with foundational stages, such as creating or using a digital identity and configuring which attributes can be shared. It then moves to identity and attribute verification, which involve confirming an individual’s identity and validating key attributes or checks relevant to the process. The taxonomy also includes Trust Services (aligned to a ‘trust service provider’ definition). This typically includes eSignatures, certificates for website authentication, electronic seals and time stamps. We also consider the role of identity data and intermediary providers e.g. ensuring access to relevant data for checks, risk, fraud, credit, and analytical purposes. 

The taxonomy is summarised below, and set out in full in Annex A: 

^{Figure 1. Digital identity taxonomy of products and services}

Identity Foundations: infrastructure for creating, managing and storing digital identities, including Identity Issuance, Identity and Consent Management, and the wider role of Digital Wallets and Identity Services. 

Identity Verification: technologies and processes to verify individual and organisational identities, including Document Validation, Biometrics and Liveness Detection, Knowledge-Based and Social Verification. 

Attribute Verification: technologies and processes to validate specific characteristics or credentials, including Age Assurance, Professional and Credential Checks, Background Screening, and Financial and Address checks. 

Trust Services: services to provide trust in digital transactions, including Digital Signatures, seals and certificates, the role of website authentication, and wider governance and compliance tools (e.g. time stamps, registered delivery services). 

Identity Data and Intermediaries: services enabling data flow and integration, including data brokerage, orchestration, risk, fraud and credit data, and wider analytics.

The UK digital identity sector: market profile 

This section sets out the size and scale of the UK’s digital identity sector. 

Number of digital identity providers 

We estimate that there are currently 270 firms active and registered within the UK providing digital identity products and services. We find 231 ‘dedicated’ firms (firms that only or mainly provide digital identity related products or services), and 39 ‘diversified’ firms (firms that provide digital identity among other products or services, to the extent that the study captures the proportional activity only (i.e. number of people working in a digital identity role only). 

Products and services offered 

Within this study, we consider the products and services offered by providers mapped against the taxonomy. We find that a typical (median) provider offers products or services aligned to five taxonomy sub-categories. For example, a firm may develop digital identities and offer verification and trust services. Further, there are several partnerships and collaborations within the market, where vendors offer a shared portfolio of identity solutions to customers. 

We find 1,586 unique markers against the 270 providers (a taxonomy tag is applied if sufficient trading data is found). This is informed using web and text data for each firm, and the use of a text classification model. Given the breadth of provision (where providers offer a range of solutions), we classify companies using multiple tags to provide greater granularity regarding provision. 

^{Fig 2. Taxonomy mentions (taxonomy categories)}

Taxonomy categories	Percentage of firms
Identity Verification	70%
Attribute Verification	60%
Identity Foundations (excluding Identity Services only)	52%
Trust Services	34%
Data and Intermediaries (includes Data Brokerage and Analytics and Insights only)	25%

^{Source: Perspective Economics (n = 270)}

Figure 2 highlights that: 

• 70% of the providers are involved in identity or attribute verification, underpinned by the role of schemes such as the UK digital identity and attributes trust framework 

• Just over half (52%) of providers are involved in issuing usable and reusable digital identities or supporting with identity data consent and privacy management 

• Over a third (34%) offer solutions aligned to ‘trust services’ (i.e. offer solutions such as digital signatures, seals and certificates) 

• Approximately a quarter (25%) provide identity data or analytics e.g. data brokers sharing identity data for supporting with financial transactions, etc.

^{Fig 3. Product and services mentioned by providers (taxonomy subcategories)}

Document based	54%
Identity and consent management	51%
Biometrics and liveness detection	46%
Financial and address verification	39%
Orchestration and interoperability	34%
Background screening	29%
Professional and credential verification	28%
Analytics and insights	25%
Knowledge Based Verification	23%
Age assurance	23%
Digital signatures (eSignatures)	22%
Governance and compliance	20%
Identity issuance	12%
Certificates	11%
Authentication	11%
Digital wallets	10%
Social verification (vouching / proofing)	5%
Data brokerage	4%

^{Source: Perspective Economics (n = 1,586 mentions of product or service provision mapped against the sub-taxonomy across 270 providers). This suggests an average of c. 5-6 taxonomy ‘hits’ per firm.}

Figure 3 provides additional granularity for the percentage of providers that mention providing products or services^{[footnote 1]} aligned to each sub-category. This highlights that document-based verification (54%) is the most provided approach by providers, followed by identity management (51%), biometrics and liveness (46%), and financial and address verification (39%). In the UK market, background screening (29%) and professional and credential verification (28%) are also frequently mentioned by providers. We note that age assurance^{[footnote 2]} (23%) is also a recurrent category. 

We also find a lower incidence of mentions regarding identity issuance (12%), digital wallets (10%), social verification (5%), and data brokerage (4%) suggesting either a higher level of market concentration (e.g. large vendors with established wallet offerings), or lower levels of adoption (e.g. social verification). 

Location 

Figure 4 sets out the registered UK location of the 270 digital identity firms identified. 

^{Figure 4. Registered location of UK digital identity firms}

^{Source: Perspective Economics (n = 270)} 

As shown in Figure 5, most firms are registered in London (51%) followed by the South East (15%). However, the data also suggests firm level activity in the North West (which accounts for 9% of firms, but 15% of the sector’s employment as explored in the next section). 

^{Figure 5. Registered location of UK digital identity firms by region (count)}

London	51%
South of England	15%
North West	9%
East of England	5%
South West	5%
Wales	3%
West Midlands	3%
Scotland	3%
Yorkshire and the Humber	2%
East Midlands	2%
North East	1%
Northern Ireland	0%

^{Source: Perspective Economics (n = 270)}

The research team also has found that, of the 270 digital identity firms in scope, 200 (74%) are headquartered or were founded in the United Kingdom, with the other 70 (26%) headquartered or founded internationally. Most of these firms are based in the United States (44) with the remainder from countries such as Australia, the Netherlands, France, Spain, Germany and 15 other countries. Further research shall explore the role of regional and inward investment, exports, and international activity. 

The UK digital identity sector: economic estimates 

This section explores digital identity related revenue, Gross Value Added (GVA), and employment. It also examines historic growth, and initial market growth scenarios. 

Company registrations 

Figure 6 sets out the running count of active firms^{[footnote 3]} by founded date. This highlights that the ecosystem contains a mix of established firms (registered several decades ago, with strong presence in areas such as background screening and financial data), as well as sustained growth in new providers in areas such as identity verification and trust services since the 2000s. 

^{Figure 6. Running count of firms by founded year}

^{Source: Perspective Economics (n = 270)}

Estimated company size 

This section examines the size distribution of these firms based on their UK operations^{[footnote 4]}. We also note that many firms will have varying global and UK footprints e.g. a multinational firm may have a ‘large’ global presence with thousands of employees, but a small research and development office in the UK. 

^{Figure 7. Estimated size (UK)}

Estimated size (UK)	(%)
Large	11%
Medium	14%
Small	35%
Micro	40%

^{Source: Perspective Economics (n = 270)}

The size estimates highlight: 

• A significant mid-market presence: Nearly half (49%) of firms operate at small or medium size (10 to 249 employees), representing significant mid-market provision in the sector 

• A maturing ecosystem: The proportion of micro-sized firms (40%) sits below the UK business average of 81% and the cyber security sector average of 55%, indicating a market where most companies have scaled beyond initial startup phase, and may be well positioned for future growth 

• International Investment: The UK is an attractive location for major international players in digital identity, with 20% of firms identified being globally ‘large’ enterprises. These multinationals maintain varying UK footprints, from dedicated research and development facilities to full-scale service delivery operations 

Estimated employment 

We estimate that there are 10,813 Full Time Equivalents (FTE) working in a digital identity related role in the UK across the 270 firms identified. We estimate that most of these roles (83%, 8,946) are employed within ‘dedicated’ firms suggesting a specialist market. The research team has reviewed web and accounts data to estimate relevant headcount in wider diversified firms (e.g. large consultancies with a digital identity offering). 

Estimated digital identity related employment can be segmented by a range of variables such as company size, region, international and domestic markers. 

Estimated headcount by size 

Employment is broadly concentrated within the large firms (59% of the workforce, across 31 firms). 

Size (UK)	Count (percentage)
Large	6,431 (59%)
Medium	2,746 (25%)
Small	1,308 (12%)
Micro	328 (3%)

Estimated headcount by region 

Employment is highly concentrated within London registered firms (46%); however, there are some signs of significant clusters in the North West (15%), and South West (8%). There are some regions in the UK with much lower-than-expected concentrations of activity, including Scotland, East of England, West Midlands, North East, and Northern Ireland. 

Region	Count (percentage)
London	4,951 (46%)
North West	1,632 (15%)
South East	1,510 (14%)
South West	844 (8%)
Wales	574 (5%)
East Midlands	522 (5%)
Yorkshire and the Humber	467 (4%)
Scotland	170 (2%)
East of England	86 (1%)
West Midlands / North East / Northern Ireland*	<1%

Estimated headcount by domestic and international marker 

The UK attracts considerable interest from international firms, and these firms (70) account for around 37% of the UK digital identity workforce. This is primarily driven by US firms, with some European firms also interacting with the UK market and engaging with schemes such as the UK digital identity and attributes trust framework. 

	Count (percentage)
UK Headquartered	6,776 (63%)
Internationally Headquartered	4,037 (37%)

Estimated headcount by taxonomy offering 

Analysis of employment across the digital identity taxonomy categories shows how jobs are distributed between primary specialisations (‘best fit’) and broader service provision (‘multiple tag’). We present both figures to reflect the diverse product and service offerings among providers. 

Identity Verification is the largest category for employment, with 5,065 roles (47%) in firms primarily focused in this area. Most employees (81%) work within providers that offer some form of identity verification or attribute verification. Trust Services and Identity Data and Intermediaries show smaller specialist employment (735 and 619 jobs respectively) but are significant in wider provision, with 26% of employees working in firms providing Trust Services, and 55% in those offering identity data and intermediary solutions. 

Taxonomy category	Best fit	Multiple tag
Identity Foundations	2,801 (26%, 67 firms)	4,860 (45%)
Identity Verification	5,065 (47%, 106 firms)	8,773 (81%)
Attribute Verification	1,593 (15%, 37 firms)	8,299 (77%)
Trust Services	735 (7%, 40 firms)	2,783 (26%)
Identity Data and Intermediaries	619 (6%, 20 firms)	5,915 (55%)

Estimated revenue and Gross Value Added (GVA)

In the most recent financial year (2023/2024), we estimate that total annual digital identity related revenue reached £2,053 million^{[footnote 5]} across the 270 firms. This relates to revenue attributable to digital identity activity only. 

Estimated revenue by size 

Revenue is highly concentrated among the large providers (70% of all revenue). Small and micro providers make up 9% of sectoral revenue, with several companies at pre-revenue stage. 

Size	Digital identity related revenue (estimate)	Percentage
Large	£1,439 million	70%
Medium	£442 million	22%
Small	£140 million	7%
Micro	£33 million	2%

Revenue by region 

Digital identity revenue shows regional variation across the UK. London remains the largest market concentration with £861 million (42%) of sector revenue. However, the North West demonstrates strength as the second largest regional hub, generating £387 million (19%) of UK revenue - highlighting its importance as a digital identity cluster. The South West and South East each account for 10% of revenue (£213 million and £209 million respectively), with Wales showing notable presence at £190 million (9%). 

UK Region	Digital identity related revenue (estimate)	Percentage
London	£861 million	42%
North West England	£387 million	19%
South West England	£213 million	10%
South East England	£209 million	10%
Wales	£190 million	9%
East Midlands	£100 million	5%
Yorkshire and the Humber	£54 million	3%
Scotland	£25 million	1%
East of England	£9 million	0%
West Midlands	£4 million	0%
North East England	<£1 million	0%
Northern Ireland	<£1 million	0%

Estimated revenue by taxonomy offering 

Analysis of revenue across the digital identity taxonomy categories highlights how revenue is distributed between primary specialisations (‘best fit’). Identity Verification is the largest taxonomy category for revenue, with £1,055 million (51%) generated by firms primarily focused in this area. Combined with Attribute Verification (£277 million, 13%), verification services account for nearly two-thirds of all sector revenue (64%). 

Identity Foundations represents a significant proportion of sector revenue (£474 million, 23%), whilst Trust Services and Identity Data and Intermediaries show smaller specialist revenue (£133 million and £114 million respectively, both 6%) among best-fit provision. 

Taxonomy category	Best fit
Identity Foundations	£474 million (23%)
Identity Verification	£1,055 million (51%)
Attribute Verification	£277 million (13%)
Trust Services	£133 million (6%)
Identity Data and Intermediaries	£114 million (6%)

Gross Value Added 

Gross Value Added (GVA) is used as a measure of productivity (at a firm level, or above). It captures the sum of a firm’s gross profit, employee remuneration, amortisation and depreciation. In this respect, any increase in GVA can highlight an improvement in the performance of a firm or a sector, as evidenced through higher profitability or enhanced earnings. 

We estimate that total annual digital identity related GVA reached £858 million across the 270 firms. The majority (74%) is concentrated within large firms. 

Size (UK)	Estimated digital identity GVA	Percentage
Large	£632 million	74%
Medium	£154 million	18%
Small	£59 million	7%
Micro	£14 million	2%

GVA by employee 

Based on current employment estimates, we estimate that GVA per employee within the digital identity sector is approximately £79,400. This is broadly comparable to the broader digital and AI sectors, but 42% higher than wider English workforce levels, highlighting a high productivity sector. 

Comparison table 

Sector	GVA per employee (estimate)
Digital identity GVA per employee estimate	£79,400
Cyber[footnote 6]	£106,300
Digital[footnote 7]	£84,700
Artificial Intelligence[footnote 8]	£89,900 (all)
England (per workforce job)[footnote 9] (2020)	£56,000

Historic growth and forecast scenarios 

As set out within previous sections, measuring the digital identity sector can involve varying definitions and scope. However, it is useful to explore both growth to date, as measured by values such as company headcount, revenue, and profitability; and market projections based on market sentiment and forecasting scenarios. 

Due to the relatively small market sample (270 providers, with only 44 dedicated providers submitting full accounts to Companies House), these estimates should be treated with appropriate caution. Company performance varies significantly based on factors such as development stage, investment cycles, and market positioning - from firms with established solutions to early-stage companies investing in new technologies. 

Growth to date 

The UK digital identity sector has demonstrated strong growth, with employment showing a compound annual growth rate (CAGR) of approximately 11.7% over the past five years. This growth trajectory is based on analysis of dedicated firms with available accounts, providing insight into employment trends across the sector. 

Year ending	Estimated headcount (accounts)	Growth rate
2023/2024	8,464	7%
2022/2023	7,912	21%
2021/2022	6,534	11%
2020/2021	5,876	5%
2019/2020	5,602	15%
2018/2019	4,868	7%
Estimated compound annual growth rate (CAGR):		11.7%

Forecast scenarios 

There are a range of global ‘market size’ estimates from various market research providers for the global digital identity market. However, many of these studies will have varying definitions and scope, and as such, these are indicative of wider global activity. We find these typically span from between c. $17 billion^{[footnote 10]} - $42 billion^{[footnote 11]} in 2023/2024, with annual compound growth estimates of c. 16% - 19% per annum over the next five years. 

For the UK digital identity market, we consider three scenarios below (Fig 8), informed by historic growth to date, and wider global estimates. These include: 

• High growth (15% CAGR to 2030): The UK market grows in line with global projected growth, trending above the previous five-year UK average growth rate 

• Medium growth (11.7% CAGR to 2030): The UK market grows at a similar rate to the previous five years 

• Low growth (7% CAGR to 2030): The UK market growth at a lower rate (but in line with the most recent annual growth rate for 2023/2024) 

We assume a high (15% CAGR), medium (11.7%), and low (7%) growth scenarios for the market, and apply these against current revenue and employment measures below. These are indicative and are not forecasts. 

^{Figure 8. UK digital identity indicative market growth scenarios (to 2030)}

^{Source: Perspective Economics}

Summary statistics (2024 estimates) 

Size	Firm count	Estimated revenue	Estimated GVA	Estimated employment (FTE)	Revenue per employee	GVA per employee
Large	31	£1,437 million	£632 million	6,431	£223,702	£98,251
Medium	37	£442 million	£154 million	2,746	£160,792	£56,069
Small	94	£140 million	£59 million	1,308	£107,202	£44,923
Micro	108	£33 million	£14 million	328	£99,535	£41,503
Grand total	270	£2,053 million	£858 million	10,813	£189,867	£79,366

Summary 

Overall, the research finds: 

• A strong sectoral foundation: The UK digital identity sector comprises of 270 active firms employing approximately 10,800 people, demonstrating a robust ecosystem of established providers and innovative companies 

• High-value employment: The sector shows strong productivity metrics, with average revenue per employee of £189,867 and GVA per employee of £79,366 - approximately 42% higher than the wider UK economy. This indicates a high-skill, high-value sector 

• Regional development: While London remains a primary hub, significant cluster activity is emerging in regions such as the North West, highlighting opportunities for regional growth and innovation 

• Growth potential: The sector shows strength in its large and medium businesses, which together account for 91% of sector revenue, and are anticipated to grow further. Small and medium-sized firms demonstrate significant potential for scaling, particularly as new market opportunities emerge across different use cases

Investment landscape 

This section draws upon the Beauhurst platform which tracks announced and unannounced investments in high-growth companies from across the UK. The research team has matched company registration numbers and company names identified within this current analysis with the platform to identify 282 fundraisings associated with 65 tracked companies. 

In other words, approximately three in every ten (28%) dedicated firms identified within the analysis has received some form of external investment or fundraising since incorporation. 

Investment to date 

We find that UK dedicated digital identity firms have collectively raised £826 million in external investment between 2015 - 2023. On a deal basis, we find an average deal size of £3.3 million, and median deal of £565,000. We also find that of the 65 dedicated firms that have raised investment, 23 have raised across five or more deals, suggesting iterative fundraising over time. 

Figure 9 highlights an increase in both the number of deals and amount raised between 2022 and 2023 (from £126 million across 31 deals, to £148 million raised across 34 deals). This highlights increased investor activity in the digital identity ecosystem (c. 19% increase) compared to a wider backdrop of significantly reduced investment in wider sectors^{[footnote 12]}. This chart also demonstrates that investor interest has been consistent in recent years, with the sector raising at least £120 million per annum and at least thirty deals each year since 2020. 

We note that this is a small sample, so will not capture the full investment sentiment and patterns and may be vulnerable to skew where a small number of firms raise investment. Further, we also have identified approximately £42 million of investment across 13 deals for Q1-Q3 2024 and anticipate that 2024 aggregate investment levels will be lower than 2023 levels. 

^{Figure 9. Investment: Amount raised and number of deals by dedicated digital identity firms (UK)}

^{Source: Perspective Economics analysis, Beauhurst data}

Demand for digital identity 

This section explores levels of sectoral demand for digital identity products and services. The research team has reviewed web data for providers (where available), and developed a classification approach to identify company descriptions, products and services offered, customers and partnerships, industries served, and standards and accreditations. 

Customers and partnership 

We have identified over 2,700 unique customers and partnerships mentioned by the digital providers. We find mention of customers or partners via analysis of company logos, case studies and testimonials. The vast majority (89%) mention at least one customer. We classify each customer against ten top sectors below. Figure 10 highlights the percentage of digital identity providers that mention at least one customer in one or more of the respective sectors. 

^{Figure 10. Percentage of digital identity firms supplying each sector}

• Financial and professional services	85%
  Healthcare and public services	58%
  Technology and digital	57%
  Retail and consumer services	56%
  Infrastructure and industry	39%
  Education and social	28%
  Gaming and entertainment	24%
  Automotive and transport	23%
  Compliance and verification	21%
  Other industries	16%

^{Source: Perspective Economics analysis of 239 companies with 1,380 mentions of customers}

This highlights that the most common application of commercial digital identity solutions is among financial and professional services customers (85%), followed by health and public services (58%), broader technology (57%), and retail and consumer services (56%). The next chart also breaks these into sub-groups, highlighting the significance of relevant subsectors such as financial services (75%), retail (45%), government (41%), and areas such as real estate (27%), gaming and gambling (24%), and travel (21%). There is a breadth of customer subsectors mentioned by providers (over 30 in scope), which highlights that the research should consider a wide range of use cases and adoption, as digital identity solutions may be applied in a wider setting than consumers might otherwise initially perceive. 

^{Figure 11. Percentage of digital identity firms supplying each sector (sub-sectoral)}

• Financial services	75%
  Retail and purchasing	45%
  Health and social care	42%
  Government	41%
  Professional services	33%
  Technology	29%
  Insurance	27%
  Real estate and construction	27%
  Education	25%
  Gaming and gambling	24%
  Travel and leisure	21%
  Telecommunications	19%
  Logistics and transportation	17%
  Workplace checks	15%
  Hospitality	14%
  Energy and utilities	12%
  Blockchain and cryptocurrency	11%
  Manufacturing	11%
  Cyber and physical security	10%
  Advertising and marketing	10%
  Automotive	9%
  Accounting	9%
  Life sciences	9%
  Charities	8%
  Other	15%

^{Source: Perspective Economics analysis of 239 companies with 1,380 mentions of customers}

Digital identity use cases 

It is also important to consider how customers and individuals use and re-use digital identity solutions to understand context and adoption. Future research could benefit from exploring a range of use cases for digital identity (e.g. proof of age to purchase a lottery ticket), and the associated journeys, user experience, and the processes required to implement these checks (both via physical and or digital identity). This would enable consideration of the economic benefits of digital identity (e.g. time savings, efficiencies), the role of the public sector in shaping procurement, and setting standards and frameworks. Other factors such as competition, innovation, and trust and inclusion may also shape demand and use cases for digital identity solutions. 

Figure 12 sets out over 1,500 use cases that have been identified through web data as mentioned by providers (and classified into over twenty-five use cases by the research team). We find (among dedicated providers) that enabling onboarding (42% of providers), fraud prevention (37%), supporting Know Your Customer (KYC) / Anti-Money Laundering (AML) (32%), background screening (28%), identity verification for account opening (20%), and digital document signing (19%) are among the most mentioned use cases. 

^{Figure 12. Reported use cases for digital identity providers (web, classified)}

Use case	Percentage of companies
Customer onboarding	42%
Fraud prevention in online transactions	37%
Secure access management	33%
Know Your Customer (KYC) compliance / Anti-Money	32%
Employee background screening	28%
Identity verification for account opening	20%
Digital document signing	19%
Age verification for online services	16%
Healthcare patient identity verification	12%
Right to Work checks	12%
Remote identity verification	11%
Passwordless authentication	11%
Government services access	11%
Customer due diligence	11%
Tenant screening and referencing	10%
Biometric authentication	9%
Digital identity wallets	8%
Travel and border control	7%
Transaction monitoring	6%
Online gaming and gambling verification	5%
Cryptocurrency user verification	5%
Zero Trust security implementation	3%
Source of funds verification	3%
Digital consent management and privacy compliance	2%
Digital identity for supply chain management	2%
IoT device identity and security	1%
Decentralised digital identity	1%

^{Source: Perspective Economics analysis of 247 companies with 1,542 mentions of use cases}

Annex: Taxonomy development 

Taxonomy and sub-area	Definition
Identity Foundations
Identity issuance	Creating and distributing identity credentials
Identity and consent management	Individuals can control their identity data and its usage (e.g., consent dashboards, data rights management, privacy controls)
Digital wallets	Protected digital storage solutions for identity credentials and verified attributes (e.g., mobile identity storage, credential apps)
Identity services	Platforms providing identity-related services to support other systems
Identity Verification
Document based	Verifying identity using official documents (e.g., passport verification, driving license validation)
Biometrics and liveness detection	Using physical characteristics to verify identity and presence
Knowledge Based Verification	Verifying identity through personal information questions (e.g., historical data)
Social verification (vouching / proofing)	Verifying identity through social connections or professional references
Attribute Verification
Age assurance	Verifying a person’s age without full identity disclosure (e.g., age band estimation, date of birth validation)
Professional and credential verification	Validation of qualifications and credentials through authoritative sources (e.g., right to work checks, qualification verification, professional memberships)
Background screening	Comprehensive verification of personal and organisational history through multiple data sources (e.g., criminal record checks, sanctions screening)
Financial and address verification	Verification of financial and residence information (e.g., bank account validation)
Trust Services
Digital signatures (eSignatures)	Electronic signatures to verify document authenticity or establish audit trails (e.g., qualified electronic signatures and seals)
Certificates	Digital documentation confirming identity or attributes (e.g., SSL certificates)
Authentication	Verifying the identity of a user or system
Governance and compliance	Ensuring identity systems meet regulatory requirements
Identity Data and Intermediaries
Data brokerage	Services that aggregate and distribute identity data
Orchestration and interoperability	Coordinating various identity systems and ensuring they work together with established standards
Risk, fraud and credit	Evidence-based assessment of identity risks and financial standing (e.g., fraud detection, risk scoring)
Analytics and insights	Analysing identity data for patterns and insights

1. Please note that this does not include ‘Identity services’ (85%) or ‘Risk, fraud and credit’ (53%) as these categories are considered broad in scope.  ↩

2. Age assurance is also explored within the DSIT Safety Tech Sectoral Analysis (2024). Available at: https://www.gov.uk/government/publications/uk-safety-tech-sector-2024-analysis  ↩

3. Please note this only related to firms that remain active as of November 2024  ↩

4. For global size, we use headcount estimates (Large = >250 FTEs, Medium = 50 – 249 FTEs, Small = 10 – 49 FTEs, Micro = <10. For UK size, we use Companies House thresholds that reflect for UK headcount, revenue, and balance sheet. A company qualifies as: Micro if it meets at least 2 of: turnover ≤£632,000, balance sheet total ≤£316,000, employees ≤10; small if it meets at least 2 of: turnover ≤£10.2 million, balance sheet total ≤£5.1 million, employees ≤50; medium if it meets at least 2 of: turnover ≤£36 million, balance sheet total ≤£18 million, employees ≤250 or Large if it exceeds 2 of: turnover >£36 million, balance sheet total >£18 million, employees >250  ↩

5. This figure is estimated using a combination of known revenue figures available for dedicated digital identity firms that publish annual accounts (n = 62), estimated revenue figures, and review of headcount data using accounts and web data. Where gaps exist, employment has been sourced or estimated, with revenue estimated using ‘revenue per employee’ (estimated by size using known data) multiplied by ‘number of employees’ to provide an estimated revenue figure on a firm-by-firm basis.  ↩

6. DSIT Cyber Security Sectoral Analysis (2024) https://www.gov.uk/government/publications/cyber-security-sectoral-analysis-2024  ↩

7. DSIT Economic Estimates: Digital Sector GVA (£161 billion) (2023) divided by 1.9 million jobs  ↩

8. DSIT AI Sectoral Analysis (2023) https://www.gov.uk/government/publications/artificial-intelligence-sector-study-2023 ↩

9. https://www.gov.uk/government/statistics/rural-productivity/rural-productivity-and-gross-value-added-gva#gross-value-added-gva-per-workforce-job ↩

10. https://www.businessresearchinsights.com/market-reports/digital-identity-market-102438 ↩

11. https://www.marketsandmarkets.com/Market-Reports/digital-identity-solutions-market-247527694.html  ↩

12. Beauhurst note a reduction in equity investment raised across UK firms of 42% between 2022 and 2023. Available at: https://www.beauhurst.com/research/the-deal-2023/ ↩