As we approach the end of 2024, the landscape of identity management is rapidly evolving, driven by technological advancements, growing privacy concerns, and increasing demand for consumer control over personal data. Here are our predictions for the future of digital identity in 2025:
- An Increasing Demand for Consumer Rights in Data Privacy
- The Global Expansion of Privacy Laws
- AI Regulation and Oversight: Ensuring Ethical Use of AI
- Shift Towards Privacy-Enhancing Technologies
- The Rise of Mobile Driver’s Licenses (mDLs) and Digital IDs
- The Growing Threat of Deepfakes and the Challenge of Authenticity
- Minimizing Biometric Data Collection with Real-Time Verification
1. An Increasing Demand for Consumer Rights in Data Privacy
The demand for consumer rights in data privacy is escalating as individuals seek more transparency, choice, and control over their personal information. According to a 2023 survey by Cisco, 84% of consumers express concerns about data privacy, with many desiring greater insight into how their data is used. This growing demand is driving a shift toward greater transparency and control.
Consumers now expect businesses to clearly disclose how their data is being collected, used, and shared. In response, companies are enhancing their data practices, allowing consumers to access detailed information about what data is collected, its usage, and who has access to it. Choice also plays a critical role, with platforms providing enhanced consent management systems to empower individuals to control what data they share and with whom. Whether it’s for marketing purposes or third-party data access, individuals want to have a say in how their personal information is used.
In addition to transparency and choice, data minimization has emerged as a key privacy principle. By focusing on collecting only essential data, businesses reduce potential privacy risks and mitigate misuse, in line with regulations like the General Data Protection Regulation (GDPR).
2. The Global Expansion of Privacy Laws
As privacy concerns grow, countries around the world are adopting stronger privacy laws. The European Union’s General Data Protection Regulation (GDPR) has set the standard, with other regions following suit. In 2025, the United States is expected to strengthen its data privacy laws, with initiatives like the California Consumer Privacy Act (CCPA) spreading to more states. Countries like China, India, and Brazil are also tightening their privacy regulations, contributing to a global approach to data protection. For example, Brazil’s LGPD (General Data Protection Law) and South Korea’s Personal Information Protection Act (PIPA) are both heavily influenced by GDPR.
The continued global harmonization of privacy laws is critical for international businesses. With increasing regulatory complexity, efforts to align privacy standards across borders will streamline compliance and ensure consistent protection of user data worldwide.
3. AI Regulation and Oversight: Ensuring Ethical Use of AI
Artificial intelligence (AI) is transforming identity management, offering tools for automation, security, and data processing. However, concerns around privacy and the ethical use of AI are rising. A 2024 KPMG study found that 63% of consumers are worried about how AI impacts their privacy, underscoring the need for stronger regulation.
Governments are working to regulate AI’s use, with the European Union’s AI Act leading the charge in ensuring transparency and accountability. Increased scrutiny of AI systems is essential, particularly concerning personal data usage and decision-making processes. Ethical AI frameworks will ensure fairness, transparency, and accountability, helping mitigate risks like biased or discriminatory AI systems.
A key aspect of ethical AI is the development of verifiable AI, which allows organizations to audit and ensure that AI systems operate within ethical boundaries. Verifiable AI enables transparency by making the decision-making processes of AI systems traceable, ensuring that AI systems are held accountable for their actions. This helps build public trust in AI applications, especially in sensitive areas like identity management, where personal data is at stake.
4. Shift Towards Privacy-Enhancing Technologies
As the demand for data privacy grows, businesses and consumers are increasingly turning to privacy-enhancing technologies (PETs) to protect sensitive information. These technologies enable secure data processing without compromising privacy. One such technology is homomorphic encryption, which allows data to be processed while remaining encrypted. This ensures that sensitive information can be used for analysis without exposing it to unauthorized parties.
Additionally, decentralized identity systems are gaining momentum. This framework allows individuals to create, manage, and share their identities without relying on a central authority. By using cryptographic techniques and decentralized technologies like blockchain, these systems give users more control over their personal information. For example, verifiable credentials, a decentralized technology, are becoming increasingly important. These digital credentials enable individuals to prove their identity or share specific data without disclosing unnecessary personal details. For instance, a user could prove their age or citizenship without revealing their full date of birth or address. This technology is becoming critical in digital identity systems, offering both security and privacy.
5. The Rise of Mobile Driver’s Licenses (mDLs) and Digital IDs
The adoption of mobile driver’s licenses (mDLs) and digital IDs is expected to accelerate over the next few years. mDLs are digital versions of traditional driver’s licenses that can be stored securely on a mobile device. These digital IDs are convenient and secure, providing individuals with an easy way to prove their identity in various scenarios, including travel, age verification, and accessing services.
The European Union’s Digital Identity Wallet initiative is one of the most notable efforts to standardize digital identities across member states. By 2025, mDLs are expected to become more widely accepted, with over 30 U.S. states adopting them for digital identification. This will enable users to store various forms of identification—including mDLs, health records, and government-issued IDs—on their smartphones, streamlining identity verification across borders and simplifying access to both government services and private-sector applications.
Digital IDs provide individuals with greater control over their personal information. Users will have the ability to decide when, where, and how they share their identity data, making it easier to access age-gated services, travel, and other forms of authentication securely.
6. The Growing Threat of Deepfakes and the Challenge of Authenticity
Deepfake technology poses one of the most significant challenges in digital identity management. Deepfakes—AI-generated videos, images, and audio clips that manipulate real people’s likenesses—have become increasingly sophisticated in recent years. As this technology improves, it is becoming more difficult to distinguish between authentic and fake content. This presents a growing threat not only to individuals but also to artists, public figures, and brands, as malicious actors can more easily impersonate others or spread misinformation. In response, we are likely to see more platforms giving individuals control over their likenesses.
Synthetic identity fraud is another growing concern. Deepfake technology is often used to create fake identities, which can be used to access services or commit fraud. According to the Federal Trade Commission (FTC), identity theft and fraud caused losses of over $5.8 billion in 2022, a significant portion of which was attributed to synthetic identities.
To combat these threats, advanced identity verification solutions are needed. Technologies such as digital watermarks, AI-powered authenticity checks, and biometric verification are being developed to ensure that the content individuals share is authentic. These tools will help protect both individuals and brands from the misuse of deepfakes and synthetic identities.
7. Minimizing Biometric Data Collection with Real-Time Verification
Biometric verification has become a standard method for identity authentication, but it also raises concerns about data privacy. With growing awareness of data breaches and misuse, there is a shift toward real-time verification and the minimization of biometric data storage. Real-time verification allows organizations to authenticate individuals on the spot without storing sensitive biometric data, reducing the risks associated with long-term data retention.
One key development in this area is the use of liveness detection technology, which ensures that biometric authentication systems cannot be fooled by photos, videos, or other replicas. This technology helps prevent AI-based spoofing attempts, making biometric verification more secure.
As biometric technologies evolve, there is a growing trend toward on-device storage and decentralized solutions. These solutions store biometric data on users’ devices rather than on centralized servers, giving individuals greater control over their data and minimizing the risk of large-scale data breaches.
Conclusion
The landscape of identity management is changing quickly, shaped by technological advancements, a rising demand for privacy, and the growth of regulatory frameworks. As consumer rights, AI regulations, and privacy-enhancing technologies become more prominent, the future of digital identity will focus on security, transparency, and user control. By 2025, these trends will transform how we manage, secure, and verify our identities, creating both new opportunities and challenges in maintaining privacy and authenticity.
Identity.com
Identity.com helps many businesses by providing their customers with a hassle-free identity verification process through our products. Our organization envisions a user-centric internet where individuals maintain control over their data. This commitment drives Identity.com to actively contribute to this future through innovative identity management systems and protocols.
As members of the World Wide Web Consortium (W3C), we uphold the standards for the World Wide Web and work towards a more secure and user-friendly online experience. Identity.com is an open-source ecosystem providing access to on-chain and secure identity verification. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Please get in touch for more information about how we can help you with identity verification and general KYC processes using decentralized solutions.