Digital identity is on the brink of a major shift. Governments around the world are rolling out first-party digital IDs to make things easier, more secure, and to eliminate the need for physical documents.
Great, right?
But here’s where it gets interesting: this isn’t the endgame for digital ID, it’s just the starting line.
The Power of Decentralized ID
Imagine being able to combine verified data from different sources into one seamless, powerful digital credential.
That’s an advantage that decentralized identity brings to the table, and it’s one of the most exciting developments in this space.
Opportunity, Not A Threat
Yes, government-issued digital IDs could rattle the cage for businesses that rely solely on verifying physical documents.
But forward-looking identity companies know that every disruption is a doorway.
Here’s why: using these government IDs as a foundation, you can stack additional third-party verified data on top.
The result? A credential that’s stronger, smarter, and more adaptable.
Why It Matters
Mixing data from multiple sources means:
- Less onboarding friction: Onboarding shouldn’t feel like filling out paperwork at the DMV. With verifiable credentials, you can instantly confirm users have been verified before and match their data accurately, no more redundant data entry or re-uploading the same documents. This means smoother onboarding, whether users are moving between clients or jumping through siloed IAM systems.
- Better customer acquisition: Accurate customer data matching speeds up the whole verification process. Faster verifications mean fewer delays and drop-offs, which translates to higher conversion rates in your client’s acquisition funnel.
- Cross-system compatibility: If you’re an IDV provider with a big client base, verifiable credentials mean users can breeze through onboarding across multiple clients, making data matching faster and smoother. For IAM systems, they’re a game-changer. Users can get onboarded across siloed identity systems without messy, complex unification.
- Higher data accuracy: Here’s the headache—61% of businesses rely on more than one KYC provider, and 12% are juggling three or more. Why? Because data inaccuracies force them to patch together bits and pieces from different sources to make sense of it all. Verifiable credentials change the game: better data matching, fewer mistakes, and no more Frankensteining results from multiple providers.
The Cherry on Top: Privacy
Here’s the kicker: these composite credentials can offer more privacy than the originals.
Think Zero-Knowledge Proofs (ZKPs).
With ZKPs, users can prove something (e.g., age, residency) without sharing the actual data. That’s next-level privacy, built into the credential.
The Bottom Line
This isn’t just about replacing physical IDs; it’s about creating new forms of digital identities that are more versatile and privacy-focused than ever before.
For identity companies, it’s a massive opportunity to rethink their approach and create real value.
