New analysis suggests robust growth for the UK's Digital Identity market
On December 21st, new research commissioned by DSIT unveiled a sector analysis of digital identity in the UK. This was undertaken by Oliver Wyman, Perspective Economics, and Projects by IF. These interim findings will be built upon this year, further elaborating on market adoption, barriers, opportunities for growth, and consumer understanding of digital identity.
The paper offered a valuable snapshot of the current ecosystem, and techUK welcomes this opportunity to produce a baseline understanding of identification-related economic activity in the UK. The findings from these studies provide fantastic visibility and data for the sector.
To read the full paper, click here: Digital Identity Sectoral Analysis 2024: Interim Findings
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Summary
The digital identity ecosystem is moving quickly, characterised by steady growth in the last few years. From 2023-2024, dedicated digital ID companies generated an estimated £2.05bn in annual revenue, employing almost 11,000 people in the UK. The research highlights 270 active firms, the Gross Value Added for the sector is also well above the national average per employee, totalling £79,366.
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Key Takeaways
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There are 270 companies in the UK digital identity market. Among these, 231 are specialised providers concentrated solely on digital identity, while 39 are diversified firms that offer digital identity services along with other services.
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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.
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In 2023/2024, these companies achieved an annual revenue of £2.05 billion, contributing £858 million in GVA and 10,813 full-time equivalent employees.
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Employment has grown consistently (average of 11.7% per annum) over the past five years.
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The geographic distribution indicates that around 50% of firms are based in London, while there are notable clusters in the South East, accounting for 15%, and the North West, which comprises 9% of firms and 15% of employment.
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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.
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Figures show commercial digital identity solutions are most commonly used in financial and professional services (85%), followed by health and public services (58%), broader technology (57%), and retail (56%).
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Key subsectors include financial services (75%), retail (45%), and government (41%), among others like real estate (27%), gaming & gambling (24%), and travel (21%).
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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).
You can read the full report on DSIT’s website here.
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What does this mean going forward?
The UK digital identity sector is performing strongly, with expanding use cases for this technology offering new opportunities for growth. Following on from a March 2024 consultation by the Home Office on alcohol licensing, DSIT announced on the same day as this research was published, that alcohol sales including at pubs and clubs, would soon be permissible through a digital ID.
Policymakers expanding the use cases for digital ID, was highlighted by experts at techUK's Digital ID Summit as key to further adoption, adding tangible value to consumers lives.
DSIT has commissioned a number of these sector analyses alongside Perspective Economics, including deep dives into online safety technology, cyber security and AI. Please click below to read further 2024 sector breakdowns.
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As the UK’s largest trade association for technology, techUK includes many Digital ID companies as members, and acts as a leading voice in the sector.
Digital identities will provide a gateway for citizens and SMEs into the connected ecosystem of services making up the digital economy.
To find out more about our work, visit our Digital ID hub and sign up for our newsletter here.
