Digital Identity in Government Sector Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Digital Identity in Government Sector Market is projected to expand from USD 3.93 billion in 2025 to USD 10.47 billion by 2031, reflecting a compound annual growth rate of 17.74%. This sector involves the technological infrastructure and electronic credentials that public administrations utilize to authenticate citizen identities for secure access to vital services. Growth is largely driven by the urgent requirement to curb identity fraud in benefit distribution, the necessity to strengthen national security measures, and the effort to lower administrative costs by digitizing public interactions. These core factors fuel the demand for strong verification systems, guaranteeing precision and efficiency in government-citizen transactions.

Conversely, broad implementation is often hindered by substantial apprehensions regarding data privacy and the difficulties involved in protecting centralized databases from advanced cyber attacks. Maintaining public confidence is crucial but challenging given fears of surveillance and potential data abuse, leading to opposition against mandatory adoption. The World Bank noted in 2024 that identification systems in over 90 percent of countries worldwide depended on digital data, highlighting the immense scope of infrastructure that governments are required to safeguard to support continued market growth.

Market Drivers

The rapid digitalization of public services and e-governance initiatives acts as a major catalyst for market expansion, as governments worldwide shift from paper-heavy bureaucracies to efficient digital environments. This transition requires secure, interoperable identity systems to enable remote access to healthcare, tax services, and legal records, prompting aggressive government funding to boost operational capacity and coverage. For example, the Australian Government's Budget 2024-25, released in May 2024, designated AUD 288.1 million to advance the legislation and deployment of its national Digital ID system, emphasizing the strategic focus on unified platforms that minimize administrative hurdles. Similarly, in developing regions, the Philippine News Agency reported in August 2024 that the Philippine Statistics Authority had registered more than 89 million citizens in the PhilSys national ID system, demonstrating the swift growth of state-managed biometric databases.

At the same time, the rising frequency of identity fraud and cybersecurity threats forces the public sector to implement robust verification technologies. As services migrate online, malicious actors increasingly employ synthetic identities and generative AI to evade standard security protocols, necessitating the adoption of liveness detection and multi-factor authentication. Onfido’s Identity Fraud Report 2024, published in January 2024, revealed a 3,000% year-over-year surge in the use of deepfakes for identity attacks. This sharp increase in complex attack methods fuels the demand for advanced biometric solutions, as traditional passwords are no longer adequate to secure sensitive data. Thus, the market is driven by the defensive need to secure access points against a changing threat landscape while ensuring services remain accessible to users.

Market Challenges

Worries surrounding data privacy and the protection of centralized databases act as a major constraint on the Global Digital Identity in Government Sector Market. As government bodies collect sensitive personal data, the risk of unauthorized access generates considerable resistance from the public. Fears of surveillance and data misuse reduce adoption rates, compelling agencies to prolong project schedules and decelerating the market's overall growth momentum. Without citizen confidence in the security of their credentials, the implementation of verification systems encounters immediate social and administrative obstacles.

The recurrence of security breaches reinforces these concerns and leads to hesitation in funding digital infrastructure projects. If identity systems are viewed as susceptible to attacks, stakeholders are less likely to back large-scale integration efforts. The Identity Defined Security Alliance reported in 2024 that 90 percent of organizations had faced an identity-related breach within the previous year, underscoring the instability of the current security landscape. This high rate of compromise suggests that preserving the integrity of digital credentials remains a significant operational challenge, which directly hampers the pace at which governments can roll out these verification frameworks.

Market Trends

The swift deployment of Mobile Driver’s Licenses (mDL) marks a fundamental change in credential presentation, shifting from static physical cards to cryptographically secure mobile apps. This development enables selective disclosure, allowing users to verify attributes like age without exposing their home address, thus balancing privacy needs with ISO/IEC 18013-5 technical standards. Government agencies are actively replacing outdated issuance systems to facilitate these interoperable platforms that operate across jurisdictions. The Secure Technology Alliance's Winter Market Snapshot from December 2024 predicts that nearly 70 percent of U.S. states will implement mobile driver's licenses within the next two years, highlighting the speed at which governments are moving toward smartphone-based identity solutions.

Simultaneously, the adoption of Digital Travel Credentials (DTC) at border crossings is transforming international travel by substituting manual passport inspections with seamless biometric pathways. This trend prioritizes contactless entry systems where facial or iris recognition matches a traveler’s live biometrics to their official digital profile, greatly alleviating bottlenecks at immigration points. Airports function as the main testing environments for these systems, necessitating extensive technical coordination between airlines and border control authorities. In its 2024 Global Passenger Survey released in November 2024, the International Air Transport Association noted that 46 percent of travelers have already used biometric identification during airport procedures, signaling strong acceptance of these automated verification methods as the emerging standard for global transit security.

Key Players Profiled in the Digital Identity in Government Sector Market

• IBM Corporation
• Microsoft Corporation
• Oracle Corporation
• SAP SE
• Deloitte Touche Tohmatsu Limited
• Accenture PLC
• Hewlett Packard Enterprise Company
• Intel Corporation
• NEC Corporation
• Fujitsu Limited
• Okta, Inc.
• ForgeRock, Inc.

Report Scope

In this report, the Global Digital Identity in Government Sector Market has been segmented into the following categories:

Digital Identity in Government Sector Market, by Offering:

• Solutions
• Services

Digital Identity in Government Sector Market, by Solution Type:

• Identity Verification
• Authentication
• Identity Lifecycle Management
• Other

Digital Identity in Government Sector Market, by Organization Size:

• Large Organization
• SMEs

Digital Identity in Government Sector Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Digital Identity in Government Sector Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

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