© Copyright Acquisition International 2025 - All Rights Reserved.

Article Image - ID Verification: Cashing In On A $5bn + M&A Market
Posted 24th April 2024

ID Verification: Cashing In On A $5bn + M&A Market

Digital identity fraud is a growing threat, with the U.S. economy suffering over $52 billion in fraud-related losses in 2021 alone.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

ID Verification: Cashing In On A $5bn + M&A Market
High technology security protection

Written by Adam Aziz, Investment Bank Analyst at DAI Magister

Digital identity fraud is a growing threat, with the U.S. economy suffering over $52 billion in fraud-related losses in 2021 alone. Peer-to-Peer (P2P) payment fraud rose by over 100% year-over-year, with account takeovers and P2P payments fraud also recording double-digit growth. As online transactions and remote interactions become increasingly commonplace, the need for robust identity verification solutions has never been greater.

The ID verification market has seen significant growth, with a diverse array of well-funded independent players vying for market share. Companies typically aggregate data from multiple sources, including biometrics, official documents, credit reports, social media, and geolocation, to deliver a comprehensive 360-degree view of potential customers, partners, and employees.

Growing Demand for ID Verification Systems

The growth in demand for ID verification systems can be attributed to several factors. Firstly, the rise of online fraud and identity theft has made it imperative for businesses to adopt stringent measures to safeguard their operations and protect their customers’ sensitive information.

Secondly, regulatory requirements, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, have become more stringent, compelling organisations to implement effective identity verification processes to ensure compliance. The COVID-19 pandemic has accelerated the shift towards digital services, remote work, and online transactions, further emphasising the need for reliable and efficient ID verification solutions.

As a result, the ID verification systems market is experiencing significant growth, with businesses investing in advanced technologies like biometrics, artificial intelligence, and blockchain to enhance the accuracy and security of their identity verification processes.

Key challenges

The market faces several challenges that hinder its growth and effectiveness. One of the primary issues is the lack of standardisation across different countries and regions, with each nation having its own unique identification documents, making it challenging for businesses to implement universal verification processes. Additionally, the ever-evolving landscape of fraudulent activities, such as deepfakes and synthetic identities, constantly challenges the effectiveness of ID verification systems.

Data privacy and security concerns also pose significant challenges to the market. Businesses must comply with stringent data protection regulations, such as GDPR and CCPA, and ensure robust security measures to protect sensitive user information from breaches and cyber-attacks. Moreover, balancing the need for thorough identity verification with a seamless and user-friendly experience is crucial for encouraging user adoption and reducing abandonment rates.

The cost of implementing and maintaining ID verification systems can also be a significant barrier, particularly for small and medium-sized enterprises. The development, integration, and ongoing maintenance of these systems require substantial financial investments, which may lead to a competitive disadvantage for businesses with limited resources.

Addressing these challenges requires collaboration between governments, businesses, and technology providers to develop innovative solutions that can effectively combat fraud while ensuring user privacy and convenience.

Consolidation and specialisation

The digital identity verification space has seen a proliferation of midsized players, with over 50 companies that have raised between $10 million to $100 million to date. This highly competitive landscape has given rise to two distinct types of players: those focusing on specific verticals and those adopting a broader approach, resembling scaled-down versions of established strategics in the space.

Inorganic growth from incumbents expected to continue

The digital identity verification landscape is populated by several well-funded incumbents and a set of companies that have scaled to an attractive size, creating opportunities for rapid consolidation as larger companies seek to expand their capabilities and market share.

A key driver of this M&A activity is the need to navigate complex regulatory environments across different geographies, as acquiring a target with extensive local knowledge can be more effective than pursuing organic expansion. Large identity verification providers are also actively acquiring companies with differentiated technologies and functionalities.

Interest from outside the ID verification space

The importance of ID verification to strategics whose core product is not necessarily ID-related is another key driver for M&A in the coming years. In several industries, a proprietary, in-house ID verification scheme can improve user experience by providing added security or extending functionality of the platform.

What to expect next…

With over $10bn raised in the space to date, there is an estimated $100bn+ in enterprise value in a sector with a highly fragmented mid-market and over 50 M&A deals in the past 3 years alone. We expect the acquisition trend to continue, however potential targets must consider their strategic differentiators to stand out given the highly competitive environment.

Clearly, this presents a dilemma to companies in the space. The market is already awash with attractive targets with consolidation well underway – as incumbents place their bets, there is risk of a limited window in which to initiate an acquisition under favourable conditions. Companies should highlight key differentiators that enhance their value, such as domain expertise, strong customer relationships, geographical dominance, and proprietary technologies. Standing out in this market is difficult, but imperative to optimise outcomes.

Categories: Finance, Innovation, News


You Might Also Like
Read Full PostRead - Eye Icon
Award Winning Cloud-Based Communication
Innovation
04/05/2022Award Winning Cloud-Based Communication

Unified Communications as a Service (UCaaS) is a category of "as a service" or "Cloud" delivery mechanisms for enterprize communications. These procedures allow the linking of data between one source to another, in no time.

Read Full PostRead - Eye Icon
Best Independent Investment Management Firm – Canada
Leadership
17/05/2016Best Independent Investment Management Firm – Canada

Matco Financial Inc. is an independent, privately-owned investment management firm.

Read Full PostRead - Eye Icon
How to Grow Your Business in 2022: Best Strategies to Use
News
30/06/2022How to Grow Your Business in 2022: Best Strategies to Use

The business development life cycle is a five-stage process: launch, growth, shake-out, maturity, and decline. When a company comes to the maturity stage, there are only two options left: reorganize the business and move forward with it, or finish its lifecycl

Read Full PostRead - Eye Icon
Founders Need To Think Differently About M&A Exits, Says Investment Bank CEO
M&A
09/07/2024Founders Need To Think Differently About M&A Exits, Says Investment Bank CEO

50% of M&A deals fail because most approaches to exit involve hiring an M&A banker and marketing the business for sale.

Read Full PostRead - Eye Icon
2016 First Quarter Update – Leroy si Asociatii
Leadership
06/06/20162016 First Quarter Update – Leroy si Asociatii

With 16 years of experience on the Romanian market, Leroy si Asociatii is one of the country’s leading independent law firms.

Read Full PostRead - Eye Icon
Leveraging AI for Fraud Detection and Risk Assessment in the FinTech
News
22/01/2024Leveraging AI for Fraud Detection and Risk Assessment in the FinTech

While ChatGPT become lazy recently, denying to perform basic tasks, and making excuses on why it shouldn’t do, what was required, it is still hard to deny that machine learning models can bring many advantages to any technological solution, and FinTech i

Read Full PostRead - Eye Icon
5 Things You Should Know Before Buying Your First Cryptocurrency
News
06/11/20235 Things You Should Know Before Buying Your First Cryptocurrency

Cryptocurrencies are fairly new in the investment world and raise some worry as a result.Plenty of websites offer advice for your first-time crypto purchase. Nonetheless, this remains a rather fresh investment opportunity, bringing along a degree of caution. E

Read Full PostRead - Eye Icon
The World’s Largest Translation & Global Content Management Company
Innovation
02/02/2017The World’s Largest Translation & Global Content Management Company

Lionbridge is celebrating its 20th year in business and is based in Boston, MA. They combine their undoubted technologies and skills in different ways, to respond to the needs of various industries.

Read Full PostRead - Eye Icon
How Are Carpet Cleaning Companies Embracing The Eco-Friendly Approach
News
04/03/2024How Are Carpet Cleaning Companies Embracing The Eco-Friendly Approach

The current trend in carpet cleaning methods Reputable carpet cleaning Hammersmith companies are now transitioning towards eco-friendly cleaning solutions, representing a shift of direction towards sustainable living. By embracing the efforts to cut down on to



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow