In today’s digital-first world, understanding digital identity is critical. Your digital identity plays a central role in verifying who you are—even when you’re doing everyday things like accessing a bank account, logging into social media, or making an online purchase. In this blog, you’ll learn what digital identity means, how it works, and why it’s essential for online authentication, fraud prevention, and secure access management.
Phone, keys, wallet?
Whenever a person leaves the house, most do a sanity check for items they require—“do I
have my phone, keys, wallet, glasses, money, watch, ID etc.” These tools help people interact in the physical world: a watch to keep time, a wallet to store money and identity documents, and keys to lock up houses or drive cars.
But as the world goes digital, people are drastically reducing the physical items they carry. One of the last remaining essentials going digital is the identity document. Though adoption may be gradual, many countries in Europe, the Middle East, Africa, Asia, and Latin America have rolled out national ID programs valid in both the physical and digital domains. But just because a person has a digital ID card, does that mean they have a “digital identity”? Yes and no.
While digital ID cards reduce the need to carry physical documents like a driver’s license, a person’s digital identity is far broader and more complex than a simple digital ID. A digital identity encapsulates online activity, biometric and behavioral data, and other key attributes that enable people to log in, verify their identity, and interact in the digital space. Always available, always online.
Read on for answers to common digital identity questions:
What is digital identity?
Digital identity is the set of digitally or electronically captured attributes, behaviors, credentials, and data points that uniquely verify and represent a person online. At Mitek, we define digital identity not just as a static profile, but as a dynamic combination of identity documents, biometric traits, behavioral patterns, and contextual signals like location and device data. This multi-layered identity framework enables organizations to securely authenticate users, detect fraud in real-time, and build trust across digital interactions.
Examples of digital identity – personally identifiable information (PII)
A person’s digital identity is composed of personally identifiable information (PII) and behavioral characteristics. Below are some examples of PII that make up a digital identity:
- Social security number (SSN)
- Biometric data
- Driver’s license number
- Passport number
- Login credentials (usernames and passwords)
- Date of birth
- Bank account number
PII helps banks, websites, and applications verify a person’s identity through a digital identity verification process. As identity theft and online fraud techniques become more advanced, robust digital identity security and fraud management solutions are critical for fraud prevention. Organizations must prioritize having a secure and efficient onboarding process to verify identities and protect sensitive information.
Mobile driver licenses
One example of a digital identity that is becoming more common, are mobile drivers licenses (mDL) or digital drivers licenses (DDL). This evolution signals a shift in how we perceive and manage identity in the digital age. These go beyond a simple digital card. By leveraging secure, encrypted technologies and biometric authentication, mDLs offer a more secure method of verifying identity compared to traditional physical cards. Individuals control access to their personal data and are enabled seamlessly and securely across various online and offline services.
Types of digital identity
Digital identities can take many forms depending on how information is collected, verified, and managed. These include:
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Document-based digital identities: Verified through government-issued IDs, often enhanced by identity verification technologies used in-person or remotely.
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Biometric digital identities: Established through facial or voice biometrics and supported by advanced biometric authentication solutions.
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Centralized & federated identities: Used in enterprise and shared-login environments where identity data is managed or federated through secure platforms.
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Decentralized (self-sovereign) identities: An emerging identity model where users retain ownership and control over their digital credentials, increasingly supported by secure verification ecosystems.
The importance of digital identity
Today, our lives demand secure, seamless, and trustworthy digital interactions. In the physical world, proving who you are is often quite straightforward - presenting an ID or being recognized by someone. But online, where face-to-face interaction is absent, digital identity becomes the foundation for trust.
It directly impacts every person in their daily life—from accessing bank accounts, signing up for healthcare services, to proving age or eligibility for specific platforms. Without a secure and reliable digital identity, individuals' risk being excluded from essential services, falling victim to identity theft, or experiencing friction in everyday digital experiences.
Digital identity is essential for enabling trust in digital transactions. It allows organizations to verify customers, prevent fraud, and streamline access to digital services. Without a secure digital identity framework, both individuals and businesses are vulnerable to data breaches, impersonation attacks, and financial losses.
Digital identity benefits
The benefits of a strong digital identity framework extend to both consumers and organizations:
- Improved fraud prevention: Digital identity verification systems help detect and prevent identity theft, reducing the risk of financial crime.
- Faster customer onboarding: Automated digital verification accelerates registration and onboarding, resulting in a smoother customer journey.
- Seamless user experience: With tools like biometric login or single sign-on (SSO), users can access services effortlessly while maintaining strong security.
- Wider access to services: Digital identity enables broader access to banking, healthcare, and government services, especially for underserved or remote populations.
- Compliance with regulations: A robust digital identity infrastructure helps businesses meet regulatory requirements such as KYC and AML.
Digital identity risks
While the advantages are clear, there are also risks to consider:
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Identity theft and impersonation: If a digital identity is compromised, fraudsters can use it for malicious purposes.
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Data breaches: Centralized storage of identity data increases the risk of large-scale information leaks.
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Biometric data misuse: Unlike passwords, biometric data cannot be changed if stolen, making its protection crucial.
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Privacy concerns: Users may lose control over how their identity data is collected and shared.
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Over-reliance on central systems: When identity systems are centralized, they become attractive targets for cyberattacks.
Digital identity verification systems
Modern digital identity verification systems incorporate advanced technologies, including:
- Document verification: Uses AI and machine learning to analyze ID documents like passports and driver’s licenses for authenticity and consistency.
- Liveness detection: Validates that the person presenting the identity is physically present, preventing spoofing attacks using photos, videos, or deepfakes.
- Biometric authentication: Matches a user’s live biometrics (like facial features or voice) with stored templates to confirm identity.
- Device and location intelligence: Analyzes device fingerprinting and geolocation data to add contextual trust signals.
- Machine learning algorithms: Continuously monitor user behavior and detect anomalies to prevent identity fraud in real time.
Future of digital identity verification
Convenience battles security when it comes to digital identity adoption. While consumers value digital identities for access to new services, they remain concerned over security risks and are fighting to find a balance between the two. But when it comes to the sharing economy, consumers are already actively using digital identities, setting the stage for the next frontier of digital interactions.
As fraudsters and criminals try to steal identities, having a more secure system of identity authentication is also becoming more sophisticated. The new normal for digital identity verification will be in the form of a multi-factor authentication that includes some form of unique biometric identifier such as facial or voice recognition. This offers the consumer both convenience and an extra layer of security.
As hackers evolve, cybersecurity is as important as ever to avoid a business-altering data breach and expose your customer's personal information to a potential fraudster. As the world moves more towards digital ID systems, financial institutions need to make sure they have a secure digital identity management solution built with sophisticated technology to protect personal data at all costs.
Frequently asked questions about digital identity
What is biometric authentication technology?
Biometric authentication technology is used to verify a person’s identity. These unique biometric and behavioral biometric features include elements like facial recognition, fingerprints, voice recognition, palm symmetry, iris recognition and more. Examples of using biometric authentication technology being used in everyday situations would be when you use your voice or facial recognition to unlock your phone or use your voice to ask Siri where the closest gas station is. Because every person has a unique identifier, using biometrics as a digital identity solution can help fight against fraud like financial crime by making it harder for fraudsters to falsify an identity.
How does multi-factor authentication improve access management?
When someone creates an account online, they will need credentials for accessing their account and usually set up a password and a user ID. This is known as a single factor authentication or SFA and is the one of the simplest forms of authentication. Two-factor authentication, or 2FA for short, requires a password (the first factor) then a numeric code, security token or a biometric such as a voice (the second factor) to access online data. Also known as two-step verification or dual-factor authentication, 2FA validates both sets of user credentials before granting access to an online account. Multi-factor authentication (MFA) is a method of electronic authentication in which two or more factors (eg. a password, voice recognition and ID) are required for a user to gain access to a website or application. By involving multiple authentication layers, the access control systems remain secure even if one of the authentication factors is compromised.
Most multi-factor or 2FA processes combine two or more of five common authentication factors: knowledge; possession; inheritance; location, and time. Knowledge factors are items the user knows such as a password or PIN, whereas a possession factor is something the user possesses, such as their mobile phone or an ID. Inheritance factors, also known as biometric factors, include facial features, voice tone, fingerprints and other inherited identifiers.
Often times we hear the term identity and access management (IAM) when we are talking about user verification and authentication. Identity and access management is a framework of technologies that ensure the right users have the appropriate access to technology, platforms and resources, at the right time. Although very helpful in a lot of instances, it does not necessarily authenticate the user throughout the lifecycle of the relationship.
What is self-sovereign Identity?
Self-sovereign identity refers to individuals or organizations maintaining exclusive ownership of their digital identification and analog identities as well as determining how this personal data is distributed and used. Christopher Allen’s Ten Self-Sovereign Identity (SSI) Principles itemize the fundamental components of a self-sovereign digital identity framework:
- Existence — Users must have an independent existence.
- Control — Users must control their identities.
- Access — Users must have access to their own data and any associated claims without the interference of gatekeepers or intermediaries.
- Transparency — Systems and algorithms must be transparent.
- Persistence — Identities must be long-lived.
- Portability — Information and services about identity must be transportable.
- Interoperability — Identities should be as widely usable as possible.
- Consent — Users must agree to the use of their identity.
- Minimization — Disclosure of claims must be minimized.
- Protection — The rights of users must be protected.
The pros of self-sovereign identity management are that personal data is more private, and a person is in full control over the personal information they choose to share. A con is that the individual is also responsible for the security of that information, which can create opportunities for identity thieves to commit identity fraud.
Self -sovereign identity solves two challenges for financial services’ digital product managers: confidence and risk. Accepting a customer’s sovereign digital identity as verified by the decentralized, irreversible, and transparent blockchain builds consumer confidence in your platforms and facilitates KYC identity verification/AML compliance.
Self-sovereign identity also reduces costs associated with multiple identity assurance systems by limiting PII to what’s necessary to complete the desired transaction.
To learn more on protecting customer's digital identities and fighting fraud:
Download Mitek's new Digital Fraud Playbook -- the ultimate guide to modern digital threats
About Chris Briggs - CPO at Mitek
Christopher Briggs is Chief Product Officer at Mitek