The UK digital identity market sits in a kind of limbo. As Keir Starmer prepares to step down as prime minister, his government’s signature digital ID policy suddenly finds itself adrift: an easy target for opponents and competitors to point to as a bungled effort, fraught with miscues and U-turns. The private sector remains unsatisfied that certified Digital Verification Service providers are playing the role they have been positioned to play. And various agreements and discussions are being casually binned or hidden from public view.
As such, the new Digital Identity Sectoral Analysis Report 2026, prepared by Perspective Economics and Survation and commissioned by the Office for Digital Identities and Attributes (OfDIA) under the Department for Science, Innovation and Technology (DSIT), communicates a somewhat tentative mood in the industry, in comparing developments against its May 2025 baseline study.
The numbers are of the sort that can be spun either as a win or a failure, depending on context. The report estimates that 275 firms are currently providing digital identity products and services in the UK, a net increase of 9 firms (+3 percent) since the baseline study. The total includes 233 dedicated providers and 42 diversified firms. The sector generated an estimated £2,027 million in annual revenue in 2024/2025. Estimated Gross Value Added (GVA) reached £1,037 million, an increase of £149 million (+17 percent) since the baseline, “suggesting an improvement in sectoral productivity.”
Financial and professional services remain the core customer sector, with healthcare and public services “rising notably from 58 percent to 72 percent.” The top reported use cases are Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance (53 percent), fraud prevention (50 percent), secure access management (43 percent), and right to work checks (41 percent). Age verification for online services has doubled to 33 percent.
Providers add age assurance, credential verification
Investment totalled £49 million across 14 deals in 2025. Consolidation has continued, with the acquisitions of TrustID, Keyless and DataTools. The sector continues to be a steady employer: “an estimated 9,624 Full-Time Equivalents (FTEs) are employed in digital identity roles across the UK.” That’s a decrease of 6 percent from the baseline, which recorded 10,246. But OfDIA notes that “this reduction is concentrated among large and medium firms and is consistent with market consolidation, increased use of AI, and broader tech sector headcount pressures.”
Identity or attribute verification services account for the majority of providers at 75 percent. Document-based verification (60 percent) and biometrics and liveness detection (57 percent) are the most common sub-categories. On the rise are professional and credential verification, which rose from 28 percent of providers to 55 percent, and age assurance, up from 23 to 31 percent.
While the bulk of digital identity firms working in the UK have headquarters there (73 percent), 36 percent have at least one international office, and among 28 firms filing geographic revenue data, 62 percent of revenue was generated from international markets.
“Providers increasingly frame their value proposition around compliance and user experience rather than purely operational efficiencies,” the report says. “This appears to coincide with a more demanding regulatory environment, though the data does not directly attribute the shift in framing to specific regulatory drivers.”
UK consumers resigned to digital identity?
Consumer attitudes toward digital identity are changing, as understanding grows and use increases. So says a consumer survey of 5,658 UK residents conducted in November 2025.
Eighty one percent of respondents to the survey report “some level of understanding of digital identity,” up from 71 percent at baseline. Seventy seven percent of respondents report having used a digital identity service for at least one purpose, with the most common digital use cases including insurance, credit applications, and bank account opening.
Most people prefer using digital ID online, while around 40 percent still prefer using physical ID for in-person interactions.
One telling pair of numbers is that 71 percent of respondents believe digital identity services will be important over the next five years – but only 43 percent view the current direction of development positively, “suggesting many see digital identity as increasingly embedded in services regardless of personal sentiment.”
Article Topics
Department for Science Innovation and Technology (DSIT) | digital identity | OfDIA | UK digital ID
Leave a comment