As one of the top trends within access control for nearly a decade, the current rise of mobile credentials – hastened by COVID and the changing workforce – has been a slow and steady one. HID’s inaugural 2023 State of the Security Industry Report, examines this “going mobile” trend, including digital IDs, Identity as-a-service (IDaaS), the cloud, biometrics and more. The report gathered responses from 2,700 partners, end users and security and IT personnel across a range of titles and organization sizes, representing more than 11 industries.
Digital transformation continues to “exert pressure as the global pandemic accelerated the adoption of cloud technologies across many sectors,” said researchers, noting, “the convergence of these factors means IDaaS is quickly becoming the expectation.”
In fact, the identity access management (IAM) market is expected to grow at a 22.7 percent compound annual growth rate to $41.9 billion by the end of 2031. As such, SaaS-delivered identities represent huge opportunities in the security industry, the study pointed out.
Interestingly, the study found that the majority of survey respondents (81 percent) are offering a hybrid work model, with 67 perecent of respondents noting that multifactor authentication and passwordless authentication are most important to adapting to hybrid and remote work, and 48 percent pointing to the importance of mobile and digital IDs. With that said, the survey also reveals almost half of the organizations aren't quite ready, or need help, in implementing a comprehensive IDaaS strategy.
As researchers point out in the study, “prior to the pandemic, digital transformation and the convergence of physical and logical access caused enterprises to migrate more of their access management capabilities to the cloud.” With the majority of respondents offering a hybrid work model, more companies will deliver identity management “as a service” rather than via on-premises infrastructure in 2023, according to the study.
Researchers point to the rise of Digital IDs and mobile authentication as a way to propel many more mobile access deployments, noting identification and authentication are more commonly completed via mobile devices, including smartphones and wearables. The growing popularity of digital wallets has enabled smartphone users, for example, to add keys, IDs and digital documents directly in the wallet app, the study noted. These include, but are not limited to, drivers’ licenses in eight states, verifiable COVID-19 vaccination information, employee badges, student IDs and hotel room keys.
Not surprisingly, commercial real estate companies (40 percent) are outpacing other verticals as large commercial real estate firms are leveraging mobile access as part of their larger tenant experience apps, according to the HID survey.
The study also looked at the continuing touchless trend, finding that nealy 60 percent of respondents see the benefit of contactless biometrics. According to survey data, 59 percent of respondents are currently using, planning to implement, or at least testing biometric technologies in the near future.
We spoke with Sanjit Bardhan, HID’s Vice President amd Head of Global Mobile Business, about the survey findings and the trends that are driving them:
Ragusa: With COVID no longer driving decisions, do you still the same kind of demand for touchless and contactless solutions and access? If so, what is driving this continued trend?
Bardhan: Even though COVID is no longer driving demand for touchless like it was previously, contactless solutions and the digital experience are reshaping security with interconnected devices that dramatically expand what types of things can be secured and how. The cloud will efficiently power a variety of implementations across both physical and logical footprints. This will elevate the value of data while facilitating servitization to drive specific business outcomes. The rise of innovative technologies such as Near Field Communication (NFC), BLE, RTLS and others have led to increased adoption rate. Also, many different industries, verticals, stakeholders, end users, partners and customers have embraced this new technology and it is driving this trend upwards.
Cloud-based mobile solutions used for access control and building management reduce or eliminate the need to physically touch cards, readers, or keypads, or to issue or revoke ID cards in person. Visitor management has also been adapted to a more hands-off experience with cloud-based solutions that limit face-to-face interaction through self-service check-in. Even physical card issuance reduces contact using cloud-based solutions that enable cards to be designed and printed anywhere. Wireless technologies and Bluetooth beacons have been integral to implementing automated physical distancing and contact-tracing policies during the global pandemic.
Another application is security patrol monitoring, real-time key tracking and contractor management. Guards tap each tour checkpoint with their NFC-enabled smartphone for more detailed and efficient, contact-free reporting. Governments are also tapping into the touch-free experience through digital versions of national identity documents. Citizens can use mobile devices to securely request appointments, receive health information and access credentials. Hence, almost all industries have begun adopting this trend.
Looking at COVID and other factors, what are some of the keys for the growth of digital IDs? Do you see continued growth in this area?
Bardhan: Digital ID adoption across industries has accelerated more rapidly than ever before. According to HID’s 2023 State of Security and Identity Report, more than 2,700 end users and partners were asked about the biggest issues that they are facing in their organizations. Digital transformation and modernization are one of the top reasons for the development of this trend. In today’s world, trusted identity is becoming a digital phenomenon and customers increasingly prefer to use these digital identities from passports to student IDs, employee badges and other corporate credentials.
The recent shift of consumers demanding touchless, seamless and secured digital credentials has been a big contributing factor. The wide adoption of cloud-based digital IDs that provide simplicity, convenience and innovative capabilities has been instrumental in the growth of digital IDs. Many virtual business models are looking to provide contactless biometrics with modern iris and facial recognition technologies that are reliable and applicable to on-premises and remote authentication with the added bonus of privacy and elimination of unauthorized access and fraud.
Is the phone winning out as the credential of choice in this battle for identity that is going on within security?
Yes, phones are becoming a top form factor of choice for consumers. Mobile IDs, defined as digital IDs stored on and authenticated via mobile devices, are rapidly gaining adoption. According to our 2022 State of Physical Access Control Report, 66% of users have already upgraded to mobile readers or plan to do so, while 41% of respondents say that mobile access would be one of the top features required in a new access control system.
The infrastructure to support digital transactions grew during the past two years, alongside the need to offer contactless transactions. In tandem, the adoption of mobile wallet apps that house digital identities on mobile devices also grew. Digital wallets comprised 48.6% of e-commerce transaction value worldwide in 2021, or just over $2.6 trillion. In addition, digital wallets are projected to rise to 52.5% of transaction value in 2025, driven by the popularity of digital wallets from major players such as Amazon, Apple, Google and PayPal. That’s because they make the online shopping experience much easier while enabling users to store multiple payment applications on a single device. Expanded capabilities allow iPhone users to add keys, IDs and digital documents directly in the wallet app. These include, but are not limited to, driver’s licenses in eight states, verifiable COVID-19 vaccination information, employee badges, student IDs and hotel room keys.
Please talk about the growth of IDaaS, and what that will look like in terms of creating a revenue model for those who offer IDaaS, such as a subscription or recurring service model?
The IDaaS market growth has been exponential and the growth of mobile credentials has a close correlation to this. Multiple industry drivers have led to this exponential growth; security, regulations, compliance, privacy, use cases and user experience are some of the top drivers.
With increasing (and varying) use cases of digital credentials, revenue models have been reconstructed, and subscription or recurring revenue models offer more flexibility to end-users as they deploy large digital ecosystems. Subscription models also allow customers to pick and choose the types of services/use cases they need in order to hit their organizational goals. Furthermore, with hybrid work environments in relevance today, subscription models allow for activation-based billing where the customers pay exactly for what they use. These options are difficult to implement in perpetual or one-time payment models. Therefore, the industry is moving quickly towards recurring revenue and/or subscription-based revenue models.
Historically, manufacturer revenue models have been based on one-time hardware sales supplemented with additional revenue streams from consumables and services. OPEX-based revenue models were virtually inexistent as value extraction from subscription models was very difficult. In general, very few subscription models existed and not too many succeeded with such revenue models, as the industry was slow to adopt subscription and/or recurring revenue models.
I see commercial real estate is leading the way in digital IDs. What is driving this growth? What role does the growth of Proptech play?
Yes, the commercial real estate (CRE) industry is adopting digital IDs rapidly. According to 2023 HID State of Security and Identity Report, 47% of integrators and installers said their CRE customers are using mobile identities for identity verification. Large commercial real estate firms are leveraging mobile access as part of their larger tenant experience apps. For example, New York City-based Silverstein Properties offers secure contactless access to its office buildings through employee badges in Apple Wallet. Recently, employee badge in Wallet, made its debut in the UK at 22 Bishopsgate; that is the next step in transforming the user experience in a modern workplace.
Today’s buildings range from managed, multi-tenant property to a company-owned headquarters facility with many satellite operations worldwide. In any scenario, it can be difficult to scale access control deployments without large infrastructure investments. Cloud-based digital access control enables integration with a range of access use cases as well as centralized control over property technology solutions.
Tenants are offering their employees flexible, multi-location, and hybrid work styles that include work-from-home and in-office hot-desking. They want touchless and seamless access to doors and elevators, and intuitive features and amenities that make their journey to and from the office easier. And the ubiquitous mobile phone has become the command center for their lives, a single device that consolidates both work and life. To achieve these capabilities, those managing the building need a modern digital ready infrastructure that enables robust experiences, mobile adoption across systems, and future-ready, touchless access control.
Serving as a “single source of truth,” tenant experience platforms integrate access control, visitor management, building operations (alerts, maintenance requests, broken elevator, etc.), shared asset management (booking shared rooms or spaces), as well as custom experiences like local dining options, yoga schedules, and café specials with cloud-based credential management.
What is the current discussion around data, including storing, protecting and mining that data to create better outcomes and/or efficiencies and savings, for example?
There are two schools of thought when it comes to data. There are organizations that have very stringent privacy requirements and are cognizant of what data is stored or shared. On the other hand, there are organizations that trust companies with their data in order to get meaningful statistical analysis around usage, savings, efficiencies, etc. These analytics help organizations with multiple objectives, including workspace management, employee engagement, user experience, etc. It is imperative that organizations make the right choice in data management by offering solutions that are safe, secure and certified.
This article originally appeared in Locksmith Ledger magazine (www.locksmithledger.com), a sister publication to Security Business. Paul Ragusa is Senior Editor of Locksmith Ledger.
