The State of Digital Identity: What Marketers Need to Know

Digital identity has quietly become one of the most important forces shaping marketing today. For years, marketers have relied on cookies, tracking pixels, and third-party (3P) data to understand their customers and reach them effectively. But as privacy regulations tightened and third-party cookies began to fade, the industry realized something: identity is the new foundation for trust, personalization, and customer experience (CX).

In this article, we’ll look at how identity has evolved, explore key technologies like SSO, OAuth, FIDO2, verifiable credentials, and services like Okta and ID.me, and talk about what it all means for marketers who want to balance personalization with consumer privacy.

The Evolution of Digital Identity

When the internet was young, users created a new username and password for every site they visited. That quickly became unsustainable. Identity solutions evolved to reduce friction while keeping accounts secure.

By 2025, 80% of enterprises will adopt a unified identity security platform, up from less than 20% in 2021.

Gartner

For marketers, this evolution has meant easier customer onboarding, higher conversion rates, and more reliable data to fuel personalization. From SAML in the early 2000s, to OAuth 2.0 and OpenID powering social logins, to today’s passwordless authentication, identity has gone from a back-end IT concern to a front-line customer experience issue.

Why Identity Matters to Marketers

Identity isn’t just about logins. It touches everything from conversion rates to personalization to customer trust.

87% of consumers say they won’t do business with a company if they have concerns about its security practices.

McKinsey

When customers can sign up with one click, they’re more likely to convert. When they trust a brand to protect their data, they’re more likely to stay loyal. And when businesses can unify customer identities across platforms, they can personalize experiences without relying on invasive tracking.

Key Identity Technologies and Standards

Here’s a rundown of the technologies shaping the identity landscape today:

• FIDO2 and Passkeys: Passwordless authentication that uses biometrics or security keys. Companies like Google and Microsoft have reported faster logins, fewer support tickets, and high adoption when offering passkeys.
• ID.me: An identity verification service that helps users prove attributes like military, student, or healthcare worker status, often used for discounts or access control.
• OAuth 2.0: The standard behind Login with Google/Facebook. It lets users share data between apps without sharing passwords.
• Okta (and other IDaaS providers): Cloud-based platforms that handle authentication, SSO, MFA, and user management, enabling secure and branded login experiences.
• OpenID Connect: Built on OAuth 2.0, it verifies user identity and provides profile data to applications.
• SAML (Security Assertion Markup Language): The enterprise standard for Single Sign-On, especially in corporate and B2B applications.
• Single Sign-On (SSO): Enables users to log into multiple applications with a single set of credentials, reducing friction and boosting conversion.
• Verifiable Credentials (VCs): A decentralized way for users to hold and present digital proofs (like age, employment, or loyalty status) without giving away unnecessary personal data.

Social logins can increase conversion rates by 20–40%, depending on the implementation.

Auth0

The Move Toward Passwordless Authentication

Passwords have been the weakest link for decades. They’re hard to remember, easy to steal, and a top cause of breaches. FIDO2 and passkeys represent a huge shift.

Implementing multi-factor authentication blocks 99.9% of automated account takeover attacks.

Microsoft

For marketers, the implications are clear: if customers can log in faster and more safely, they’ll be more likely to engage, shop, and stay loyal. Companies that adopt passwordless authentication are signaling to customers that they value both security and convenience.

Verifiable Credentials and the Future of Identity

The next wave in identity is self-sovereign identity (SSI) and verifiable credentials (VCs). These allow customers to prove who they are – or just specific attributes – without handing over more data than necessary.

The EU’seIDAS 2.0 framework will give every citizen access to a digital identity wallet that can be used across public and private services (European Commission).

For marketers, this could change onboarding and verification entirely. Imagine instantly verifying a customer’s eligibility for a loyalty program or discount, without collecting sensitive documents. This reduces risk while giving customers more control.

Balancing Identity and Consumer Privacy

Marketers walk a fine line: identity is the key to personalization, but mishandling identity can shatter trust. Here are a few principles to keep in mind:

• Transparency: Always be clear about what data you’re collecting and why.
• Consent: Utilize opt-ins and preference centers to give customers control over their data.
• Data Minimization: Collect only what you need, and store it securely.
• Security: Strong authentication (MFA, passwordless) protects both customers and your brand.
• Global Awareness: Since identity expectations vary by region, align with local norms and regulations.

Global Regulations Covering Digital Identity

Digital identity is no longer just a technical consideration—it is shaped and governed by a growing set of global regulations and frameworks. These policies define how identities are created, verified, and protected, ensuring trust, interoperability, and privacy across borders. Below is a list of the most influential regulations in alphabetical order.

• Aadhaar Act (India): Establishes Aadhaar as a nationwide digital identity system based on biometric and demographic data. It governs how identity is issued, verified, and used, with strict rules on privacy, consent, and lawful use.
• Australia’s Trusted Digital Identity Framework (TDIF): Defines accreditation standards for digital identity providers and services in Australia, focusing on security, privacy, usability, and interoperability across government and business ecosystems.
• CLOUD Act (Clarifying Lawful Overseas Use of Data – United States): While primarily focused on law enforcement access to data, it has implications for digital identity since service providers must comply with lawful requests for identity-linked information, even across borders.
• DIACC Pan-Canadian Trust Framework (Canada): A set of industry and government standards developed by the Digital ID & Authentication Council of Canada. It ensures interoperability and trust in digital identity systems across provinces and sectors.
• eIDAS 2.0 (Electronic Identification, Authentication, and Trust Services – European Union): Provides a legal framework for cross-border electronic identification and trust services. The updated regulation introduces the European Digital Identity Wallet, enabling citizens to use a government-backed digital identity across public and private services.
• GDPR (General Data Protection Regulation – European Union): Sets strict rules on how organizations collect, process, and store personal data, including identity-related information. It emphasizes user consent, data minimization, and the right to be forgotten, directly impacting digital identity management.
• ISO/IEC 24760 (International Standard): An international standard on identity management frameworks that sets out terminology, concepts, and guidelines for implementing secure and interoperable digital identity systems worldwide.
• NIST Digital Identity Guidelines (United States): Published by the National Institute of Standards and Technology, these guidelines (SP 800-63 series) set technical and policy standards for digital authentication, identity proofing, and lifecycle management, widely adopted by federal agencies and private enterprises.
• Singapore’s National Digital Identity (NDI) Framework: A government initiative under the Smart Nation program that provides citizens with a secure, universal login (Singpass) to access both public and private sector digital services.