A Bold Prediction for 2025 | Proof

As we enter 2025, society is grappling with two opposing forces. On one hand, we are increasingly digital first. A generation of consumers now shies away from paper and rejects signing with a pen. Consumers prefer to do things online, on their own time, and quickly. Society no longer tolerates analog processes; everything is expected to be digital. At the same time, an AI-powered arms race is threatening everything we trust. Our own eyes can no longer be trusted to distinguish what’s real from what’s fake. Institutions from the news to banks and governments struggle to determine what information is trustworthy, what documents are real or forged, and whether the person they’re interacting with is genuine.

As Marc Andreessen recently said, we have to “switch our sense of what's real from basically just trying to eyeball it…to only taking seriously the things that we know are real.”

The good news is that we’ve solved this problem before, and we have the technology to do it again. In 1958, Bank of America launched BankAmericard (which became Visa). While Visa is often credited as the inventor of the credit card, its true innovation was reestablishing trust in payments through the creation of an electronic network for value exchange.

Just as payment networks revolutionized how we handle money, there is a prediction that we are about to see a similar transformation in how we handle identity online.

The Numbers Paint a Stark Reality

According to recent Federal Trade Commission data, consumer financial losses from fraud reached an estimated $158.3 billion in 2023. Even more concerning, 80% of financial services executives expect AI-generated fraud to undermine existing identity-proofing methods in the next 12 months.

Today's fraudsters are leveraging AI and operating in sophisticated networks. When one criminal discovers a weakness in a company's identity verification system, that knowledge is instantly shared and weaponized across criminal networks. Yet, most businesses are still fighting this networked threat alone, with individual KYC and identity-proofing policies that create silos for fraudsters to exploit. Criminals are working together while businesses are left fending for themselves.

The parallel to early credit card fraud is striking. Before major payment networks, merchants fought fraud individually and with little success. The game-changer came when networks enabled issuers and merchants to share fraud data. When a card was compromised at one store, the entire network could respond in real time and stop a transaction in flight. Momentum compounded as networks allowed merchants to trust consumers without a pre-established relationship. The same solution should exist for all authorizations and transaction types, not just payments. To do so, we need to think beyond siloed IDV solutions and even beyond data consortiums and databases. What is needed is the coordination and sophistication of an identity network.

The Identity Verification Explosion

As AI makes it easy to fake phone calls, emails, and even video chats, businesses have had no choice but to require identity verification for nearly every online interaction. A recent survey showed that 98% of eCommerce companies report an increase in AI-enabled transaction fraud. However, the current solution—verifying your identity from scratch every time you do something online—is like carrying a different credit card for every store you visit. This paradigm is not only ineffective, it doesn’t align with consumer preferences. Consumers are increasingly concerned about identity theft and privacy, yet are asked to provide ID documents and sensitive information to every business online. After relentless data breaches, it’s clear that our current approach is no longer sustainable. Without considerable redirection, we face catastrophic harm to institutions and even national security.

The right solution mirrors what payment networks achieved: allowing one trusted credential to work everywhere. Initially, in payments, a single credential was accepted across merchants on the same street, then across states, countries, and now globally.

Liability and Consumer Protection

Perhaps the most crucial lesson from payment networks concerns liability. Credit cards gained widespread adoption because networks like Visa established clear rules about who bears the cost when things go wrong. Today’s identity market lacks this clarity—consumers shoulder the burden of proving identity theft while businesses struggle to determine their liability for account takeovers and how to handle reimbursements.

Seventy-five percent of financial services respondents say they are highly concerned about fraud risks in electronic documents and signatures, which are widely used for authorizations and increasingly susceptible to AI-enabled forgery. Without clear rules about liability and consumer protection, our entire concept of identity is set to collapse. Today, consumers have no protection when a business mistakenly accepts forged records. They only discover it later, after the damage is done, leaving them to recover their identity and fight a dispute in court.

Similar to payments, identity networks that guarantee the efficacy of their solutions and offer verifiable proof as to who authorized what will not only address industry concerns but also provide practical solutions for everyday consumers.

Looking Ahead and Learning from Payment Networks

The parallels between the evolution of payments and the journey the identity industry is on are clear. In the same way that payment networks solved the problem of establishing trust between merchants and consumers with no direct relationship, identity networks will emerge to solve the same problems that exist on the internet.

Over the next few weeks, these themes will be explored in a new series that examines the historical trends behind these predictions and how modern payment networks provide a playbook for how Identity Authorization Networks will become the identity layer for the Internet.