SA’s first Identity Index reveals business concerns

South Africa’s first Identity Index reveals heightened concern over identity fraud threats in South Africa, with 56.7% of businesses expressing concern or strong concern about future threats. 

The landmark study by iiDENTIFii, the Identity Index 2024: South Africa Edition, published in partnership with World Wide Worx, provides an in-depth analysis of the current landscape of identity fraud concerns, practices, and preparedness among businesses. The findings highlight significant trends, investment priorities, and the effectiveness of various identity verification solutions as businesses of all sizes navigate the evolving threat of identity fraud.

About the Identity Index 2024

The Identity Index 2024 provides an in-depth analysis of the current landscape of identity fraud concerns, practices, and preparedness among businesses. The findings highlight significant trends, investment priorities, and the effectiveness of various identity verification solutions as businesses of all sizes navigate the evolving threat of identity fraud. 

The research was completed by World Wide Worx in 2024, across a sample of 200 medium and large enterprises, across industry sectors. The primary Identity Index is based on the percentage of companies that regard their identity management processes as Very Effective, which currently stands at 24.5%. Additionally, those that consider their processes Somewhat Effective make up 62%, which highlights the potential of the index at 86.5%, despite the actual index remaining relatively low at 24.5%.

Gur Geva, founder and CEO of iiDENTIFii says: “We commissioned the first Identity Index in order to gauge and track local industry sentiment around digital identity and identity fraud in the country. The results of the independent survey provide an important foundation of measurement for how identity is being authenticated in the country, how confident businesses are in the face of growing threats and where the potential fault lines are in mitigating the risk of fraud.” 

Businesses expressed growing concern about identity fraud 

Overall, the index showed that businesses are becoming more aware of, and prepared for, the challenges posed by identity fraud. 

Those surveyed in the study expressed concerns about growing identity verification fraud and its impact on their business. These concerns centred around the potential for financial loss (35.3%) and reputational damage (34.8%), illustrating that financial and brand implications are almost equally weighted when considering the future outcomes of a business. 

The concern for AI-driven fraud was particularly pronounced, with up to 63.2% of smaller businesses and 60.9% of larger businesses identifying it as a critical threat. These findings emphasise the need for businesses to stay ahead of increasingly sophisticated fraud tactics by implementing more advanced and adaptive security measures.

Businesses are adopting robust identity verification (IDV) solutions 

Businesses in South Africa are adopting IDV solutions with the aims of enhancing security and reducing fraud. The report shows that adoption rates of AI-based fraud detection are at 50.5% and biometric methods are at 39.5%. This demonstrates a strategic shift towards leveraging cutting-edge technologies to mitigate identity fraud risks. However, the implementation of IDV solutions doesn’t come without its challenges. 

Barriers to effective IDV implementation

Arthur Goldstuck, CEO of World Wide Worx, says: “Despite the trend towards investing in IDV solutions, there are still some significant barriers to implementation, with 31% citing regulatory compliance and 23% citing user acceptance as the most substantial barriers.” 

This is further reflected in the investment patterns in fraud prevention technologies. Many businesses, particularly those with 201-1,000 employees, allocate between 10-20% (46.4%) of their budgets to these technologies, underscoring the prioritisation of fraud prevention in their corporate strategies. 

Larger companies also display significant investment, with 42.2% dedicating 10-20% and 26.6% allocating more than 20% of their budgets to fraud prevention technologies. However, a lack of collaboration among industry stakeholders is evident, with 45.6% of small businesses and 31.3% of large businesses never engaging in cooperative efforts to share intelligence and combat fraud. 

Says Geva: “These points towards an opportunity for more coordinated industry-wide approaches to digital identity, from stronger collaboration to a sustained commitment to investing in advanced technologies. This could enhance the effectiveness of fraud prevention at an industry level and build a more resilient ecosystem against identity fraud.

“iiDENTIFii is proud to establish the Identity Index, which offers a critical framework for monitoring the evolution of identity in our country. By serving as a benchmark for the effectiveness of identity management practices, the index can help identify gaps and opportunities for improvement across businesses of all sizes.”

Goldstuck says: “As companies respond to emerging threats and adopt new technologies, tracking progress through this index will be essential to ensuring that identity verification systems are not only robust but also responsive to the evolving landscape of identity fraud. This dynamic approach, supported by the Identity Index, will ultimately drive stronger and more cohesive efforts in safeguarding against fraud and enhancing trust in digital interactions.”