Despite the rapid pace of digital transformation, most businesses and governments still rely on traditional identity verification (IDV) methods. In an era of rising digital fraud, deepfakes and AI-generated forgeries, conventional document-based IDV systems are struggling to keep up.
As these threats evolve further, businesses must ask themselves a hard question: Are their identity verification systems still fit for purpose?

How identity verification evolved over the years

Identity verification has come a long way, yet we’re still not where we need to be. To understand why current systems are failing, we first need to look at how digital identity has evolved.

Overview of IDV evolution

Version 1: Centralized Identity (1970s–2000s)

This era relied on usernames, passwords, and knowledge-based authentication. Enterprises collected and managed all user information themselves. It was difficult to scale, easy to forget and increasingly vulnerable to breaches.

Version 2: Federated Identity (2000s–early 2020s)

As online ecosystems grew, Big Tech stepped in with solutions like “Sign in with Google” or “Facebook Login.” This simplified user access but also came at a cost. Tech giants became the gatekeepers of identity, owning and monetizing user data, with limited transparency or user control, leaving security and privacy compromised.

Version 3: Decentralized Identity (Now)

We’re now entering the era of decentralized identity, powered by technologies like eIDs and the EUDI wallet. This model returns control of identity to the user, allowing individuals to manage verifiable credentials securely from their own digital wallets — and present them only when needed.

While we’ve progressed from passwords to federated logins to biometric and document-based checks, most current systems still rely on centralized infrastructure and physical credentials.

The current state of IDV: Document-based – and what comes next

At its core, today’s identity verification (IDV) process remains rooted in a document-based model. Most digital platforms, from banks to fintech apps to online marketplaces, require users to upload a physical government-issued ID and a selfie, which are then matched using facial recognition technology.

The objective is straightforward: confirm that the individual presenting the ID is both its legitimate owner and a unique person. While digitally enabled, this approach remains inherently centralized and heavily reliant on visual authentication and backend data matching — systems that were not built to withstand today’s fraud landscape.

Document-based systems are struggling to counter modern threats such as AI-generated deepfakes, synthetic identities composed of stolen data and sophisticated fraud techniques capable of bypassing biometric checks. Compounding the risk, these systems often require businesses to store large amounts of sensitive personal information, significantly increasing exposure to data breaches and missed regulatory compliance.

Source: Regula: The Impact of Deepfakes on Identity Verification

With regulatory frameworks like eIDAS 2.0 and the emerging European Digital Identity (EUDI) standard raising the bar for digital trust and privacy, the problems of traditional IDV are growing harder to ignore. The IDV systems in place weren’t built for today’s demands of security, scalability and trust — making them not only inefficient, but a growing liability for businesses and governments alike.

The limitations of today’s IDV systems

Most current IDV systems are vulnerable to fraud and can be easily bypassed with deepfakes, forged documents or stolen data.

In the U.S. alone, the Federal Trade Commission (FTC) reported over 365,000 identity theft cases in Q1 of 2025 — that’s more than 4,000 incidents every single day. This isn’t just a consumer problem, it’s a growing threat to businesses, regulators and the digital economy as a whole.

Source: Federal Trade Commission (FTC) Consumer Sentinel Network: 2025 YTD Data

Behind these rising risks lie deeper, systemic issues that today’s verification methods fail to address:

• Interoperability gaps: Fragmented networks hinder seamless verification

• Cybersecurity threats: Fraud, identity theft and data breaches are escalating

• Deepfake concerns: AI-driven fraud is challenging identity verification

• Data privacy demands: Users want greater control over their personal data

• Regulatory pressure: Stricter compliance requirements such as eIDAS 2.0 demand securer solutions

What does this mean for companies?

For most companies, current IDV systems are no longer just inconvenient, they’re actively hurting business outcomes.

Here’s where businesses are feeling the pain:

• Rising fraud costs
  Deepfakes and synthetic identities make document checks easy to bypass, increasing the risk of fraud and exposing platforms to financial damage.

• High conversion rates drop off
  Manual document checks and poor verification UX cause users to abandon onboarding, lowering completion and growth.

• Falling behind on compliance
  With frameworks like eIDAS 2.0 coming into force by 2027, fragmented ID systems make cross-border compliance slow, costly and hard to scale.

These painpoints underscore the need for a fundamental shift. Rather than improving outdated systems, we must rethink verification itself — moving away from static documents and centralized control toward a decentralized, user-centric framework.

What’s the solution for this broken IDV system?

Decentralized identity verification (DID) offers an entirely different model, one that’s designed to return ownership of identity data back to the individual.

Rather than relying on centralized databases and static documents, decentralized IDV empowers individuals to store verifiable credentials (such as government-issued eIDs) in secure digital wallets and present when needed. This approach not only reduces the risk of fraud but also helps organizations comply with emerging regulations like eIDAS 2.0 and integrate seamlessly with EUDI standards.

Next-gen IDV methods - Credentials stored on phones

This shift calls for more than just a new method, it demands a new infrastructure. And that’s exactly what Hopae is building — an lDV solution that uses trusted eIDs for global user onboarding.

Hopae’s decentralized IDV solution

Designed for every type of business, Hopae’s IDV solution tackles real-world challenges head-on, reducing fraud at its source and delivering reliable, high-trust user verification. Behind every successful onboarding strategy are the teams responsible for driving innovation, ensuring compliance and building trust. Here’s how Hopae’s infrastructure can support their goals:

ID verification for digital transformation & product teams

Frictionless identity = higher conversions.

• Reduce conversion drop-offs with mobile-first, one-click ID flows

• Plug into your existing UX without redesigning flows

• Accelerate time-to-value by simplifying integration and maintenance

ID verification for compliance & legal teams

Meet today’s laws — and tomorrow’s deadlines.

• Built-in compliance with eIDAS 2.0, GDPR, and EU cross-border ID regulations

• Full auditability, consent management and data minimization baked in

• Reduce liability by relying on verified, government-backed credentials

ID verification for risk & fraud prevention teams

Prevent fraud before it starts.

• Stop fake accounts with deepfake-proof, credential-level verification

• Eliminate synthetic and stolen identities using government-backed eIDs

• Gain stronger data to automate KYC and avoid verification issues

We’re excited to unveil our next-generation identity verification solution at Identity Week 2025 in Amsterdam — so if you’re there, come join us as we showcase how to stop fraud at the root, boost user trust and redefine what secure onboarding looks like.

The future of identity is here – are you ready for it?

The shift from traditional IDV to decentralized identity is no longer a future concept, it’s already underway. In this new landscape, businesses that adopt secure, reliable solutions position themselves to meet tomorrow’s standards with confidence — while delivering smoother, safer and more trustworthy user experiences.

Want to know more about how Hopae can help you stay ahead in this new era of IDV?
Let’s connect!