The FIDO Alliance, alongside HID, has unveiled a comprehensive report titled "The State of Physical and Digital Identity in the Enterprise," highlighting the challenges faced by organisations in managing access across the workforce. This research, based on input from 500 IT and cybersecurity professionals in the US, Canada, UK, France, and Germany, reveals a gap between enterprise confidence in identity management and the operational realities they face.
The report indicates that although 94% of organisations express confidence in their ability to revoke access within 24 hours of an employee leaving, a substantial 35% encountered issues doing so in the past two years. Moreover, 70% reported experiencing at least one security incident related to identity management during this period.
Challenges in governance and complexity
Findings highlight that only half of the enterprises have unified reporting ownership for physical and digital identity, with just 48% having a consolidated budget for these activities. The financial sector experiences the highest fragmentation, with 34% maintaining separate reporting structures despite strict regulatory requirements.
Additionally, 59% of enterprises utilise three or more distinct authentication systems, and 58% noted increased complexity in managing digital identities over the past two years.
High incident rates in the public sector
Reducing the risk of phishing and credential breaches drives the move towards passwordless authentication
The research identifies the public sector as suffering from the highest rate of identity-related security incidents, with 43% of entities facing access revocation failures. Manual credential revocation in this sector is at 20%, significantly higher than that in the IT/Technology sector.
While 93% of organisations are progressing with passkey adoption, only 13% have achieved wide-scale deployment. This limited deployment correlates with elevated security incident rates, underscoring the necessity for comprehensive adoption to maximise protection against threats.
Reducing the risk of phishing and credential breaches drives the move towards passwordless authentication, cited by 45% of respondents. Another 44% aim to minimise IT costs related to password resets and help desk burdens.
Leadership Insights
The full report will be presented at Identiverse 2026, with FIDO Alliance and HID available
Andrew Shikiar, Executive Director and CEO of the FIDO Alliance, stated, "The story in this data isn't about awareness, it's about execution. Ninety-three percent of organisations are on the passkey journey, but only 13% have deployed at scale, and the security incident rates reflect that gap directly. Phishing-resistant authentication only delivers its full protective value when deployment is comprehensive rather than selective — because threat actors don't limit themselves to the parts of the organisation that are already protected."
Sean Dyon, Vice President of the Authentication Business Unit at HID, added, "Identity security is no longer just an authentication challenge; it is an enterprise governance challenge. As organisations adopt passkeys, a unified approach to managing physical and digital identity becomes critical. This research shows that fragmented governance, disconnected systems, and limited visibility create real business risk. HID is closing that gap by bringing credentials, access rights, and lifecycle management together to enable faster, more confident access decisions."
The full report will be presented at Identiverse 2026, with FIDO Alliance and HID available for discussions at booths 252 and 800, respectively, from June 15-17.
The FIDO Alliance and HID, a global enabler of trusted identity solutions, release The State of Physical and Digital Identity in the Enterprise, a new research report examining how organisations manage physical and logical access across their workforces.
Surveying 500 IT and cybersecurity decision makers across the US, Canada, UK, France and Germany, the new study uncovered a significant disconnect between enterprise confidence in identity security and operational reality. While most organisations believe they can revoke all physical and digital access within 24 hours when an employee leaves, more than one-third report experiencing actual failures doing so, contributing to identity-related security incidents across the enterprise.
Physical and digital identity
Key findings from the report include:
- While confidence is high, so are security incidents
- 94% of organisations claim confidence that all physical and logical access can be revoked within 24 hours of an employee leaving.
- Yet 35% experienced delays or failures doing exactly that in the past two years — and 70% experienced at least one identity-related security incident overall.
- Governance is fragmented
- Only 50% of enterprises have unified reporting ownership for physical and digital identity, and just 48% have consolidated budget control.
- Finance is the most governance-fragmented sector, with 34% operating fully separate reporting structures despite operating under stringent regulatory access-control obligations.
- Complexity is growing, and enterprises manage three separate systems on average
- 59% of enterprises manage three or more distinct credential and authentication systems.
- 58% say managing digital identity has become more complex over the past two years.
- The Public Sector carries the highest incident rate of any industry
- The sector has the highest identity security incident rate of any industry, with 43% experiencing access revocation failures.
- It has a 20% manual credential revocation rate, which is more than double the IT/Technology sector.
- The passkey adoption must scale to protect businesses
- 93% of organisations are at some stage of passkey adoption and 65% report high or expert technical familiarity.
- However, only 13% have deployed passkeys at scale, explaining why organisations experience such high levels of security incidents.
- Phishing-resistant authentication is a top business priority
- The pioneer driver for moving to passwordless authentication is reducing phishing and credential-based breach risk (45%), followed by reducing IT costs from password resets and help desk load (44%).
Phishing-resistant authentication
"The story in this data isn't about awareness, it's about execution. Ninety-three percent of organisations are on the passkey journey, but only 13% have deployed at scale, and the security incident rates reflect that gap directly,” said Andrew Shikiar, executive director and CEO of the FIDO Alliance. “Phishing-resistant authentication only delivers its full protective value when deployment is comprehensive rather than selective – because threat actors don't limit themselves to the parts of the organisation that are already protected."
“Identity security is no longer just an authentication challenge; it is an enterprise governance challenge. As organisations adopt passkeys, a unified approach to managing physical and digital identity becomes critical. This research shows that fragmented governance, disconnected systems and limited visibility create real business risk. HID is closing that gap by bringing credentials, access rights and lifecycle management together to enable faster, more confident access decisions,” said Sean Dyon, Vice President of the Authentication Business Unit at HID. The full report is being launched at Identiverse 2026. Visit FIDO Alliance at booth 252 and HID at booth 800 from June 15-17.
