Decentralized Digital Identity Verification with Blockchain and AI-Powered Fraud Detection

Digital identity forms the backbone of verification processes in banking, governance, healthcare, telecommunications and online services. However, most identity verification systems still rely on centralized storage infrastructures, which remain vulnerable to data breaches, unauthorized access, and large-scale misuse. The increasing sophistication of identity-related fraud, including synthetic identity creation, document tampering, and biometric spoofing, further exposes the limitations of conventional verification methods.This paper presents a systematic review of decentralized digital identity verification using blockchain technology for secure, immutable identity management, integrated with AI-driven fraud detection models for advanced anomaly identification. The study evaluates leading frameworks, including blockchain-based decentralized identity architectures, verifiable credentials, and AI-powered document and biometric analysis. Drawing insights from recent literature, including blockchain-based identity management models proposed by H. V. A. Le et al. (2025) and digital identity verification systems for banking introduced by G. Bilakanti (2024), this work explores how blockchain and AI can be combined to build a tamper-resistant, privacy-centric, and fraud-resilient identity verification system.