Navigating the Digital Identity Landscape

While eIDAS 2.0 centers on fostering interoperability and setting standards for digital identity, the EUDI Wallet serves as a tangible tool for users, thereby contributing to the development of a comprehensive digital identity ecosystem.

The Electronic IDentification and trust Services Regulation, more commonly known as eIDAS, aims to create a unified digital identity framework, promoting interoperability and trust in cross-border interactions. eIDAS 2.0 represents a paradigm shift, addressing key challenges that hindered the initial eIDAS regulation's widespread adoption. Its revision was triggered by low implementation of eIDAS by European Union (EU) member states. The revised eIDAS 2.0 plans to provide private individuals a trusted and secure means of sharing verified identity and data attributes with not just public but also private services.

Key to the eIDAS regulation is the digital wallet, with each member state responsible for providing a digital identity wallet to every citizen who wants one. With the ambitious goal of 80% of EU residents using a digital identity by 2030, the idea is to provide all citizens and residents across the EU with highly secure and privacy preserving digital wallets that can be used to manage various digital credentials. As a result, a final agreement on eID was reached by the European Parliament and the Council on November 8, 2023.

Things to consider

KuppingerCole market sizing research indicates that the financial, government, and health care sectors already see the highest use of a verified digital identity to remotely onboard and enroll users. While these may be the most frequent users of verified digital identity, other industries are rapidly showing interest. This expected growth is in line with the overall growth of this segment, marked by increasing maturity of technologies, increasing adoption across a wider range of industries, and an increased use of eIDs and digital wallets. However, the true potential lies not in restricting these technologies to specific use cases but in embracing their capacity to simplify a multitude of interactions.

Far from being a mere tool, the EUDI Wallet could serve as a means for the adoption of digital services by providing a unified approach to identity management. From e-commerce to government processes and beyond, the EUDI Wallet and eIDAS 2.0 have the potential to integrate decentralized identity principles into existing applications and build new digital services that benefit from them. Nevertheless, ensuring security and interoperability will be challenging - especially at the massive scale of users and use cases the EU is targeting.

In addition, the digital identity issuance and applicability must not just be for one organization or use case – if a user has access to a verified, digital identity, they must be able to use it for many different purposes, with many different service providers in disparate industries, and even with public institutions. Therefore, solutions must be flexible and extensible: flexible to provide adjustable levels of assurance to each use case or flow, and extensible to address the increasingly complex interoperability needs and security considerations.

Reaping the benefits

The wallet's full potential extends far beyond specific use cases, encompassing its applicability in e-commerce, organizational and enterprise settings, government interactions, and more. Key components to consider when selecting the right technology mix for a digital identity solution will include high functionality with exceptional user experience. The crucial factor here is the widespread acceptance of the EUDI Wallet, which hinges on its user-friendliness, security, and global functionality. Achieving acceptance becomes feasible when the system is easier to use and seamlessly works on a global scale.

Done right, the economy stands to gain significantly from the simplification brought about by the EUDI Wallet. One of the primary benefits is a reduction in drop-off rates, as the streamlined and user-friendly nature of the wallet ensures a smoother process, preventing potential users from abandoning digital interactions midway. Additionally, the simplification enabled by the wallet helps reduce overall process costs. Eliminating unnecessary bureaucratic hurdles and reducing in the time required for various transactions further bolster the economic benefits.

In essence, the key to unlocking the full potential of the EUDI Wallet lies not only in its technical capabilities, but equally in the investments made to educate users, promote transparency, and cultivate a user base that recognizes the transformative impact of digital wallets on both the personal and economic landscape. Emphasizing the versatility of the EUDI Wallet in various economic facets is critical for user adoption, which ultimately leads to a more efficient and connected economy. User education will therefore be an important part of success, as will an iterative approach.