Welcome to the KuppingerCole Analysts chat. I'm your host. My name is Matthias Reinwarth. I'm an analyst and advisor with KuppingerCole Analysts. And my guest today is Martin Kuppinger. He is the principal analyst and one of the founders of KuppingerCole Analysts.
Hi, Martin. Hi, Matthias. Good morning. You're giving away that we are recording this very early in the day, so maybe the lighting is different than usual because it's really dark outside. We want to quickly briefly cover a topic that made the news in just a few days, a few weeks ago. We want to talk about consumer devices that are now able to carry digital IDs to be presented towards, for example, the airport. We want to talk about the digital ID in the Apple Wallet that has been announced. It's in a very early stage.
It's better, but they are providing a mechanism to register your digital ID in selected U.S. states and then present that for various purposes. And many consider this to be some kind of a game changer. What is your opinion on that? I think the point that it comes from Apple means it will have an impact, very clearly. Is it really a game changer?
So what is great is it brings visibility, much more visibility than before to this entire theme of verified identities, of reusable identities, of having identities in a, most call it wallet, which I believe is not a very good term, but maybe fits very well for what Apple is doing. I think this is probably the most positive thing I can say about it, except the fact that it helps people also for certain use cases. But I think, honestly, my opinion is it's far, far away from where we need to be with that. Because at the end of the day, I think the first thing is it's not really an ID.
What you do is you have an Apple wallet and you put a representation of a certain ID into it. And then you put a representation probably in the future of the next ID in. So like in a real wallet, you have all your ID cards in the wallet, but that already means you have multiple ID cards in a wallet. It's not the ID in that narrow sense. I think this is something we should keep in mind. And so I think it's helpful for certain use cases where it's supported, but it's really far, far away from the vision that is behind various of the other wallet initiatives.
On the other hand, I think it plays perfectly well in what we see in many areas of this wallet ecosystem, that there are single purpose solutions developed for whatever international travel, for keeping your mobile driver's license in an Apple wallet, which is maybe more comfortable than having a separate app for the mobile driver's license, which is even worse. But it by far does not leverage the potential that is behind the idea of reusable identities, verified identities. All the verifiable credentials and what is behind. Right.
So as you said, we're putting a representation of an already existing state issued identifier into the wallet. It clearly is not an issuance process. It's just a means of transport. But even if we take this as a given, as you said, it really makes a lot of use cases much easier. It's always this example that everybody uses to buy booze at the shop and to say, I have to prove I'm 18 years old. There was some kind of selected disclosure just to say I am of legal age, but without having to show my full passport.
That is something that is a use case that can be clearly implemented, but that's giving not too much information away. That is a good starting point, isn't it?
Yes, it helps in certain use cases, but I think there's a misconception from the very beginning in this entire concept Apple is following. And probably I will get a lot of comments on that. The misconception is the ID that's, for instance, Martin or Matthias, and the mobile driver's license is not an ID. It's a verifiable credential of Matthias and Martin or Martin. And we don't share the same mobile driver license for sure.
To put this clear concept, and I think that's where the UDI wallet from that part of the concept is really better at saying you have a wallet and things in that wallet are basically verifiable credentials, even while they are in the traditional life called ID cards maybe, or mobile driver license, which is not in the narrow sense an ID card used as an ID card in certain countries, but it's not in the narrow sense the ID card, it's a driver's license. And these are all elements of your identity, which you then in this concept can share in a controlled manner.
And I think in the ideal world, you can share this without taking it out of your wallet in any way. So it's something which basically happens in the background. And I think the concept of Apple is quite a bit away from this idea. And this also, I believe, can become an inhibitor for the use cases that really provide a huge business value on the other end, where it's about, and I talked about this at EIC this year, EIC last year, the European Identity Conference, the real value of this entire concept for a consumer comes clearly in simplification.
For business that comes with the more sort of verifiable credentials or the more attributes of an identity you can, under controlled circumstances, interest in your business processes. And that is something I don't currently see in the concept of Apple, is that you have not only a few ID cards in your wallet, but that you have hundreds, thousands, tens of thousands of verifiable credentials that are, in a sense, a digital representation of user, whatever, your insurance contracts. All the other things, which then are always sets of credentials that you can use to automate processes.
And this is, I think, what isn't really in this concept. Yet, at least I don't see it.
Right, but we are at an early stage, I fully agree. And we know that the concept, as we described it, is something that inherits from something that is a trust anchor, which is outside of the ecosystem. But nevertheless, maybe if we compare it to what Apple did with Apple Pay, so really starting with a representation of a credit card and using that for payment, so still issued by somebody else, a bank or the credit card issuer. But nevertheless, the payment is simple, it's easy, and it's in your phone.
And I think it's the same mimic that we see with the passport as it is in this early beta phase. It's not usable in the EU, it's not even fully available in the US, just a few states. But the genie is out of the bottle, isn't it?
I think, hopefully, it helps driving this entire concept forward. But also, hopefully, we think beyond that. As I've said, I think that the real value will come when we have way more in that.
So yes, this is nice for a verification. But I think almost two years ago, in one of my keynotes, I talked about the potential for two things. The one is employee onboarding. And the other is automating loan processes in banks. In both cases, you need more than just the idea for employee onboarding.
Okay, yes, you start, okay, this is really Martin. Things fit overall to this we. But then you say, okay, and there are a ton of different certificates and etc. from schools, from universities, etc., which also brought in automatically. And then you can say, okay, I onboard Martin, he's an employee of Copico. I issue some additional credentials to that, like saying Martin is the principal analyst. And then Martin goes into a project at a company X. And the company X says, okay, I can verify that this is Martin. He's a Copico analyst. He's in this project, whatever, ABC.
And he has that role in the project. And then I can automate the entire authorization. But that requires way more than just an ID card in a wallet. And that is where the value is. And this is where I say we are really light years away from that. And if you take a loan process, what you need, you need your marital status. You need your current real estate. You need income information, etc., etc. All that must be represented.
And then we can automate a process that costs every large bank tens of millions, hundreds of millions or more per year for AML, for KM, KYC, so anti-mono laundering, know your customer. And this is, I think, where it's still not yet there at least. And then there's the obvious burst effect, as I understand, that it's bound to a device. So you're an Apple fanboy, Matthias. How many Apple devices do you have?
Four, I think. It's the watch, it's the iPad, it's the phone, it's the MacBook, which I'm looking into right now.
Yeah, four. Okay. I also have four, but they are split into two worlds, which is the personal life and the business life. So currently it's two each, but that may become more on the business side after I just switch to a MacBook Air. It's not that I'm against Apple. The next thing might be an iPad Mini for my desktop, et cetera.
So, yes, I probably never will end up with an Apple watch unless the Apple watch looks like the Junghans Max Bill watch in Bauhaus design. So the bar is raised for Apple here, quite a long way to go. So that is a bit different. So my perspective of a watch would be something like that.
So, and I'm not sponsored by Junghans by any means, but so I'd like to look at more like that. Anyway, maybe some others like to look at like a Rolex or so, but then I may even end up with a smartwatch.
Anyway, back to the topic. I think you use the ID across devices. So it's relatively unattractive to me. And that's the same problem with UDI wallet, by the way, that we are device bound. A wallet must roam. I want to decide which credentials I have where on which device and where I use it. Going back to the bank loan example, will you do a large bank loan application from your iPhone? Most likely not. You will use a different device. Then you need to bring in again, something for travel is fine because you go to the airport, you show your phone. Nice.
But when you book your travel, it already may look different if you want to do the check into a hotel in another country. And it already may look quite different. And this is why I believe there are still things we need to overcome, not only for the Apple, but for all wallets. What I really like is it's giving a push. And it's sort of, yeah, sort of a dissemination of this entire scene to a way broader public than it has been before. But there's a long way to go.
Yeah, absolutely. But I think when you look at EODI wallet being mandatory by the end of 2026, if I remember correctly, Apple just threw one stone into the sea to release what happens right now. And they built it on standards, which is good. So they're using MDoc, they're using ISO standards, they are using FIDO standards to integrate all of this, starting with this very limited use case, fully agreed. But at least there's potential for interoperability at that limited use case.
And let's wait and see what else can be added to that wallet that really adds value for the users that are willing to be using that in that early stage. The fear I have a bit is that the paradigm used and when you look at my example of whatever bank loan and other things, then probably already the wallet as a paradigm or a term is misleading because it's probably more a rack of folders with all the information in than just a single wallet. I think we will need to look at how does this look like and clearly in this rack of folders, not everything can be stored on a secure element.
Also very clear, so it will be probably way more distributed and decentralized. I think the risk is that this may fall a bit short because it's too narrow in its ambition. And I think we should think much bigger, honestly, here. And I think this is part of what I'm bringing up. It will help to drive attention for that. And I think it also shows one thing very clearly. We will not only have one, let's call it wallet for now. And when we are on the other side of it, so when we are an enterprise, when we are an organization or whatever, we will not be able to accept only one wallet.
It will be probably a couple because not everyone is using Apple. That's the starting point. Not everyone will have a UDI wallet because not everyone is a US citizen. So for an enterprise, latest when it becomes a global use case, we anyway will need multiple of them. And that will open up a huge playing field for the ones who are able to build the aggregations. And that also means for an enterprise, don't think about integrating the Apple wallet. Think about how you can integrate all wallets in a sort of defined manner, which clearly needs sort of an abstraction layer.
And all these wallets are additions to what you do at a rip and replace. I think we talked about this in earlier podcasts. We surely will add links to some of our former wallets-related podcasts anyway.
Yeah, absolutely. And that is a nice segue to EIC. You've mentioned earlier EICs. And we will talk at upcoming EIC in May, 2026 in Berlin about these interoperable and standards-based multinational identity ecosystems, which we need to create where this wallet can be maybe a part thereof. But in the end, we need to make sure that we have a global set of standards which allow for communicating, for traveling globally, and for using the means that we have everywhere where we want it to do.
So it's a journey that we're on, and the discussion will continue there, exactly continuing what you've mentioned. This is really something where we need to think bigger and get bigger and allow more use cases, right? Yes.
Thank you, Martin, for being my guest today, for sharing some light on this interesting and really challenging development. I think it's nice that it just happened, so it's there. We can use it. It's not only an MVP. We have a large installed user base. Let's wait and see what happens and really look at standards evolving there. To be precise, the two of us can't use it yet. It's driving something, and hopefully it's driving everything in the right direction and not in a dead-end row. Right.
Maybe some other countries, some other organizations will piggyback very soon on that and try to use that for different purposes. This is just the first use case. Let's wait and see. And you've mentioned that not everybody's using Apple. Let's wait and see what happens on the other side of the pond, say in the Android ecosystem, what's going to happen there. If we have something similar, maybe something interoperable, that would be nice as well.
And we have already a bit, just to be clear, a little bit we have in the Microsoft ecosystem when you take the LinkedIn verified stuff, which puts it on the same standard. So it's not that it's not existing or nothing happening in other ecosystems. So I think a lot of things are going on. A lot of them are not well-known enough. And this is, I think, maybe the most important thing with the Apple ID, that it creates awareness beyond a relatively specialized community. Absolutely.
Getting away from just showing that there are standards around and that we should do something to doing actually something. So it's really actual use cases that we can present and talk about at EIC. So this is something where we are moving from standardization to real life. Yes. Okay.
Thank you, Martin, for being my guest. And I'm looking forward to having you soon in upcoming episodes. We will look at trends for identity in 2026, where this is one of, but by far not the only one. Thanks again, Martin. You're welcome.
