Article 6 min

European digital identity wallets — the future of E.U. services

European Digital Identity Wallets

November 4, 2021  

One common thread that connects numerous digital initiatives is the need for a cohesive digital identity framework. In the E.U., the Commission has proposed the European Digital Identity Wallet (Identity Wallet) that promises to simplify access to services, protect the sharing of personal information and propel European-centric approaches to the new economy.

The E.U. requires a trusted and secure digital identity that works across all Member States protecting consumers’ rights and delivering innovative solutions. Having all residents and businesses use one common way to interact and transact helps drive the vision of a Digital Single Market forward.

The proposal is not the E.U.’s first attempt at creating a pan-European electronic ID framework. The Regulation for Electronic Identification, Authentication and Trust Services (eIDAS) has been in effect since 2018, but it doesn’t mandate:

  • Member States to have a digital ID system
  • Standards to enable interoperability between systems
  • Use by the private sector
  • Mobile usability

By overcoming these shortcomings and creating new standards that are open to different Member States initiatives and private sector involvement, the Identity Wallet plan will be universally available, widely used and offer user control over their data. According to Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age,

“The European digital identity will enable us to do in any Member State as we do at home without any extra cost and fewer hurdles. Be that renting a flat or opening a bank account outside of our home country. And do this in a way that is secure and transparent.”

Digital identity in the E.U.

With numerous member states, different initiatives and attitudes toward digitization, the current status of identity in the E.U. is problematic. According to information presented at a 2019 conference, 86 different versions of ID cards and 181 other of types of residence documents were available in the E.U. For organizations that want to quickly and easily identify a person, there are many variations to consider and authenticate. For the person needing the verification to get the service, the complication results in slower onboarding.

According to the E.U., only 14% of key public service providers allow cross-border authentication with digital identity. But 63% of E.U. citizens want a secure single digital ID for all online services, and this is before any significant educational and promotional initiatives to drive acceptance.

In their in-depth Study to support the IA for revision eIDAS regulation, only 3% of E.U. citizens, those of working age residing in another E.U. Member State, are covered by eiDAS. Only 14 out of the 27 EU members have ‘notified’ eIDs under eIDAS, and only about 65% of public services are available online.

The problem is compounded by the need to include private services, new technology developments, increasing security risks, and the demand for seamless and trusted onboarding and interactions. As the eiDAS revision study points out:

“A no change scenario for the eIDAS Regulation may continue preventing access by all E.U. citizens and businesses to a trusted and secure eID that can be used across sectors and borders; undermine the functioning of other E.U. legislation, such as the Single Digital Gateway Regulation (and the Once-Only Principle in particular); perpetuate market fragmentation; continue to prevent users from being in full control of their identity data; fail to mitigate increasing fraud risks from more pervasive use of IoT devices.”

Multiple identity systems

Multiple identity systems, working together

Based on the observation above, it’s clear that eiDAS is not sufficient to take the E.U. forward to its 2030 digital goals, which include:

  • All key public services should be available online
  • All citizens will have access to electronic medical records
  • And 80% citizens should use an eID solution

But that’s not to say that the progress made by eiDAS needs to be thrown out. Establishing legal certainty on liability, the burden of proof, legal effect and international aspects of trust services are significant gains. Instead, the recommendation is to expand the capabilities of the regulation, mandating a notified digital ID system on all Member States, creating standards to enable interoperability between different systems, adding in private services and providing ways for citizens to control their data fully.

Of course, trust models need to be maintained and strengthened, complex technical specifications require determination and new regulations need creation. On top of that, widespread adoption by the public and various services is necessary. As an article in TechCrunch puts it:

European e-ID is a complex mass of requirements needed to deliver on the vision of a secure and trusted European digital ID that doesn’t just languish ignored and unused by most web users — some highly technical requirements, others (such as achieving the sought for widespread adoption) no less challenging.”

The European Digital Identity Wallet

To help solve these complex issues, the E.U. has created a toolbox for a European Digital Identity framework. E.U. citizens should have “self-determined personal digital wallets that would allow for a secure and easy access to different services, both public and private, under the users full control. In addition, it creates a new qualified trust service for attestation of attributes concerning information related to identity.”

A prescribed wallet is an innovation that can drive consumer use. Consumer acceptance of the convenience of mobile devices is both broad and deep; in many markets, mobile use cuts across demographics, and on an individual level, people have them on them all the time. An app that allows people to sign up securely to services with a click, anywhere in the E.U., with total control of their data would probably be an instant hit.

From the business point of view, the ability for consumers to quickly sign up would contribute to gaining more customers and providing a better user experience. Additional benefits include:

  • More manageable and less costly compliance
  • Improved security and simplified engagement
  • Leveraging trusted relationships to offer additional services
  • Better enable cross-border opportunities to take advantage of the full E.U. market

The potential impact is significant. According to an E.U., a single digital gateway would “help E.U. citizens save up to 855,000 hours of their time annually and companies could save more than EUR 11 billion per year.”

The basis for meeting new E.U. ID requirements via the European Digital Identity Wallet is an intriguing path forward. Significant technical, legal and implementation work are necessary to develop a framework and start driving use. But the Identity Wallet provides a direction that E.U. service providers can engage with now to create a cohesive, secure and trusted E.U. digital identity platform.