By 2030, more than 3.5 billion people will use biometric technologies. Already today, they are changing our daily lives by simplifying access to services and reducing time spent on routine tasks. However, the fragmentation of digital identity systems remains a serious problem. Countries and companies create their solutions, which leads to platform incompatibility and a lack of united standards.
How to solve this problem and move to a better-organized future? The EU has developed a potential life-saver. In this article, we will discuss to which extent the proposed solution can be useful.
The need for change
As I have already mentioned, today’s digital identity systems are fragmented. Different countries and companies use incompatible technologies: some use plastic cards, and some use biometrics or mobile applications. This creates inconveniences for users and limits the development of the digital economy. In addition, the security issue remains critical. Large-scale data leaks undermine people’s trust in digital systems and force companies to spend vast amounts on protection.
The European Union seeks to address these issues through the European Digital Identity Wallet (EUDI Wallet). This digital wallet integrates key features such as online authentication, digital signatures, secure data storage, and pseudonymization. The goal is simple but ambitious: creating a unified system that will provide citizens and businesses convenient access to services in all EU countries.
What is the uniqueness of EUDI Wallet?
EUDI Wallet is designed to become a universal digital ID and personal digital wallet within the EU. It can be used both by private citizens and the business community, aiming to provide a secure and efficient way to interact with government and commercial services.
For example, businesses will be able to check their new hires’ documents and be sure about their personalities. This not only speeds up the process but also guarantees the authenticity of the documents. In terms of clients’ side, with this digital wallet, companies can automate background checks such as KYC, facilitating regulatory compliance and improving customer service speeds.
What plays a role in EUDI Wallet success?
Despite the apparent advantages of EUDI Wallet, its successful implementation requires solving several challenges. One of them is the harmonization of standards. For the wallet to become universal, it is necessary to ensure its operation in all 27 EU countries. This requires not only technological integration but also the development of an agreed legislative framework.
Another important aspect is user trust. People should be sure that their data is securely protected and that the process of using the system is transparent. Educational initiatives are essential here to help users understand the benefits of the system and its security.
However, if challenges are tackled wisely, the results can be impressive. In some countries, similar systems are thriving. For example, in Belgium, the rapid adoption of itsme, the online identification system in 2021–2022, was fueled by a government mandate requiring a COVID-19 pass for restaurant visits. Itsme’s digital identity offered the most convenient way for consumers to obtain the pass, doubling the user base from 3 million to 6 million within a year. This demonstrates that consumer adoption follows when a service is needed and backed by government trust.
The experience of Estonia is also interesting, where a reliable digital identification system has significantly reduced bank fraud cases. Until 2017, fraud affected about 1 out of 200 citizens. However, after the launch of the international eID application in 2017, this figure improved to about 1 case per 2,500 citizens. This case, in turn, highlights the importance of having a reliable and secure digital identification system to build trust.
New prospects for business
EUDI Wallet is particularly important for small and medium-sized enterprises (SMEs). These companies often face difficulties in managing administrative processes and compliance with regulatory requirements. EUDI Wallet can significantly simplify these tasks by reducing compliance costs and speeding up routine operations.
For example, automation of KYC processes saves time and money by eliminating the need for manual data verification. Companies can use Verified Electronic Attestations (QEAAs) to quickly exchange data with customers, partners, and government agencies. Data shows that enhancing customer registration processes could cut onboarding costs by as much as 90% while addressing payroll fraud has the potential to save up to $1.6 trillion worldwide.
EUDI Wallet is not just a convenient tool for Europe but also an example of how to create a unified digital identity system. International cooperation and harmonization of standards are necessary for the successful implementation of the project. Only by combining the efforts of governments, businesses, and citizens in Europe will be able to create a system that will become a benchmark for other countries.
