Digital ID is becoming inextricably linked to how we identify ourselves, and European member states, citizens and politicians are now intensely aware how important it is to be able to use digital identities across the European Union.
The European Union (EU) first introduced its Electronic Identification, Authentication and Trust Services (EIDAS) regulation in 2014, designed to increase trust in digital services and provide a framework for authenticating digital identities. It focused on digital identification, whereas a new update (EIDAS 2.0) will be centred on digital identity, which is an entirely different thing.
The upcoming revision of the European EIDAS regulation will allow the European Commission to advance its goal of harmonising Europe’s digital identity landscape, removing virtual borders, boosting digital connectivity, and improving access to online goods and services. International commerce could receive a massive boost and harmonisation of the market, for digital identity will play a key role in establishing trust and security.
EIDAS 2.0 proposes that every European citizen receive an EU Digital Identity Wallet, issued by a qualified issuer, for safe storage and easy access of credentials, statements, and personal verified data. It would work as a 'digital twin' for all hard-copy identity documents and would potentially provide a framework to solve many of the privacy, security, and user experience problems we currently encounter in our daily lives.
The EU Digital Identity Wallet will provide secure digital storage of sensitive, personally identifiable information (i.e., a birth or medical certificate, driver's licences, passports, bank statements, etc.). This will provide EU citizens with a uniform facility in which they can manage their digital identities, boosting trust, security, and convenience across sectors.
Specifically, the European Digital Identity will:
Be available to any EU citizen, resident, and business who wants to use it
Be widely useable as a way either to identify users or to prove certain personal attributes, for the purpose of access to public and private digital services across the Union.
The EU Digital Identity Wallet will support multiple use cases that collectively amount to easy and secure storage of citizens' digital ID documents and makes sharing information with companies and institutions more convenient. Importantly, it will harmonise the use of digital identities across Europe.
EU Digital Identity Wallets can facilitate the digitisation of all sectors and be used for many purposes, such as:
Banking and financial services: Open a bank account, apply for a loan, access your online banking account, or complete a KYC check from anywhere and from any device (KYC)
Education: Apply to any university within the EU by simply sharing the user’s information and academic records via their digital wallet
Public services: Request criminal records, apply for a residence permit, and file tax returns in no time
Health: Store digital certificates, medical prescriptions, and health certificates
Other private services: Rent a car, sign up with a mobile service provider, or pick up a package from the post office.
Usefully, the benefits of such a facility also extend beyond the individual citizen. Banks, financial institutions, and other businesses need to meet essential Know Your Customer (KYC) security obligations, requiring user identity verification that can often need inconvenient visits to physical branch offices. 'Remote KYC' solutions have been launched over recent years to remove these limitations, but they have yet to offer what customers really want: a fully digital and automated process.
The EU Digital Identity Wallet will also create new business opportunities for companies operating within the EU. Companies that enable access to online services and products via the wallet stand to significantly increase their customer base. All EU nationals, regardless of where they live, will become potential customers for them. The same goes for business-to-business (B2B) companies.
Moreover, legal entities and individuals alike will be able to use the wallet to sign documents online and confirm their identity in the context of KYC checks. Certain businesses, including financial services providers, telecom companies, and popular online platforms, will be mandated to accept user authentication via these wallets.
Digital identification technology has the potential to enable seamless access to public, private, and cross-border digital services. However, this has risen concerns for certain individuals. Clear emphasis should be placed on the privacy and security benefits that sit at the core of the EU Digital Identity Wallet, which puts users in full control of their digital identity and data. This empowers them to choose what data they share and who they share it with. Therefore, a Digital Identity Wallet must be:
User-friendly and flexible to be convenient for citizens;
Highly secure and promote privacy, with certification to encourage unshakeable trust;
Interoperable, based on standards and technical specifications;
Accepted as mandatory for access to public services in another country, as well as large platforms and services requiring a strong ID system such as public transport system.
This fits in well with the growing trend towards self-sovereign identity (SSI), where an individual or business has sole ownership over the ability to control their accounts and personal data. SSI benefits consumers by protecting their privacy but also protects the economy at large by significantly reducing fraud risk and user friction.
Interest is growing in how digital identity wallets can be used to protect consumers' broader stores of personal data. 63% of EU citizens indicated they want a secure single digital ID for all online services, giving them control over the use of their data. And this solution is coming fast, with the EU looking to have an agreement on the Toolbox, and to publish it, within late 2022, including technical architecture, standards and guidelines for best practices. In contrast to the eIDAS 1.0 regulation, where eID schemes are voluntary, it will become mandatory for member states to provide an EU Digital Identity Wallet to their citizens free of charge.
An EU Digital Identity Wallet can potentially create important growth opportunities for public and private services across European borders. Nets is proud to be part of two consortia (EWC and NOBID), designed to help to provide citizens with compelling, useful, and secure digital identity tools that they have full control over.
To get there, it is critical to establish harmonisation between private and public sectors. Both parties must work as a team to realise the full benefits.
Frictionless customer onboarding with digital identity is already in demand from both banks and consumers thanks to the fast, user-friendly, and secure journey it enables for customers.
Public and private sectors – and consumers – increasingly understand the advantages of an interoperable, unified, and digital identification system that enables them to securely share personal information in a range of scenarios nationally and cross-border. It's exciting to imagine the simpler, safer identity world being created for all EU citizens.
Roland is an international sales and business development professional within the financial industry with a track of 20+ years of experience across Europe. In his current position at Nets, he is leading the Business Development team for Digital Identity, Value Added, and Trusted Services, offering outstanding Digital Identity solutions and Value-Added Services for remote digital onboarding by identification, authorising, authentication, and signing in European territories.
Believing in simplicity and security as the foundation for growth and progress, Nets powers payment solutions for an easier tomorrow for banks, businesses, and consumers across Europe. Nets is a part of the Nexi Group - a leading European PayTech. For more information please see: www.nexigroup.com.
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