Digital identity wallet: next value lever for individuals and organizations
When we think about the future, we’re always extremely fascinated by the possibilities that digital could bring, enabling people, businesses, public organizations and governments to experience new ways of interaction and even completely revise the basic standard ones.
According to a McKinsey research, the distribution of digital identities all over the world within the whole 7,6 billion people population, is divided as following:
- 3,2 billion people have some form of digital identity wallet with a digital trail;
- 3,4 billion people have some form of digital identity wallet without a digital trail;
- 1 billion people completely lack a digital identity wallet.
Another study conducted by Juniper Research states that 5,2 billion people will be digital identity wallet users by 2026, more than 60% of global population.
As a result of the development of digital identity systems, the use of this kind of identification allows individuals and organizations to interact each other in multiple use cases. This digital switch facilitates many aspects from many contexts and the regular use of a digital identity wallet generates significant advantages, for example:
- purchase, authenticated access and use of private and public goods and services;
- access to asset ownership documents;
- unfolding of activities and access to information at work;
- entitlement of e-finance and e-government benefits, as digital tax filing and e-voting;
- streamlined authentication and onboarding processes;
- secure digital checkouts and payments;
- organizational management and payroll improvement;
- facilitated school and university enrollment;
- trusted access to banking and medical resources.
What is the demand for digital identity wallet solutions?
As we’ve seen, identification through a digital identity wallet represents the next value lever for individuals and organizations. Speaking of, what is the actual demand for digital identity wallet solutions? Let’s find out right away.
According to a Grand View Research’s study, the global digital identity solutions market size was valued $27,5 million in 2022 with an estimated 17% compound annual growth rate (CAGR) from 2023 up to 2030, when the assessment will be over $120 million. Another interesting point of view refers to the regional insights in terms of digital identity market revenue registered in 2022, showing that North American area (USA, Canada and Mexico) lead this business holding 38% of total revenue, whereas Pacific Asian area (China, Japan, South Korea, Singapore, including also India and Australia) is the fastest growing market ahead of Europe and Middle-East.
One of the major factors driving the digital identity wallet solutions market growth is the development of biometrics integration in smartphones and other IT devices and systems, along with digital identity-based multi-factor authentication methods, considered more secure and reliable than traditional passwords.
EUDI: the European example to build a digital identity wallet
Even if Europe is not the leading market for what concerns digital IDs, it’s important to mention that the work for the creation of the first trusted and shared European digital identity wallet is actually on. We’re talking about EUDI, a topic we’ve already covered in previous articles about its digital ID app and the political agreement.
The main features of the European digital identity wallet are:
- privacy based on a self-sovereign identity model, designed to give individuals full control on their personal data and information, thus on when and how to share them to fulfill specific needs;
- facilitated access to trusted services from a single access point, enhancing interoperability for public and private digital services throughout Europe;
- innovative concept of identity, as in upcoming future our personal identity will transform even more in a “tool” for accessing services and achieve a wide range of digital actions, enforcing EU online services interoperability and integration for the foundation of the European Digital Market in compliance with eIDAS and GDPR.
What are the benefits of a digital identity wallet?
Let’s see what are the benefits of a digital identity wallet for users. They are mainly 5:
- convenience, enabling consumers to register their favorite payment methods in one single place, including credit cards, bank accounts, gift cards, and more, facilitating and accelerating money transfers from anywhere, anytime;
- saving, representing a competitive alternative to traditional money transfer methods with no or little fees to pay, a big advantage especially for transactions occurring frequently, involving large amounts of money or towards international recipients;
- efficiency, providing users with streamlined processes where they can quickly and simply log in to the wallet app to complete a money transfer with no need to manually enter payment details;
- security, ensuring an additional layer of protection as card and banking data are never disclosed unfolding a transaction, along with all the other security mechanisms such as data encryption and biometric authentication to tackle potential fraud and data breaches;
- peer-to-peer interaction, as nowadays consumers increasingly prefer digital wallets over cash and considering key factors like transaction speed, derisory costs and secured processes, digital identity wallets are people’s favorite way of transferring money from one individual to another.
Which factors drive the demand for digital identity wallet solutions?
Let’s finally take a look at the major and most relevant drivers for the demand of digital identity wallet solutions:
- acceleration of Internet accessibility and mobility, personal identity will be even more a digital and mobile matter through an era dominated by mobile-first connectivity solutions, leveraged by businesses and governments policies with massive investments to accelerate digitization;
- shift to digital-first contexts, digital solutions will dominate the future landscape of the interaction between individuals and organizations and will be key to build proper infrastructures to launch mobile services based on digital identities;
- demand for security and trust, most users are aware of the cyber risks entailing within the Internet and ask their IT services providers for secure and trusted solutions to successfully tackle threats while experiencing all the benefits of their own digital identity wallets;
- public supervision of digital identification systems, governments play a crucial role in the search for new sustainable and disruptive growth opportunities and there’s no doubt that the development of digital ID applications is gonna be the next step further into innovation for building interoperable and integrated solutions applied to multiple situations, as we’ve previously read in this article. This long and gradual process, of course, needs the implementation of best practices to generate new concrete business opportunities in terms of services, mainly, but also very specific IT products. In this scenario, the double role of public authorities will be to support and coordinate decentralized investments to operate local digital transformations and ensure that single local initiatives create a coherent and interoperable landscape without shortcomings.
