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How to explain the EUDI Wallet? Industry and citizens discuss Europe’s digital ID

How to explain the EUDI Wallet? Industry and citizens discuss Europe’s digital ID

The European Digital Identity (EUDI) Wallet is well on its way towards becoming a reality. To explain the major impact that the digital ID will have on both citizens and organizations, industry groups, governments, companies and media outlets have been making efforts to introduce the project to the public.

The conspiracy theories begin

The EUDI Wallet has been stirring confusion among some social media users and politicians who fear that the digital ID signals a loss of privacy and greater government control over citizens’ information, EuroNews writes.

But the true aim of the wallet is actually to enhance privacy not undermine it, Lilly Schmidt, programme lead at the Digital Society Institute at the European School of Management and Technology in Berlin. Other experts such as Professor Bart Jacobs at Radboud University Nijmegen are adopting a more cautious approach and call for tough supervision over the new technology.

Europeans are also worrying that the wallet will enable large corporations and governments to farm their data more easily. To protect against this, the EUDI Wallet introduces consent, a “weak mechanism,” according to Jacobs, but one that still provides limited protection.

GDPR rules give individuals limited power over deleting their data, notes Sanna Toropainen, doctoral researcher at the University of Helsinki. A potential downside, however, is the lack of true anonymity as the wallet is linked to a user’s legal name.

What can technology companies expect?

One of the use cases of the EUDI Wallet will be authenticating users on Very Large Online Platforms (VLOPs) designated under the Digital Services Act, such as Amazon, Facebook, LinkedIn, and Booking.com. The state will issue the first basic identity, and a chain of trust can be built for private sector use, says Laura Kask, CEO of Proud Engineers.

But other developments are also possible: The market for wallets is open and the identity business is slipping from nation-states to technology companies, Kask says in a blog post from e-Estonia

Developing the digital wallet is complicated because of the ongoing changes in European Union’s policy. The European Parliament and the Council reached an agreement on the wallet legal framework eIDAS 2.0 in November and the next step will be delivering the wallet’s technical specifications. This year, the EU has adopted the Cyber Security Certification Scheme.

The final technological solutions will depend on many implementation acts, says Yuliia Kravchenko, Risk and Compliance Expert at Estonian cybersecurity company Cybernetica. The company has worked on the Estonian digital ID.

“Previously, the protection profiles were nation-specific, but to make the wallet interoperable in all European countries, there needs to be a unified cyber security protocol, its definitions and requirements,” says Kravchenko. Creating a protocol is complicated, however, and if it is done unskillfully it could lead to poor implementation of the wallet.

Who will adopt the EUDI Wallet?

Europe has decided that its digital ID will be optional while users will be able to decide which online services will have access to their personal data. But public and certain private services such as VLOPs will have to accept the EUDI Wallet. The European Commission wants to make the digital ID attractive to all service providers, writes Computer Weekly.

Thanks to advantages such as security features and legal certainty, the wallet could become a central factor for standardized ID, opening up new business opportunities throughout the internal market.

“Secure digital identities can be the game changer for digitalisation in Germany, says the President of German digital association Bitkom Ralf Wintergerst. “The eIDAS regulation and the associated introduction of an EU wallet will lay the foundation for genuine digital communication between citizens, the administration and the economy.”

What about the banks?

Digital ID wallets present a double-edged sword for banks: They offer a defense against competition from global super apps but they will also force banks to innovate.

Banks should assess whether creating or partnering with an eID solution aligns with their strategy to safeguard their market position, banking industry group Mobey Forum writes in a new report on payments and digital wallets.

Banks can increase their relevance through Open Finance through strategic partnerships that can help them widen their range of services. Interoperability, however, will be critical to delivering convenience for consumers.

“Banks must advocate for and adopt standards that promote seamless interaction between different digital wallets and the broader digital economy,” the report concludes.

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