UK could become the regulatory ‘sweet spot’ for digital wallets, white paper says

A third of British citizens keep a photo or scan of their ID documents stored on their phones, which could lead to fraud and identity theft, according to a new survey published by Thales.

The digital identity company shared other worrying data, including that one in five store scans of IDs belonging to friends and family on their devices. Nearly a quarter (23 percent) also store bank account details in a non-encrypted format. Younger people were more likely to depend on their digital devices to store important documents, according to the survey that included 1,000 consumers.

More than half (51 percent) of the respondents said that they were unsure about the security of storing their IDs on devices or other digital locations. Around 15 percent have also become fraud victims in the past month.

These issues could be remedied with digital identity wallets, according to John Cullen, strategic marketing director for Digital Identity and Cybersecurity at Thales. The UK has recently announced that driver’s licenses and military veteran cards will become available on the Gov.uk Wallet this year.

“With secure digital identities, consumers can protect their personal information more effectively,” says Cullen. “Thales brings particular expertise in orchestration and related secure credential management services, working with government agencies in Australia and others.”

UK’s digital wallets between US and EU

The UK has a unique chance to forge its own path in digital identity wallets by merging the best solutions from the European Union and the U.S., according to a white paper published by digital consultancy Hippo Digital.

The EU’s push to introduce digital wallets is coordinated at the government level with the Electronic Identification, Authentication and Trust Services (eIDAS) at the center of its strategy. The EU is mandating that all member states provide citizens with digital IDs.

Among the key principles followed by the EU are more control for users over data, better privacy through alignment with the General Data Protection Regulation (GDPR) and a common technical framework to ensure cross-border interoperability.

The European approach could prove influential in setting global standards for digital wallets.

However, the bloc will have to take into account the different levels of digital infrastructure adoption in its 27 member states as well as a lack of focus on user experience.

The U.S. approach, on the other hand, is driven largely by the private sector, including financial institutions and tech firms such as Apple, Google and Paypal. The upshots are more convenient, consumer-centric products, but this approach also results in a more fragmented digital ID landscape.

The lack of an overarching regulatory framework similar to the one in the EU has led to a lack of a cohesive system: Services are managed by specific industries or offered at the individual state level. Mobile driver’s licenses, for instance, are being developed in at least 15 U.S. states. The dominance of Big Tech is also driving privacy concerns.

How should the UK approach digital wallets? Hypo argues that the country’s unique position could allow it to adopt the “best of both worlds.”

“With these two contrasting models in mind, the UK has the chance to merge the best of both worlds and create a hybrid model that draws on private sector agility and innovation without compromising government-driven privacy and security frameworks,” the UK-based firm writes in its paper.

Whatever approach the governments and private sector players choose, they should follow some basic recommendations for adoption, says Hypo.

This includes increasing trust in the digital ID ecosystem with technologies such as decentralized identity (DID), transparent governance and communication as well as clear regulation. Another focus should be put on better user experience and easy onboarding, such as integrating Single Sign-On (SSO), biometric authentication and more.

Article Topics

digital government  |  digital ID  |  digital identity  |  digital wallets  |  EU  |  Hippo Digital  |  mDL (mobile driver's license)  |  Thales Digital Identity and Security  |  UK  |  United States