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There is an urgent need to act as we need “The One”

As of March 2025, Europe's Digital Identity Ecosystem remains highly fragmented, with significant differences in user demographics and applications. While countries such as the Netherlands, Sweden, Norway and Italy lead the way in terms of adoption, Germany and Spain are not yet in the top 10. In fact, several EU countries did not have a digital identity system in place until a few months ago. What's more, a highly fragmented market is not a healthy or sustainable one - this also applies to some of the players in the digital identity market, some of whom are only surviving as long as taxpayers' money is funding their small-scale projects. Clearly, something has to change.

In many EU countries the private sector perceives the integration of electronic identities (eIDs) time consuming, and we face hen-egg problems where the public sector is slow or fails to digitize, like in Germany which is suffering from a very poor adoption rate and some backlashes with financing for digital identity projects being axed because of federal budget constraints. Remember Smart-eID for example?

Trustworthy digital identities are one of the cornerstones of trust in digital processes as a whole. Cross-border interoperability is essential for a thriving Digital Single Market in the European Union and brings significant economic and social benefits.

Financial Institutions eagerly require “The One”

Financial institutions face several challenges regarding remote identity proofing in digital onboarding processes while also fulfilling Anti-Money Laundering (AML) requirements.

• First, ensuring accuracy and authenticity of remote identity verification can be difficult, as sophisticated fraud techniques, such as deepfakes and synthetic identities, continue to evolve.

• Second, the need to comply with KYC (Know Your Customer) requirements, which are defined in the AML regulatory framework, means institutions must implement thorough identity checks, which can become time-consuming and cumbersome if not automated properly.

• Third, there is a challenge in maintaining data privacy and security during digital onboarding, especially as sensitive personal information is being transmitted and stored online, potentially exposing customers to data breaches or cyberattacks.

Another significant obstacle is the diversity in regulatory requirements across different jurisdictions, complicating cross-border onboarding. Financial institutions need to keep up to date with local regulations, which can vary in terms of identity proofing standards, making it difficult or sometimes almost impossible for multinational Banking, Financial Services and Insurance (BFSI) vendors to standardise across all EU countries today. Moreover, achieving a balance between user experience and compliance is crucial, as overly complex or intrusive verification processes may deter potential customers. Finally, institutions must continuously adapt to emerging technologies, ensuring that their remote onboarding solutions stay ahead of new fraud tactics while remaining compliant with ever-evolving AML and KYC guidelines.

Today, digital identities lack interoperability and cause huge integration efforts when required in regulated use cases by organisations operating in multiple European countries. Going forward the goal is to benefit from a unified approach.

Change towards “The One” is under way

These issues have been addressed to the European Commission back in 2020 when the EU Regulation 910/2024 on electronic identification and trust services (eIDAS) was started to be revised. The Commission came up with the idea of the European Digital Identity (EUDI) framework in June 2021 which is now part of Regulation 2024/1183 which passed in May 2024 and entered into force 20 days after publication of corresponding Implementing Acts in the Official Journal December 4, 2024.

Currently across Europe, Member States are adopting varying strategies to comply with eIDAS2 and develop their EUDI Wallets: Countries like Greece and Cyprus are designing fresh digital identity systems. These nations benefit from not being burdened by legacy systems, enabling faster adoption of innovative technologies. Countries like Italy, Belgium and France are merging established systems (e.g., SPID in Italy, itsme in Belgium, FranceConnect in France) with EUDI Wallet standards. This process is more complex, involving adaptation of pre-existing infrastructure. Nations such as Spain and Sweden are leveraging private expertise to accelerate the rollout of their systems, creating a hybrid public-private model.

By December 24, 2026, all EU member states are mandated to offer a digital identity wallet to their citizens and residents. These wallets will link national digital identities with various personal attributes, such as driving licenses and bank accounts, enabling individuals to authenticate their identity seamlessly across the EU. Open a new bank account will be a matter of a few minutes, just a few clicks for all those that mastered the initial set-up of their EU Digital Identity Wallets and feel incentivized enough to do so. Once they have their EUDI Wallet up and running there are no cumbersome processes of physical document verification anymore - as experienced with some digital IDs such as the Bank IDs in the Nordics our using IDAustria in the Alpine Republic these days already.

This universal access eliminates the need for multiple digital identities and simplifies cross-border interactions. We will be seeing streamlined access to public and private services, and users empowered with control over their personal data – based on selective disclosure.

In this ecosystem, the orchestration of various stakeholders plays a critical role in generating value by carefully balancing incentives and overcoming barriers that could hinder active participation. The process involves managing the diverse interests of key stakeholders such as issuers, relying parties, and wallet providers. The goal is to create an ecosystem where all participants can benefit from the system’s value. To achieve this, the EU Commission is crucial in facilitating the process by aligning the objectives of these independent actors with the broader goals of the initiative. This alignment helps to ensure that value creation remains unhindered and sustainable.

“The One” is getting closer as progress is being made

Intensive work is now underway to overcome the current fragmentation and unify the approach to digital identity across the different levels of this framework. At the beginning of March 2025, five out of 42 implementing regulations were published, another five are expected to be published soon, and more than 30 implementing regulation drafts are expected to be published for public consultation soon. The Commission has set an ambitious target to finalise all these implementing regulations by 21 May 2025.

Meanwhile, ETSI and CEN-CENELEC are working to create and update technical standards that will be reflected in revised versions of the implementing legislation. These standards are inspired by the Architectural Reference Framework (ARF) – initially created from the eIDAS Expert Group consisting of member state representatives from supervisory bodies and federal agencies, which is now available in version 1.7.1 and will be updated and extended until at least 2027.

Four large-scale pilot consortia to develop prototypes for the EU Digital Identity Wallet, with up to 140 participants from 20 countries in the largest of these consortia, are working until September 2025, when a new round of two large-scale pilots will start. Some of these pilots have successfully completed initial interoperability testing with wallet issuers and relying parties.

Namirial is one of movers and shakers of “The One”

As a pan-European qualified trust service provider with subsidiaries in multiple countries Namirial is driving the process towards the on European Digital Identity Framework and its implementation in EU countries in multiple ways. Namirial subject matter experts on legal, technical, business and political aspects are engaging in multinational and national industry associations. technical standardization bodies (e.g. ETSI) as well as publicly commenting implementing regulations.

Thanks to the broad diversity in Namirial, the wide range of national, cultural and business backgrounds Namirial can be considered Europe in a nutshell. The intrinsic understanding of regional nuances (sometimes to be found even within one country), enables Namirial to tailor services that resonate with local customs and business etiquettes, thereby enhancing user adoption and trust. Hence Namirial is among those few truly pan-European qualifies trust service providers that can bring out the best of what true European Union spirit can be all about with the vision and mission to work on “this one” – the European Digital Identity (EUDI) Ecosystem that has all the options to become the best practice example for a sustainable global digital identity ecosystem with some healthy competition driving innovation within and based on values such as privacy, accountability and reliability.

Article sponsored by Namirial