Digital identity wallets, like digital payment wallets, will soon become the norm. These new digital wallets will not only make life easier but safer as well.
Have you had to prove your identity when making a purchase or opening an account and felt uncomfortable disclosing private information to a stranger? Like many people, you might prefer to keep personal details like their home address confidential. With the increase in fraud, it’s no surprise people are concerned. Digital identity wallets can make sharing our identities safer and a whole lot easier.
Europe began talks to roll out digital identity wallets for all citizens in June 2021. The European Union expects to have them in use by September of 2022. America is gearing up to follow the trend. Today’s world is going digital fast, which means our identities shouldn’t be left behind.
What are digital identity wallets
First, a brief definition: a digital identity wallet is an application downloaded onto your mobile device that securely holds and encrypts various identity assets containing private information. This application allows users to access their personal documents without carrying an original, physical copy. Identity assets can include your driver’s license, passport, birth certificate, insurance card, social security card and more.
When asked to verify your identity with a digital identity wallet, your wallet would be scanned without having to show your ID, similar to scanning a barcode or QR code.
The everyday benefits of digital identity wallets
Any exchange of physical copies of valuable documents leaves people more susceptible to identity fraud and criminal activity. With a digital identity wallet, you’ll get more control of the personal information that you disclose. Here’s a personal example: last week, I went to a concert and had to show my driver’s license. Disclosing my home address to a complete stranger made me a little uneasy. So does giving my social security number to an office administrator when filling out new patient paperwork at the doctor’s office. With a digital identity wallet, no one sees your high-risk, sensitive personal information when you complete the same identity verification steps.
Not only do digital wallets allow you to leave your wallet at home, but they can update data in real-time. Imagine changing your license to include a new address or married name and having that change take effect immediately. Your digital ID could be ready to use immediately, avoiding the stress of either a long wait at the DMV or waiting days or weeks for a physical card to arrive in the mail.
Businesses can benefit from digital identity wallets
Businesses can utilize the convenience and real-time updates a digital identity wallet offers. Banks and other institutions must comply with the Know Your Customer standards program to identify the person they’re doing business with. Digital identity wallets could streamline verification and efficiently mitigate the chance of fraud by securely transmitting personal data in real-time, rather than traditional, slow copying all personal documents.
In addition, adoption of digital identity wallets would make bank account enrollment or re-authentication to access an existing bank account quicker and more convenient, raising customer satisfaction, retention and revenue. By reducing friction in the process of identity verification, more people will naturally start to prefer this easier method. There are some limitations to overcome — widespread adoption requires time, software, hardware, updated security and money — but the sooner businesses adopt, the sooner they can start taking advantage of these benefits.
The future of digital identity wallets is already here
As the EU adopts its digital identity wallet, we can watch how the trend will develop. After the government assigns trusted third-party providers to authenticate and secure connections, larger entities — health offices, insurance companies and banks — will feel confident enough to utilize this technology. These large entities would vet the product further, so smaller businesses could learn to trust its security and adopt the technology. It may not happen overnight, but soon we’ll see digital identity wallets accepted in concert venues, grocery stores, bars and anywhere else that requires ID verification.
A digital identity is a real-time gateway to a wealth of secure and authenticated personal information in the palm of our hands. Adopting any new technology comes with research and, admittedly, hesitation. But as we start to experience the comfort of safe, easy identity transactions and the independence of controlling that data, digital identity wallets will swell into the wave of the future.