How many times have you had to prove your identity when making a purchase or opening an account and felt a little uncomfortable disclosing private information to a stranger? Some people prefer to keep personal details like their home address confidential, and with the growing risk of fraud, they have reason to be concerned. Digital identity wallets, however, can make sharing our identities safer and a whole lot easier.
In June 2021, Europe began talks to roll out digital identity wallets for all citizens. The European Union expects to have them in use by September of this year. Like fashion and fine wine, America is gearing up to follow the trend. Today’s world is going digital fast, which means our identities shouldn’t be left behind.
Get to know digital identity wallets
Before getting into digital identity wallets and what they might do for us in the future, let’s talk about what they are. A digital identity wallet is an application downloaded onto your mobile device that securely holds and encrypts various identity assets containing private information. The application allows users to access pertinent personal documents without carrying an original, physical copy. Identity assets include items like 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, you would have your wallet scanned rather than showing your ID, similar to scanning a barcode or QR code.
Experience the everyday benefits
Handing over physical copies of valuable documents leaves us more susceptible to identity fraud and criminal activity, but a digital identity wallet gives us more control of the personal information that we disclose. 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, as 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, you can complete the same identity verification steps without anyone seeing your high-risk information.
Not only do digital wallets allow you to leave a bulky 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 instantaneously, 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.
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Businesses benefit, too
Businesses also stand to benefit from the convenience and real-time updates a digital identity wallet offers. Banks and other institutions need to comply with a Know Your Customer standards program to identify the person doing business with them. Rather than the traditional processes of copying all of my personal documents, they could use a digital identity wallet to securely transmit personal data in real-time, streamlining verification and more efficiently mitigating the chance of fraud.
Meanwhile, the 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. Humans naturally seek out the path of least resistance, and by reducing friction in the process of identity verification, more people will naturally start to prefer it. 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 upon us
As the EU adopts its digital identity wallet, we can watch how the trend will spread. 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 join in. 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. Hesitation is normal when transitioning to any new technology, 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.