The EUDI Wallet presents a major opportunity for SMEs in the EU to enhance efficiency, simplify regulatory processes, and improve customer experiences, potentially driving significant growth. However, the critical challenge will be ensuring widespread adoption and providing the necessary education and tools to fully leverage the system’s potential.
In an increasingly digital world, the European Union is making significant strides toward simplifying and securing citizens’ and businesses’ online interactions.
The European Digital Identity (EUDI) Wallet is one of the most ambitious initiatives. This digital wallet is designed to provide a secure and standardised means of identification across the EU, enabling seamless access to a wide range of public and private services. From verifying identities to conducting secure transactions, the EUDI Wallet is set to revolutionise how individuals and businesses engage with the digital economy.
While the EUDI Wallet promises convenience and security for EU citizens, it also offers substantial opportunities for small and medium-sized enterprises (SMEs) across Europe. For SMEs, the EUDI Wallet could be a game-changer. It simplifies regulatory compliance and cross-border operations and opens up new avenues for growth and innovation.
“If done right, SMEs can scale their operations, enhance customer trust, and unlock new markets, all while reducing costs and administrative burdens with the EUDI Wallet,”
Thomas Rysgaard Christiansen, Partner in Netcompany.
“If done right, SMEs can scale their operations, enhance customer trust, and unlock new markets, all while reducing costs and administrative burdens with the EUDI Wallet,” says Thomas Rysgaard Christiansen, Partner in. Netcompany.
He believes that the EUDI Wallet will pave the way for more collaborative and open ecosystems where smaller players can contribute to the value chain alongside larger corporations:
“The wallet could allow larger companies to rely on smaller, specialised providers for certain services rather than developing everything in-house. This shift creates opportunities for smaller businesses to enter the market and add value, fostering a more dynamic and competitive ecosystem,” he adds.
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Rysgaard Christiansen notes that in countries like Denmark, where many digital processes are already in place, the EUDI Wallet might offer incremental improvements rather than a complete overhaul. However, in other EU countries that still rely heavily on physical documents, the EUDI Wallet could be a significant driver of digital adoption, making it easier for businesses to operate across borders.
“Any business that requires the creation of user accounts tied to an actual identity or requires the collection of signatures for documentation is an immediate winner in the wallet ecosystem”
Michael Andrew Buckland, Head of Digital Identity at Cybernetica
Citizen centric
The core idea behind the EUDI Wallet is that it allows easy acceptance of identity and other documents across EU countries. According to Michael Andrew Buckland, Head of Digital Identity at the Estonian company Cybernetica, using secure electronic signatures as valid as handwritten ones creates more opportunities for innovation and efficiency, especially for small and medium-sized businesses.
“Any business that requires the creation of user accounts tied to an actual identity or requires the collection of signatures for documentation is an immediate winner in the wallet ecosystem. These presentation-type use cases also mean the possibility of not storing and securing customer identity data, lifting the burden and risk of this,” he says.
The wallet can become a powerful tool for SMEs, enabling them to perform Know Your Customer checks and other document-related tasks more efficiently, securely, and at a lower cost. This will reduce the potential for fraud and streamline and automate various business processes.
Buckland emphasises that the administrative burden is often generated by the repetitive, redundant provision of evidence that needs to be fully digitised and long processing times. Digital and trustworthy proofs, such as those provided by the wallet in the form of qualified electronic attestations of attributes (QEAAs).
According to Buckland, another significant cost-saving and overall benefit for SMEs is the hiring process, where verifying degrees can be expensive and time-consuming. With the EUDI Wallet, universities can directly issue education credentials to the wallet, which can be shared easily, ensuring they are legitimate.
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Scaling through data
Not only can SMEs use the EUDI Wallet to provide services to citizens and leverage it to access and share compliant data with other businesses and public institutions, ensuring that all necessary information is accurate and trustworthy.
The QEAA attestations enable companies to exchange verified information and evidence with various stakeholders. SMEs can then utilise this verified information in statutory reporting and verification processes, ensuring that all relevant data provided to authorities is accurate and reliable.
As a result, businesses, particularly SMEs, can expand their operations more effectively, entering new markets and handling increased workloads without the burden of fragmented or inconsistent processes. This scalability is crucial for growth in today’s competitive digital economy.
“Efficient scaling is made possible by a uniform identity ecosystem with data-driven processes. The decisive factor for each process is the required data to achieve the desired result. This data must be semantically flawless and legally compliant,” says Tobias Link, Division Manager in Public Sector Consulting at the German IT and business consulting firm msg systems ag.
“if verification obligations and approval procedures within Europe require a standardised data set, this can be transferred directly from a wallet in the form of secure digital evidence,”
Tobias Link, Division Manager in Public Sector Consulting at msg systems ag
According to Link, one of the biggest challenges in using the EUDI Wallet is creating and establishing uniform standards, especially for the QEAAs. The more that evidence and data are standardised, the easier it is to share and present them through the EUDI Wallet.
“Processes with high-quality and standardised data can be accelerated enormously through automated procedures and the possible use of AI. Previously time-consuming checking and processing procedures could be optimised,” he says.
This is particularly helpful for SMEs that want to expand into other European countries, as they won’t need to meet different organisational requirements for each country. Instead, they can operate within a unified European identity system.
“For example, if verification obligations and approval procedures within Europe require a standardised data set, this can be transferred directly from a wallet in the form of secure digital evidence,” he adds.
A matter of uptake
Starting in November, the EUDI Wallet will transition into a new phase of full-scale deployment, integration, and ongoing monitoring. From this point, EU countries will have 24 months to introduce a national wallet to their citizens.
This is where the wallet must prove itself, as the key challenges and obstacles revolve around its adoption and uptake.
“It does not matter how secure, trusted or convenient a Digital Identity is. If it doesn’t have use cases demonstrating the value proposition to end users and relying parties, then people will not use it,” says Buckland.
European companies should play a key role in demonstrating how it can be used within the ecosystem by exploring how to integrate it into their business processes. However, this also presents the challenge of providing education and offering more tools to help businesses fully utilise the ecosystem’s potential.
“This falls on wallet providers, member states and other peripheral entities to help inform, educate and encourage SME’s to embrace these solutions,” Buckland adds.
He is confident that there will be strong demand for a unified digital wallet system across the EU, particularly among SMEs. This system offers significant efficiency benefits for SMEs and provides a highly convenient user experience.
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“If an SME opts out of integration, and their competitor integrates, this may pose dire impacts on competitiveness. Suppose you can turn those gains into lower-priced service for a customer and make the user experience of using your product smoother and quicker. In that case, market forces will favour those SMEs that embrace the ecosystem,” Buckland says.
The risks of joining the ecosystem seem minimal, especially compared to the traditional risks of paper—and physical-based fraud in similar scenarios.
“Are the risks zero? No. But are they greatly reduced? Absolutely,” Buckland adds, and goes on to use the adoption of a national eID in Estonia as an example:
Statistics on bank fraud in Estonia illustrate the impact of a solid digital identity system. Before 2017, bank fraud was reported at about 1 in every 200 citizens. However, this rate has improved significantly after the launch of an internationally used eID application in 2017, with fraud now occurring at roughly 1 in every 2,500 citizens.
