The European Digital Identity (EUDI) Wallet will fundamentally change the payment landscape in Europe – similar to how the introduction of SEPA did almost a decade ago. Financial institutions are facing regulatory obligations, but at the same time can realize operational and strategic benefits.
What is the EUDI Wallet?
At its core, the EUDI Wallet is a digital wallet that stores digital identity credentials, such as ID or credit cards. However, its actual scope is much broader, as it simultaneously creates a digital, public infrastructure and ecosystem that can be used by both – the private and public sectors.
To fully leverage the benefits of digital identities across the EU, a unified framework and harmonization of the currently fragmented market for state-issued digital identities (eIDs) is required. Such a framework was created with the revision of the eIDAS regulation, which has been in place for 12 years, in May 2024 (the so-called “eIDAS 2.0”). Citizens will be able to use the EUDI Wallet across Europe for a wide range of use cases, such as account openings, hotel check-ins or car rentals. Use of the EUDI Wallet will be free of charge and voluntary for citizens.
A key foundation is data security and privacy protection. The EUDI Wallet promises “privacy by design,” meaning users must explicitly consent to every data exchange. Selective data sharing is also supported. For example, when buying alcohol, users can simply confirm that they are over 18 years old without disclosing any additional data.
The timeline
The roadmap is ambitious: by the end of December 2026, Member States must provide or approve at least one public or private EUDI Wallet. According to Karsten Wildberger, German Federal Minister for Digital Transformation and State Modernization, the public EUDI Wallet is expected to be available to all German citizens from January 2, 2027. According to a recently published statement by the Ministry for Digital Transformation and State Modernization, private providers in Germany will be allowed to issue their own wallets around 12 months after the launch of the public EUDI Wallet.
Concrete obligations for financial institutions
Similar to other industries, the financial sector is legally obliged to accept the EUDI Wallet for numerous use cases. Acceptance obligation means that financial institutions must securely and legally accept EUDI Wallet–based credentials and integrate them into existing processes if they are currently required to perform online identification with strong customer authentication and if end users wish to use the EUDI Wallet for this purpose. According to the eIDAS 2.0 regulation, this obligation applies from December 2027 onward.
In the financial context, authentication primarily refers to logging into accounts and approving payments. In terms of customer identification, this means: if new customers want to open an account, financial institutions must offer identification via the EUDI Wallet in addition to existing methods such as video identification.
For governments and policymakers, the focus is on sovereignty and efficiency. For citizens, it is on simplicity. The wide variety of identification and authentication methods that exist today can be replaced by a single, institution-independent application – the EUDI Wallet – while at the same time creating efficiencies for all parties involved. Account openings that currently take days or weeks could then be completed in minutes or hours and at a fraction of the cost.
EUDI Wallets as an opportunity for financial institutions
One thing is clear: the EUDI Wallet is far more than a regulatory obligation. Using the provided infrastructure can enable new business models, customer retention opportunities, and efficiency gains beyond the mandatory use cases. There is significant potential, especially in issuing identity credentials into EUDI Wallets. Processes can be optimized or data outsourced, for example by storing bank accounts as credentials in the wallet or automatically querying loyalty instruments from the EUDI Wallet at the point of sale.
We expect that, in the future, all kinds of identity credentials will be stored and used in the EUDI Wallet – similar to today’s physical wallet. The digital nature of these credentials enables entirely new use cases, automation potential and novel business models, where, for example, the issuer of attributes is compensated when credentials are used.
Due to the integration of EUDI Wallets into numerous EU regulatory frameworks – from the updated Anti-Money Laundering Regulation to (likely) the regulation on the digital euro – investments in EUDI infrastructure will pay off quickly while simultaneously fulfilling regulatory requirements.
What financial institutions should prepare now
Institutions who want to make their EUDI journey a success should not view it in isolation: The EUDI Wallet is more than a compliance topic. It requires cross-functional collaboration between different teams, all of which must understand the EUDI Wallet in order to generate competitive advantages.
What should financial institutions do now (if not done already)?
- Establish an EUDI project lead with an appropriate budget
- Set up a project team involving multiple departments
- Define a clear project plan that takes regulatory deadlines into account
- Build up knowledge to create a shared foundation
- Develop a joint EUDI strategy, including EUDI roles and use cases
- Translate the strategy into product thinking
- Conduct proof-of-concepts and participate in interoperability tests
Conclusion
The EUDI Wallet will become a key topic for financial institutions within a very short time. Financial institutions should therefore act quickly to meet regulatory requirements, but also to carefully analyze the opportunities it provides. The decisive factor to see the regulatory minimum as a starting point – not the goal. Financial institutions that use the EUDI Wallet strategically can gain efficiency and security – and the opportunity to rethink digital customer experiences across Europe. Ultimately, this results in better products for customers and new opportunities for companies.
About the authors
Nancy Timm and Dr. Jonas Gross are Managing Directors of Etonec Digital Services GmbH. They support financial institutions and central banks in fully leveraging the potential of digital identities and digital currencies.
Not that the German, shortened original article was published in IT-Finanzmagazin.
