How are digital wallets reshaping IAM?
Published October 23, 2025
- Cybersecurity
Key takeaways
- Digital identity wallets are changing how people control their online identities, making access to services faster, safer, and more private.
- The public sector is leading the way, but real impact comes when private platforms like banks and social media adopt wallet-based identity.
- Users will manage multiple wallets for different parts of life (government, work, shopping, and more) boosting privacy and consent.
- Organizations should prepare for digital identity wallet integration, in order to stay compliant and deliver the best user experience.
Imagine trying to access a school portal for years and failing, until one day, it just works. Seamlessly.
I struggled for four years to access my local school platform meant to streamline communication and activities for families. The breakthrough came when the portal integrated with a European digital identity wallet. Suddenly, what had been a bureaucratic maze became a frictionless experience. This anecdote isn’t just a good story but a glimpse into the future of personal identity in IAM.
As organizations grapple with regulatory pressures, user expectations, and the complexity of multi-channel access, digital wallets offer a strategic opportunity to rethink how identity is created, verified, and managed across ecosystems.
The rise of digital identity wallets
Digital identity wallets are emerging as a cornerstone of modern IAM. They allow individuals to store and share verified credentials securely, giving users control over their personal data. In Europe, these wallets are being rolled out to facilitate access to public services, but their true potential lies far beyond government portals.
Traditional IAM systems are built around centralized identity providers, federated trust models, and role-based access controls. While effective in enterprise environments, these models often fall short in addressing the nuanced needs of individuals navigating multiple digital domains – public services, private platforms, professional networks, and personal interactions.
Digital identity wallets invert this model. They place verified credentials directly in the hands of users, enabling selective disclosure, contextual authentication, and granular consent. This shift aligns with broader trends in privacy, decentralization, and digital sovereignty.
- Credential portability: Users carry their verified attributes across platforms
- Selective disclosure: Only necessary data is shared, reducing exposure
- User agency: Individuals control how, when, and with whom their identity is used
- Interoperability: Wallets can interface with public and private services across borders
Digital wallets: evolving use cases
The initial use cases for digital wallets in Europe focus on public services: education, healthcare, taxation. These implementations are crucial for onboarding citizens into the digital identity ecosystem. But if wallets remain confined to public sector use, adoption will stall. For wallets to become indispensable, they must extend into the private sector.
The European Union’s digital identity framework is one of the most ambitious attempts to operationalize wallet-based identity at scale. By 2027, platforms with over 10 million users or those requiring strong authentication must support wallet integration. This mandate is not just regulatory, it’s infrastructural. Public sector use cases are already underway:
- Parents accessing school portals
- Citizens managing healthcare records
- Individuals filing taxes or applying for benefits
These implementations serve as onboarding ramps into the wallet ecosystem. But the long-term success of digital wallets depends on their adoption across the private sector where most digital interactions occur.
Wide-scale adoption hinges on wallets being used across private services. Social media platforms, banks, e-commerce sites – these are the digital spaces where people spend their time and transact. European regulations are pushing toward this reality, requiring platforms with massive user bases or strong authentication needs (like financial institutions) to integrate wallet-based identity by late 2027.
This shift will redefine how users authenticate, onboard, and interact with services. Instead of juggling passwords and verification codes, users will present credentials from their wallets, streamlining access while enhancing privacy.
As wallets proliferate, users won’t rely on a single identity container. Instead, they’ll curate multiple wallets tailored to different aspects of their lives:
- Regulated Wallets for accessing government services
- Private Wallets for e-commerce, entertainment, and social platforms
- Discreet Wallets for age-restricted or sensitive content
- Professional Wallets for employment, partnerships, and enterprise collaboration
This segmentation empowers users to control what data they share and with whom, aligning perfectly with IAM’s principles of least privilege and consent-based access.
Businesses are also exploring wallets for streamlining identity management. From onboarding remote employees to verifying partner credentials in data-sharing platforms, wallets offer a scalable, secure solution. Professional wallets could carry employment history, access rights, and certifications, making transitions between roles or companies smoother and more secure.
For enterprises, wallet integration is a competitive differentiator, not just compliance. It enables:
- Frictionless onboarding: Instant verification reduces drop-off rates
- Reduced fraud: Verifiable credentials mitigate identity theft and synthetic fraud
- Improved UX: Passwordless access and contextual authentication enhance engagement
- Data minimization: Aligns with GDPR and other privacy regulations
Forward-looking organisations are already exploring wallet-based identity for:
- Customer onboarding in financial services
- Age verification in media and gaming
- Credentialing in workforce platforms
- Secure access in healthcare and insurance
Strategic considerations for IAM leaders
As digital wallets gain traction, IAM leaders must prepare for a new identity architecture. Key strategic actions include:
- Architect for interoperability: Ensure your IAM systems can interface with wallet protocols, verifiable credentials, and decentralized identifiers.
- Design for user agency: Shift from permission-based access to consent-driven identity flows. Empower users to control their data.
- Align with regulation: Monitor evolving standards like eIDAS 2.0, GDPR, and emerging wallet frameworks to future-proof your strategy.
- Invest in UX: Wallet adoption hinges on intuitive, secure, and accessible user experiences. IAM must collaborate with product and design teams.
- Pilot and iterate: Start with targeted use cases (onboarding, age verification, partner access) and expand based on feedback and performance.
What’s next?
We’re in the early stages of wallet adoption, and the path forward will be shaped by regulation, vendor capabilities, and user experience. As digital identity wallets reshape how individuals manage and share their credentials, the IAM landscape is undergoing a profound shift from centralized control to user empowerment.
Wallets give people agency over their personal data, but to truly secure and optimize digital interactions, organizations must pair personal identity with continuous identity (opens in new tab). While wallets redefine who the user is and what they can share, continuous identity ensures that access remains appropriate throughout the session, adapting to behaviour, device posture and risk indicators in real time.
Together, these models form the foundation of a modern, resilient IAM strategy and for IAM leaders, this is a moment to lead, not just in securing systems, but in shaping the future of digital trust.
Key trends shaping the future of digital identity
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