Europe’s digital identity push is moving from policy to implementation, with new rules requiring member states to deliver digital identity wallets to citizens by the end of 2026. Investors are watching closely for which companies capture the demand created by the EU’s interoperability framework, as delivery timelines and certification progress have lagged early expectations.
The regulatory deadline also creates a potential shift in costs across regulated industries such as banking and other customer-facing services, where identity verification is currently repeated at high operational expense for each onboarding and transaction.
Key takeaways
- Price move: No market prices were cited in the report, but the industry outlook is shifting around EU digital identity wallet deployment.
- Catalyst: The EU’s eIDAS 2.0 framework, now in force, is designed to make digital identity wallets interoperable across member states.
- Key implication: The value pool is increasingly tied to “infrastructure” providers that reduce repetitive verification costs for banks and regulated firms.
- Delivery risk: The European Commission has expressed doubt that all member states will meet rollout timelines, raising uncertainty about who can scale first.
What eIDAS 2.0 requires and why it matters
eIDAS 2.0, which took effect in May 2024, is built around interoperability—wallets issued in one EU member state must be recognized in the other 26. The broader policy direction is to raise adoption, with Brussels targeting 80% of EU citizens using digital ID by 2030.
In practice, the implementation challenge is less about whether wallets are mandated and more about whether regulated providers can integrate them quickly and securely. According to the European Commission, regulated firms such as banks have time until late 2027 to accept the wallets.
Still, operational rollout appears uneven. In April 2026, the European Commission said it doubted that every member state would launch on time, and that none had been certified to the new specifications early in the year. The gap between domestic readiness and EU-wide interoperability is where infrastructure suppliers may gain leverage.
The issue is illustrated by existing national apps. The article notes that Poland’s mObywatel passed 12 million users by mid-2026, but remains limited to Poland’s ecosystem. The implication is that scale alone does not solve cross-border identity acceptance—interoperability does.
Onboarding costs and the case for reusable credentials
Identity verification is an ongoing cost center for regulated firms. The report highlights a repeated pain point: banks and fintechs must verify the same customer multiple times across onboarding and subsequent processes, even when the underlying identity information is unchanged.
According to Erika Maslauskaitė, co-founder and chief executive of Lithuanian startup AlongID, “KYC and KYB are not enough” to support the full verification workflow that some businesses may require. She argues that “wiring” one identity provider into a large bank can become a multi-year project, while regulatory or technical requirements may change during implementation.
AlongID’s proposed approach centers on a reusable, wallet-based credential. The article describes the economics as transaction-linked: instead of paying per onboarding or repeatedly reconstructing verification, banks and regulated firms could reuse a credential already present in the customer’s wallet. The claim is that costs would decline as transaction volumes scale.
The company also draws a parallel to payments infrastructure—suggesting that identity should work like an “integration layer,” similar to how local payment methods were connected into broader core infrastructure. The broader investor takeaway is that regulators may create demand, but the profitability may hinge on reducing integration and compliance friction.
Why investors may focus on Lithuania and the ecosystem build-out
The report frames Lithuania as a launchpad for digital identity infrastructure, pointing to a decade-long effort by the Bank of Lithuania to court fintechs through a relatively lighter electronic money institution license and English-language paperwork. It also cites Invest Lithuania’s assessment that the country ranks first in the EU by fintech licences issued, and names companies such as Vinted and Nord Security as beneficiaries of that ecosystem.
AlongID, according to the article, was spun out of a Vilnius software firm founded in 2019 and has worked on verification for GB Group, the London-listed identity company. The startup has also received a €2 million European grant and showcased its product at Mobile World Congress in March 2025, with plans to launch with a European neobank.
Maslauskaitė positions the business as enabling rather than controlling identity. The article says she rejects the idea that a centralised identity provider would create a “big brother” surveillance model, arguing instead for credentials remaining “on the device” and being hashed, alongside an infrastructure approach that connects providers.
What the digital identity market could mean for investors
The report suggests a large addressable market for digital identity, citing market research estimates from Grand View Research and MarketsandMarkets. Grand View Research places the digital identity market at nearly $47 billion in 2025 and $135 billion by 2033, while MarketsandMarkets estimates $44 billion in the near term and growth to $132 billion by 2031.
It also notes competition across the identity verification landscape, naming Norway’s Signicat, Germany’s IDnow, GB Group, and Lithuanian firms iDenfy and Ondato. The implied investment angle is that growth may not only be about delivering identity wallets, but about capturing services that sit “below” large banks—particularly where expertise is required to minimize risk in narrower industries.
In the article’s view, the remaining question is not regulation-driven demand, but who can build the licensed, interoperable infrastructure needed for verification. The report links the urgency to a wider shift toward AI, arguing that trusted identity and authorization processes become more important as more digital actions are delegated or executed through agents.
With eIDAS 2.0 now established and regulated firms facing acceptance timelines into 2027, investors will likely watch how quickly member states progress with certification and how banks adapt wallet-based verification. The next key developments to monitor include further European Commission updates on certification progress, member-state rollout milestones through 2026, and bank integration timelines ahead of late-2027 wallet acceptance.
