Calm settles over digital identity market - for now... (Hark, is that Big Tech on the horizon?)
A relative calm has settled over the digital identity sector after months of worry and vitriol – for now, at least.
Digital ID players have largely welcomed the government’s announcement of the technicalities of how the Gov.uk Wallet will work and the role of private sector providers in that ecosystem.
Engagement from the Department for Science, Innovation and Technology (DSIT) took far too long to come, and the concerns that arose were entirely unnecessary – as the government effectively accepted when technology secretary Peter Kyle apologised to delegates at last week’s critical summit meeting.
“We are empowering the market, not sidelining it,” Kyle said, according to sources attending the meeting. “We recognise your concerns. I read your recent letter and take it seriously.”
Addressing the reasons for the unexpected government digital wallet announcement in January, and the subsequent lack of information, Kyle said, “I hope that my presence here reassures you that any negative impact on the market in which you operate in – I apologise for it – is certainly not something that we intended to do. But it was simply a consequence of a government coming in and seeing that we were miles behind where the public expects us to be.”
Kyle’s overarching narrative was that people would have thought it very strange if government “censored itself” from providing digital versions of paper-based documents such as driving licences, in favour of allowing the private sector to do so. Hence, government needed a digital wallet as a priority.
He acknowledged that “there was a very rapid change of direction after the general election” because he felt the government was so far behind expectations in providing digital public services.
Kyle repeatedly stressed that he is “very open minded” about the role of the private sector and the interplay with government-built systems, but said he sees it is “my job to excite people about the opportunities that will come from government moving to digital services”.
“I’m not approaching this from an ideological perspective. I am approaching this by trying the best I can to look at the world through people’s eyes who want to have access to government services, government-backed data, used in a wise way that empowers them,” he said.
“I’m open minded about how the market matures and the role that the government plays going forward, as long as it can be delivered safely, securely, and in the interests of people who look to these services to be delivered in a way that’s suitable for them in the way they live their lives these days.”
His immediate priority is to get the enabling legislation through Parliament, in the form of the Data (Use & Access) Bill, expected to become law in June. The Gov.uk Wallet will launch soon after, with the digital driving licence expected later this year, “complete with age verification functions for online and offline activity”.
Watershed moment
Kyle’s announcements won over many of his previous critics.
Writing for Computer Weekly, David Crack, chair of the Association of Digital Verification Professionals, described last week’s meeting as a “watershed moment”.
“Hats off to Peter Kyle for his bold decisions and refreshing honesty. This is a moment that demands goodwill and open collaboration. Government and industry must move as one – the stakes are too high for division. This isn’t just about digital identity. It’s about sovereignty. It’s about dignity and rebuilding trust in an age of data,” he said.
Yoti chief executive Robin Tombs said he now sensed “a growing buzz about the opportunities for the private sector”.
He pointed to the “enormity” of DSIT’s ambition to require government services to issue a verified digital credential in the Gov.uk wallet alongside any paper- or card-based credential or proof of entitlement / eligibility by the end of 2027.
“Even if only some key credentials get into the government wallet by then, the impact of this project will be huge,” said Tombs.
“If the UK government gets close to issuing 20, or even 10, of the most highly used government credentials into the wallet during 2026 / 2027, I think it’s very likely 50% to 70% of the UK’s 57 million adults – that’s 28 to 40 million people – will have a UK government wallet by the end of 2027.”
Others still have concerns. In many countries, private sector digital ID service providers (IDSPs) can offer their tools to access government services as well as commercial services. So far, there’s no sign of that happening in the UK -although perhaps the growing security concerns around DSIT’s Gov.UK One Login digital identity system may be a catalyst to open up public sector services.
The lack of communication from the government prior to last week has also left some with a lingering scepticism, with calls for a formal working group between government and industry to collaborate on standards and integration going forward.
But the new roadmap for digital identity has, for many, left two very big elephants in the room. It is easy to see the government’s ecosystem and architecture around the Gov.uk Wallet as a direct encouragement to Apple and Google. It’s been designed in a way that appears to fit with the models of their smartphone wallets, and – crucially – the government has for the first time accepted that it bears legal liability for all government-issued digital credentials.
Yoti’s Tombs demurs on this view, saying, “A highly adopted government wallet under this model means it will be hard for one or two private brands who gain high network market share, to over-exploit their position.”
Others – those whose priority is to see the use of digital identities thrive across the UK – don’t really care. If it takes Apple and Google to make such technology mainstream, with all the potential economic benefits that entails, then does it matter?
But for many of the 50-plus IDSPs that have invested heavily in product development and gaining government certification, there’s now a land grab underway, which Kyle’s announcement is only likely to accelerate.
Can any IDSPs carve out a niche, or make themselves a big enough name to compete for app downloads, before Big Tech comes sweeping in?
As Richard Oliphant, an independent legal consultant and expert on digital identity, has highlighted – Apple and Google don’t need to make money from their digital wallets, whereas IDSPs have a financial model and investors to feed. That could be a critical advantage for the smartphone giants.
DSIT has hardly covered itself in glory so far, but Kyle’s ambition is welcome and if his roadmap catalyses the market, ultimately nobody can complain. The level of public/private engagement from now on remains to be seen.
But if public interest in digital identity is finally soon to be piqued, you can bet Apple and Google will be poised and ready.