The Future of Digital Identity: 500M Users to Embrace Digital Identity Wallets by 2026

Gartner, Inc. forecasts a significant shift in identity verification practices, predicting that by 2026, over 500 million smartphone users will regularly utilize digital identity wallets (DIWs) for verifiable claims.

This evolution comes as traditional methods of identity verification (IDV) struggle to meet the demands of increasingly digital interactions.

Currently, many IDV processes rely on users submitting a picture of their identity document along with a selfie to verify their identity. While this method helps establish trust during online interactions, it falls short due to its repetitive nature and limited scope.

As Akif Khan, VP Analyst at Gartner, explains, “The market is entering a transition period as portable digital identity (PDI) solutions are starting to mature, which in the next five years, will reduce the demand for standalone IDV.”

Addressing the Challenges of Traditional Identity Verification

The existing IDV model often requires users to repeatedly provide core identity data—such as their name, date of birth, and address—creating an inconvenient experience. As digital processes expand, there is a growing need to incorporate additional attributes linked to a user’s identity, including educational qualifications, employment proof, and even healthcare data.

“The processes in place today are focused and limited,” Khan notes, emphasizing the necessity for a more comprehensive approach as more services transition online.

The Emergence of Portable Digital Identity Solutions

Portable Digital Identity (PDI) represents a solution that could change the way identities are verified online. A PDI encompasses all essential attributes needed for digital identification while allowing users to maintain control over their security and privacy.

The principle behind PDI is straightforward: a user verifies their identity with a trusted entity, and this verification is recorded as an identity assertion. This assertion can either be stored with the verifying party in a centralized model or saved in a DIW on the user’s smartphone in a decentralized model. The latter approach offers the added advantage of using verifiable credentials, allowing users to confirm certain details—like their age—without disclosing unnecessary personal information.

Government Initiatives and Vendor Solutions

In response to the growing need for PDI, governments are taking proactive steps. The European Commission’s eIDAS Regulation mandates that all EU member states provide citizens with a DIW by 2026. Meanwhile, several vendors already offer products that enable organizations to implement PDI for specific use cases.

According to Khan, “Chief information security officers (CISOs) do not need to wait for a government to provide all citizens with a PDI solution.” He suggests that organizations can adopt decentralized identity wallet products today. For instance, integrating these wallets into employee onboarding, account recovery, and IT support workflows can enhance security through robust authentication while improving user experience by eliminating repetitive IDV processes.

As the landscape of digital identity evolves, the adoption of PDI solutions is poised to transform how individuals verify their identities online.

With millions of users expected to embrace digital identity wallets in the coming years, businesses and governments must adapt to these changes to enhance security and streamline user experiences.