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As the UK advances its Data Protection and Digital Information Bill and formalizes its digital ID trust framework, identity providers, regulators, and tech platforms face critical decisions. Will the government-issued wallet accelerate adoption? Undercut the private sector? Or unlock new opportunities for collaboration?
These were the central questions we explored in our latest live session, hosted by Nick Lambert, CEO of Dock Labs. He was joined by two seasoned guests: Robin Tombs, CEO of Yoti, and Richard Oliphant, legal consultant at RO Legal Consulting. Together, we unpacked what the UK government’s new digital identity wallet could mean for the broader identity ecosystem.
Below are the key takeaways from the conversation—including insights into regulation, interoperability, user adoption, and what this shift means for the future of digital identity in the UK and beyond.
The Data Bill and Trust Framework
- Current status:
- The bill has passed through the House of Lords.
- The bill codifies the UK’s digital identity trust framework into law, ending its prior “non-statutory” status.
- Impact:
- Legitimizes existing certified identity providers.
- Expected to galvanize private sector adoption.
- Does not apply to central government services—that’s handled by the separate One Login system.
Use Cases for Digital Wallets
- Private sector:
- Customer onboarding in financial services.
- Age verification for alcohol, knives, and other restricted items.
- Public sector limitations:
- Requires further regulatory changes (e.g. licensing laws, AML regs).
- Currently not usable in regulated areas like alcohol sales or bank onboarding without sector-specific updates.
Regulatory Lag and Barriers
- Current misalignment:
- Sector-specific regulations (e.g. FCA, JMLSG) haven't caught up.
- Example: banks can’t fully rely on digital wallets until money laundering rules are updated.
- Timeline expectations:
- Changes likely over the next 2–3 years.
- The Home Office suggests legal changes for age verification will come by the end of 2025.
- Resulting problem:
- Businesses and compliance officers remain risk-averse due to lack of clear guidance, even when using cryptographically signed data from passports.
The Role of the Digital Driver’s Licenses
- Advantages:
- Thanks to Zero-Knowledge Proofs (ZKPs), users can prove they’re over 18 without disclosing their full DOB—a huge data minimization win.
- Supports both online and in-person transactions.
- Can be selectively disclosed.
- Limitations:
- Not yet usable by the private sector without further law changes.
- Government hesitant to allow certified providers to host government-issued credentials.
Private vs Government Wallets
- Arguments for private wallets:
- Better user experience and UI/UX.
- More flexible with commercial SLAs and integrations.
- Can support sensitive use cases (e.g. porn, gambling) where users prefer anonymity.
- Arguments for government wallet:
- Potentially free for end users and businesses.
- Useful for public sector use cases (e.g. Companies House, student loans).
- Concerns raised about the government wallet:
- This could create a monopoly, reducing competition and innovation.
- Lack of communication and transparency with industry.
- Unclear if it will allow integration by certified private ID providers.
- Recommendation:
- Let citizens choose between certified wallets.
- All certified wallets should be treated equally.
Implications for ID Verification (IDV) Providers
- Market disruption:
- IDV providers could be disintermediated if wallets become dominant.
- Businesses may seek IDPs who can support both traditional and reusable digital IDs.
- Strategic pivots:
- Some IDVs may move into the consumer market.
- Others may partner to integrate wallet access into their flow.
Current Usage of Yoti Wallet
- High adoption in certain flows:
- Right to Work and DBS checks (150k/month).
- Child Trust Fund access at age 18.
- Peer-to-peer marketplaces.
- Age verification for sensitive content and services.
- Adoption drivers:
- Reusability, convenience, and privacy.
- Younger users prefer apps to repeated document uploads.
Privacy, Trust, and Data Minimization
- Privacy concerns with the government wallet:
- Some users fear government surveillance or data reuse.
- ZKPs help address privacy by minimizing data shared.
- Data minimization gaps:
- Some businesses still require unnecessary retention (e.g. passport photo page).
- Regulators haven’t updated guidance to match technological capabilities.
Interoperability and International Alignment
- EU Wallet comparison:
- EU wallet offers digital signatures and payment auth.
- Mandatory for banks by 2027.
- UK outlook:
- No comparable mandates yet for authentication or payments.
- Scope for private sector innovation.
- Mutual recognition:
- The EU wants agreements with third countries like the UK.
- Reciprocity may be hard due to different assurance levels.
KYB and Organizational Identity
- Corporate credentials coming:
- Will support use cases like proving employment or company representation.
- Corporate and personal IDs will complement each other.
- Government wallet limitations:
- Unlikely to handle private sector credential issuance at scale.
Final Thoughts and Industry Advice
- Robin’s advice to government:
- Let certified wallets be used across all sectors.
- Keep certification simple, trusted, and consistent.
- Richard’s advice to government:
- Improve communication and collaboration with industry.
- Ensure ecosystem alignment with EU wallet for interoperability.
