iDenfy, an international RegTech and fraud prevention service provider, has introduced a significant platform enhancement in anticipation of upcoming European Union Digital Identity Wallet compliance standards. This update is aimed at businesses in regulated sectors that need to verify user identities through government-backed digital ID systems, without requiring users to upload photos of identification documents.
By allowing users to leverage their existing credentials used in everyday services, iDenfy hopes to streamline the Know Your Customer (KYC) process. The newly implemented non-document verification approach is expected to boost business conversions through a simplified customer experience.
EU Digital Identity Wallet Compliance
Under Regulation (EU) 2024/1183, the eIDAS 2.0 framework mandates that by December 31, 2026, all 27 EU member states must offer at least one EU Digital Identity Wallet (EUDI Wallet) to their citizens. This legal obligation requires banks, payment institutions, and electronic money organizations to use these wallets as a valid method for Strong Customer Authentication (SCA) in compliance with EU regulation.
The EUDI Wallet serves as a secure mobile application capable of storing verified credentials such as national ID cards, passports, and driving licenses centrally. This solution reduces the need for recurring verification each time a user accesses a new service.
Integrating Electronic and Physical Verification
This solution reduces the need for recurring verification each time a user accesses a new service
iDenfy's updated platform supports both physical and electronic ID verification processes in a combined workflow, enabling verification within a single session.
This integrated approach simplifies user navigation and reduces operational complexities for businesses. Previously, a document-first verification procedure had deterred conversions, but iDenfy reports a 23% decrease in session drop-offs. They anticipate a 30% reduction as the system can seamlessly transition to electronic verification in cases of document capture issues.
Market Shifts and Identity Methods
Businesses face challenges beyond regulatory demands. Notably, Nordic markets have effectively transitioned away from physical document-based verification. In Sweden and Norway, BankID is prevalent, while MitID is common in Denmark, and Smart-ID is used in the Baltic states. Here, requiring users to photograph ID cards often interrupts the verification process.
Comprehensive Identity Verification
iDenfy's identity verification tool covers over 16,000 government-issued documents
iDenfy's identity verification tool covers over 16,000 government-issued documents across more than 200 nations and territories, automating various KYC components as necessary.
Businesses can build tailor-made onboarding processes using facial recognition, age checks, or passive liveness detection, all without the need for coding. Manual reviews are conducted non-stop by iDenfy’s compliance team to ensure accuracy and address anomalies in user sessions.
Adapting to Regulatory Demands
Financial institutions and fintech companies must align with the demand for wallet-based authentication to avoid compliance issues. Businesses unable to process these credentials risk losing access to the expanding segment of EU users, resulting in potential legal repercussions and financial losses during user onboarding.
Research from Fenergo highlights a global expenditure of $72.9 million annually on AML and KYC compliance. Inefficient onboarding processes continue to drive customer attrition, further aggravated by any wallet incompatibility.
Domantas Ciulde, CEO of iDenfy, stated, “The EUDI Wallet is not a future consideration for businesses in regulated markets; it is an immediate infrastructure question. Electronic IDs carry the same level of government-backed trust as physical documents, and in many cases, they are harder to forge. Our role is to make sure that businesses can accept both methods without rebuilding their onboarding system from scratch."
iDenfy, a global RegTech and fraud prevention service provider, announced a major platform update ahead of the European Union’s Digital Identity Wallet compliance regulations for regulated businesses that require verifying users through government-backed digital ID verification methods, all without asking the user to upload an actual photo of their ID document.
That means users will be entering their credentials that they use for daily services already, which creates a familiarity factor. According to iDenfy, these newly launched non-doc verification workflows will help businesses increase conversions due to the simplified version of the standard, document-based Know Your Customer (KYC) process.
Secure mobile application
Under Regulation (EU) 2024/1183, the eIDAS 2.0 framework requires all 27 EU member states to make at least one EU Digital Identity Wallet (EUDI Wallet) available to their citizens by December 31, 2026, a binding legal obligation with no room for interpretation. Banks, payment institutions, and electronic money organizations have to operate under EU regulation, and now require accepting the wallet as a valid method for Strong Customer Authentication (SCA), due to direct compliance concerns.
The EUDI Wallet is a secure mobile application that can store verified credentials, including national ID cards, passports, and driving licenses in one place, so users won’t need to be asked to reverify every time they access a new service. This framework was presented in May 2024.
Electronic ID verification flow
To navigate businesses through this shift, iDenfy updated its platform with a combined physical and electronic ID verification flow. Rather than running separate processes, the integration handles both verification paths within a single session, and in this way, removes friction for the user as well as minimizes implementation overhead for the business.
A purely document-first verification flow is, in practical terms, a barrier to conversion for a meaningful share of users in these regions. The data reflects this. iDenfy has recorded a 23% reduction in verification drop-offs among users who previously abandoned sessions because a physical document was not available, and projects 30% reduction to allow the system to automatically switch to the electronic ID verification workflow when a physical document capture fails due to poor image quality or lighting, or other minor issues.
Physical document verification
The challenge businesses face is not purely about regulation, though that pressure is real and immediate. Across the Nordic markets, the shift away from physical document verification has already happened at scale.
BankID is the dominant identity method in Sweden and Norway. MitID handles the majority of identity transactions in Denmark. Smart-ID is the standard across Estonia, Latvia, and Lithuania. In these markets, asking a user to photograph a physical ID card is increasingly the friction point that ends a session, not a standard step within one.
Identity verification tool
In general, iDenfy’s identity verification tool covers over 16,000+ government-issued documents across over 200+ countries and territories, with automated workflows handling different KYC processes as needed. Clients can choose various elements and combine their own onboarding process using elements like facial recognition, age verification, or passive liveness detection without ever needing to code. Cases that fall outside automated parameters are sent to iDenfy’s internal compliance team, which operates nonstop with dedicated day and night shifts, so reviews are not delayed by weekends or public holidays.
The second layer is a manual review conducted by iDenfy’s internal compliance team, available 24 hours a day, seven days a week. The company has day and night shifts to manage this process without any interruptions, such as holidays, weekends, or any specific days, to be able to catch edge cases, flag anomalies, and guarantee the most accurate outcome for every session. The combined flow is available to all iDenfy customers at no additional cost and can be enabled directly through dashboard settings, with no new integration work required.
Beyond regulatory penalties
For financial institutions, that means any onboarding or authentication flow that cannot process a wallet-based credential will be out of compliance. Likewise for fintechs, payment processors, and electronic money providers, the consequences of non-compliance extend far beyond regulatory penalties.
A business that cannot accept wallet credentials will be unable to onboard a growing segment of EU users who will fail with a wallet-based identification as their primary method. This can create legal exposure and a direct revenue loss at the point of user acquisition.
Inefficient onboarding flows
According to research from Fenergo, globally, businesses already spend $72.9 million per year on AML and KYC compliance, simultaneously losing clients due to inefficient onboarding flows. Adding wallet incompatibility to that equation compounds an already costly problem.t.
“The EUDI Wallet is not a future consideration for businesses in regulated markets; it is an immediate infrastructure question. Electronic IDs carry the same level of government-backed trust as physical documents, and in many cases, they are harder to forge. Our role is to make sure that businesses can accept both methods without rebuilding their onboarding system from scratch,” commented Domantas Ciulde, the CEO of iDenfy.
