With the UK’s Data Protection and Digital Information Bill advancing and a government-issued digital ID wallet on the way, identity verification (IDV) providers are entering a new phase of uncertainty and opportunity.
In our recent panel discussion with Yoti’s CEO Robin Tombs, legal consultant Richard Oliphant, and Dock Labs’ CEO Nick Lambert, we explored how the rise of reusable digital IDs is forcing IDV providers to rethink their role in the ecosystem.
Risk of Being Bypassed
As wallets that store verified credentials gain traction, IDV providers may be cut out of future onboarding flows.
If users can present a pre-verified digital ID from a wallet, businesses might no longer need traditional verification each time. This could reduce demand for one-time document checks and put pressure on IDVs to prove continued value.
To stay relevant, IDV providers will need to support both traditional verification methods and the ability to accept reusable credentials.
Two Strategic Responses Emerging
Some IDV providers may try to compete in the consumer space by launching their own digital ID wallets.
While this move requires significant investment in UX, privacy, and brand trust, it allows them to maintain a direct relationship with end users.
Others may integrate wallet support into their existing B2B platforms. By becoming intermediaries between wallets and businesses, they can continue to play a critical role in the verification flow, even if the initial identity check was done elsewhere.
Whichever path they choose, the goal is the same: retain their position in the value chain as identity becomes more portable.
Clients Want Flexibility
While reusable credentials are gaining traction, traditional KYC flows aren’t disappearing overnight. Businesses will continue to require identity verification, but their expectations are evolving.
They’ll increasingly look for providers who can manage both legacy document-based checks and modern wallet-based verifiable credentials, without added friction.
IDVs who can bridge this gap will be best positioned to serve clients navigating the shift to digital identity.
