Remote onboarding has become one of the biggest friction points in financial services, even as regulators continue to tighten expectations around AML compliance. Many firms still depend on document uploads, liveness checks, video calls, and manual reviews to satisfy KYC requirements.
According to Hopae, the result is often a clunky experience that customers abandon partway through, with nearly one in two potential users dropping out because the process feels slow or difficult.
That is why the arrival of eIDAS 2.0 — and the early adoption of the EUDI Wallet — is landing as more than just another digital identity initiative. For financial institutions, the Wallet promises a first-mover advantage by making onboarding faster and simpler while also addressing wider operational and fraud pressures that have built up around remote verification.
Across the industry, the pain points are familiar. In customer onboarding, users frequently hit problems at the document and liveness capture stages, or get stuck in lengthy verification flows with too many steps. Behind the scenes, firms carry high operational costs because ID checks still rely on manual reviews, while video calls introduce delays and potential errors. Adding to the burden, institutions often maintain multiple customer journeys to reflect differing national requirements, even when serving the same product. Fraud is also rising as AI tools make synthetic identities, deepfakes and document manipulation easier to scale.
The same pattern shows up in lending. Loan applications regularly trigger repeated verification of income, employment and residency, increasing compliance workload each time a customer applies for a new product. Where validation is manual, approval cycles slow down and controls can struggle against AI-driven fraud tactics. Payments bring another challenge: mandatory multi-factor authentication to meet PSD2/SCA can drive drop-off when users fail to complete the steps, while uneven authentication experiences across countries can create weaknesses that fraudsters exploit. Account recovery is no less demanding, with asynchronous, multi-step processes forcing customers to re-upload documents, join video calls, or even attend in person — delaying access for hours or days. That repeated identity re-verification can also push users to overshare sensitive data, while increasing support costs and exposure to impersonation attacks.
Taken together, these constraints tend to fall into four buckets. First is high onboarding drop-off, with remote onboarding in finance facing 40–60% abandonment because strict identification requirements are not convenient for users. Second is a complex compliance workload, as firms try to keep pace with evolving and heterogeneous requirements — from AML-D to the upcoming AML-R, and from PSD2/SCA to future PSD3/PSR — contributing to heavy operational costs reported at $1,500–$3,000 per client.
Third is escalating fraud exposure, with AI-driven fraud projected to reach $58bn by 2030. Finally, there is cross-border expansion complexity: entering a new market often means building new ID flows, selecting new vendors and navigating local compliance expectations, even as cross-border banking demand rises and euro-area households’ pan-European deposits grew nearly 60% in 2024 (€151bn).
The EUDI Wallet is positioned as a direct response to these issues because it replaces fragmented, document-driven checks with a unified, high-assurance, government-grade digital identity wallet. On the customer experience front, it aims to remove many of the steps that cause drop-off.
In a bank account opening journey, the Wallet could replace document uploads and in-person or liveness checks with instant wallet-based ID verification, taking a process that can last minutes — or even hours — and reducing it to around 30 seconds. It also targets the oversharing problem by shifting from repetitive document uploads towards a short journey that can be completed in just a few taps.
Compliance is another area where the Wallet could make a meaningful difference. Instead of collecting and analysing multiple documents such as passport scans and proof of address, institutions could rely on the EUDI Wallet’s high level of assurance as a recognised identification method across EU member states, with alignment to AML, eIDAS and payments requirements. This “compliance built-in” approach also suggests a path to lowering onboarding costs, moving from verification fees that can be around €5 per check (depending on country) to only a few cents when using wallet-based credentials.
Fraud controls are also central to the Wallet’s appeal. By using cryptographically signed credentials, the Wallet is designed to reduce key entry points for fraud such as document tampering. Its security model is intended to reflect the highest standards, with wallets and enrolment flows assessed by certification bodies.
The Wallet’s high level of assurance is supported by enrolment that relies on in-person identity proofing and the use of hardware tokens or smart cards, raising the bar against synthetic identities and deepfakes. The decentralised nature of the Wallet also limits exposure: data resides with the end-user rather than in a single centralised database, reducing breach risk to the individual level, and selective disclosure allows users to share only what is needed — for example, confirming age rather than sharing a full date of birth.
For cross-border growth, the promise is simplification. Instead of maintaining separate onboarding paths for different jurisdictions, institutions could accept users from any EU country through a single wallet-based identity flow. Government-backed credentials help ensure foreign users’ identities can be verified with the same level of trust as domestic customers, while standardised attributes can support checks around residency, age and unique personhood without constant redesign.
The opportunity is not only about consuming Wallet credentials. Financial institutions can also participate in the ecosystem by issuing Electronic Attestation of Attributes (EEA) and Qualified Electronic Attestation of Attributes (QEEA). These credentials could streamline regulatory checks and allow customers to reuse verified data across services.
Examples include low-friction SCA attestations being enabled through large-scale pilots, qualified eSignatures that could remove the need for video identification on high-value contracts, and faster lending decisions by verifying income, address or employment in seconds. There is also a potential commercial upside: banks could issue their own attestations so customers can reuse bank-verified data across partner services — for example, providing a verified affordability credential to be used by a telco or gambling operator — creating new routes to revenue and partnership models.
Ultimately, the EUDI Wallet is framed as a way to convert more users while cutting compliance costs. By introducing a unified, government-backed identity layer, it aims to reduce friction, simplify compliance, lower verification costs and enable consistent onboarding across Europe. For institutions that move early, the Wallet could become both an efficiency play and a strategic platform for new credential-based services — and a signal that the next phase of digital identity in finance is shifting from experimentation to execution.
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