Super apps are widely seen as the next major trend in the financial sector. From a banking perspective, however, the race to add ever more features misses the point. Banks’ greatest competitive advantage lies in a capability that few other market participants possess: securely verifying people’s identities and their data.
Many banks are currently pursuing a similar goal: turning their app into a digital one-stop shop. Banking, shopping, travel, mobility and insurance are all supposed to come together on a single platform, keeping customers within the bank’s ecosystem for as long as possible. But this race may be heading in the wrong direction. Banks will not become more successful by copying Big Tech. Their real strength lies elsewhere: few other industries enjoy the same level of customer trust when it comes to identity, sensitive data and security. With eIDAS 2.0, banks now have an opportunity to turn precisely that trust into a new competitive advantage. Giesecke+Devrient (G+D) explains why digital identities are strategically more important for banks than the next super app.
Why are banks at risk of competing in the wrong race?
The vision is appealing: a single app for every aspect of life. But banks that try to compete with Apple, Google or specialized platforms on the number of features are entering an arena where others have been setting the pace for years. What customers expect from their bank above all else is reliability. They want their money to be protected, their data to be handled securely and their transactions to work seamlessly. A bank does not need to be a travel portal, delivery service and shopping platform at the same time. Quite the opposite: the further banks move away from the core of their brand, the greater the risk of diluting their most valuable asset.
What advantage do banks already have?
Whether opening an account, logging in or authorizing a payment, banks have spent decades building robust processes to reliably identify individuals, prevent fraud and comply with regulatory requirements. During onboarding, they already verify identity documents against official registries, automatically extract the relevant data and use biometric methods, including liveness detection, to confirm that the person is who they claim to be. With every login and sensitive transaction, modern authentication methods ensure that only authorized individuals can access accounts and services. What has long been standard practice in online banking is becoming a critical capability across the entire digital economy. As more services move online, the ability to verify identities securely and conveniently becomes increasingly important.
Why does eIDAS 2.0 change the rules of the game?
With eIDAS 2.0, the EU is laying the foundation for a standardized digital identity that can be used across Europe. In the future, citizens will be able to manage their most important credentials, from national ID cards and driver’s licenses to health credentials, in the European Digital Identity Wallet (EUDI Wallet) and share them in a controlled manner. Banks will become key players in this ecosystem: they will integrate the EUDI Wallet into their onboarding and authentication processes and can also provide their own identity credentials. This simplifies regulatory checks such as Know Your Customer (KYC) while improving the customer experience. That is where the real opportunity lies. Banks can extend their existing strengths into new digital use cases and become an anchor of trust in a digital society, without having to build entirely new capabilities.
How can trust become a new business model?
Verified identities will increasingly be required wherever people use services involving sensitive information and therefore subject to strict regulation. Banks could offer identity verification through a Verification-as-a-Service model, with platforms or companies paying for each completed verification. Identities could also be integrated directly into other organizations’ applications. Hotels, for example, could check in guests without conducting another ID check, healthcare providers could access verified patient data, and retailers could provide personalized offers based on confirmed customer attributes. Cross-industry partnerships, such as working with government agencies to verify eligibility for benefits, will also become increasingly important. The key difference from the super-app model is that banks do not have to develop and operate all these services themselves. Instead, they provide the trusted infrastructure on which a wide range of digital services can operate reliably and in compliance with data protection requirements.
What should banks focus on now?
The success of digital identities does not depend on technology alone. Transparency, data protection and open standards are equally important. Users must remain in control of which data they share and with whom at all times. Identity solutions must be interoperable and integrate seamlessly into different applications. Above all, banks need to act now, as Big Tech and fintech companies are already investing heavily in digital identities. Banks still have a significant advantage when it comes to trust, but they cannot take that advantage for granted. Those that invest consistently in open identity platforms now can establish themselves over the long term as trusted identity providers for the digital economy.
“Banks’ greatest competitive advantage is not their ability to offer as many digital services as possible. It is the trust their customers place in them,” says Henrik Ringström, Portfolio Owner Digital Identity at G+D Netcetera. “The question is how banks can embed that trust into their existing processes: onboarding, login and payment authorization. With eIDAS 2.0, the EUDI Wallet can be integrated directly into these processes without banks having to build new capabilities from the ground up. Banks that move early can turn digital identity into a business in its own right.”
