Emerging Technologies

How universal wallets can help businesses unleash the full potential of digital identity

Person holding iphone, paying by phone, universal wallet, digital identity.

Universal wallets are the first step towards unleashing the potential of digital identity. Image: Unsplash/Rodion Kutsaiev

David Treat
Senior Managing Director, Accenture Innovation, Incubation Group Lead
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Emerging Technologies

  • People are becoming more comfortable with “tokenization” – the process of digitizing ownership of documents and other items – thanks to digital wallets.
  • Digital wallets are already transforming online business interactions, taking them from "website-centric" to "customer-centric".
  • To be successful in the future, businesses will need to earn customers’ trust so they will share discrete real-time data with them via their wallets. This will help to enhance interactions with consumers.

This has come about due to two new trends around digital identity.

First, generative AI's integration into daily interactions is accelerating the evolution of digital interfaces. AI platforms like ChatGPT show the potential for consolidating various functions within a single interface. Universal wallets, characterized by one interface that makes the fragmented user ID/password system obsolete, are paving the way for a disruptive, user-centered experience of managing digital assets. With these digital advancements, new business models and trapped value can be unlocked.

This is where the second trend comes in: we no longer need to carry our physical wallets with us wherever we go. Digital payment mechanisms from ApplePay and Google Pay to Zelle and Venmo have been widely available for some time. Some US states are even adopting mDL, a mobile driver's license and digital identification (ID).

Notably, under such schemes it’s possible to share only certain pieces of identity, as needed – for example, a person can use a mobile driver’s license in California to verify their age without sharing other details of their identity. Health insurance cards, airplane boarding passes, city transportation cards and COVID-19 vaccination records can all also be stored in a smartphone mobile wallet.

The transition to universal wallets

Early digitization and point solutions like Venmo and apple wallet, as well as digital ID solutions like mDL, have helped to get people comfortable with using digital versions of documents that were historically physical. Such pioneering endeavors are helping people get ready to move in the direction of travel in this space: universal wallet infrastructure that integrates a range of applications. This will create a more seamless experience, enhance privacy protections and unlock new business models.

Universal wallets – and the tokens held within those wallets – are bridging the gap between and harmonizing digital and physical spaces. The market for tokenization (digitizing ownership of a particular asset) is projected to grow by 21.5% to $8.6 billion by 2028. This rise exemplifies the shift towards more novel asset management via wallets.

Wallets are expected to transform and support new paradigms of value exchange via the trinity of identity, money, and objects:

  • Identity: Tokenization could breathe life into digital IDs, enabling people to interact and transact across digital spaces with authenticity and security.
  • Money: Tokenized currency could revolutionize economic transactions, making them instantaneous and borderless, a vital feature for the fluidity of the digital marketplace.
  • Objects: Tokenization could extend to assets, enabling the ownership and trade of virtual goods – from artwork to real estate – enhancing the economy.

Tokenization is already transforming digital interactions from "website-centric" to "customer-centric". It extends beyond currency and identity to securities, capital markets, carbon ecosystems and non-fungible tokens (NFTs). This reflects a shift towards a future where users can hold tokenized versions of their identity, money and objects in their universal wallet.

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Individual agency plus trust equals real-time customer data

In the previous digital era, businesses purchased stale customer data to configure advertisement targeting and customer personalization. However, this approach has been found to have an average conversion rate of only 2-5% across all advertisers.

Now, the convergence of blockchain, digital identity, AI and metaverse-based technologies is reshaping the business landscape. Traditional advertising models are giving way to direct and personalised approaches that prioritise trust over mere data collection. Privacy-preserving technologies, such as confidential computing, enable businesses to ensure customisation while also safeguarding privacy.

In this new digital era, businesses can create trust-based relationships directly with customers. With that earned trust, customers can share discrete real-time data with businesses – as they choose. In return, their trusted businesses will create tailored experiences for their customers. For example, as a customer’s clothing style and size preferences change over time, the customer can elect to share purchasing data with their favourite, trusted department store through their digital wallet.

This means the winning businesses of the future will be the ones that earn the trust of their customers. They must excel at earning digital trust through cybersecurity, safety, transparency, interoperability, auditability, redressability, fairness and privacy.

This future business model deviates from the traditional data-centric approach. Success lies in earning direct trusted access to customers' digital wallets or data stores. Businesses must offer people control over their information and the ability to choose exceptional services.

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Continuously merging the digital and physical

The digital identity revolution is not just a technological leap, it’s the catalyst for a profound transformation of business models. In this new technological era, the future of the internet is set to redefine our world, merging the physical with the digital in a continuum that offers boundless new opportunities.

For businesses, the transition to this new realm is about more than adopting technology – it's a strategic evolution toward a future where digital identities are as intricate and valued as their physical counterparts.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Emerging TechnologiesFinancial and Monetary SystemsCybersecurity
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