Digital identities are increasingly defining our interactions online, offering ease and security across various platforms. Now, three of Europe’s biggest telecom giants have begun an experimental field-testing of the European Union’s digital ID scheme in the ambitious project named ‘Potential’. Deutsche Telekom, Telefónica and Vodafone are launching trials across 19 EU nations, using smartphone-based digital identity wallets in scenarios such as opening bank accounts, acquiring digital driving licenses, and car rentals. Internet-based citizen services requiring e-signature verification are also being assessed.

Coordinated by the EU, this trial aligns with the modified Electronic Identification, Authentication and Trust Services (eIDAS) regulations adopted just a fortnight ago. The objective is momentous: to unify a technical structure enhancing the efficiency of know-your-customer (KYC) protocols throughout the EU. As a result, residents, irrespective of their EU location, can rely on an EU-issued digital ID, significantly simplifying their identity verification procedures.

In a statement, Commission President Ursula von der Leyen commented, “Every time a Website asks us to create a new digital identity or conveniently log in via a large platform, we actually have no idea what is happening with our data. This is why the Commission will soon propose a secure European digital identity. One that we trust, and that citizens everywhere in Europe can use to do everything from pay taxes to rent a bike.”

Telefónica’s chief legal and corporate affairs officer Valentina Daiber also sees the utility, noting, “It is therefore only logical to add another important facet to life in the digital cosmos with a smartphone-based digital identity”.

However, the implementation of the EU’s digital ID scheme brings up several arguments. For instance, combining citizens’ credentials in a single fortified location could not only strengthen data protection but also place users in control of their personal data, opposing the current norm of relinquishing data to advertising-funded Internet behemoths.

On the flip side, users might still have to provide basic data like their names, addresses, contact, and payment details to numerous online services. Despite the existence of a centralized reserve for KYC information, identity theft could still be a possibility due to potential data leaks.

Moreover, the EU could unintentionally become an online gatekeeper, pressuring companies to adopt its digital ID program along with the complex terms linked to its usage. While big corporations might handle the situation efficiently, smaller, independent businesses could face challenges.

There is also the ongoing concern of central authorities collecting and controlling data, sparking fears of invasive surveillance. The introduction of digital IDs combined with initiatives like central bank digital currencies (CBDCs) with traceable financial transactions has raised reasonable questions about the direction in which we are headed. Understanding, debating, and addressing these issues remain crucial as we continue to digitize identity and personal data.