Preparing for the future of Digital Identity in the UK: What businesses need to know

The Shift Toward Digital Identity

Historically, identity verification has relied on one-off checks using physical documents or siloed digital credentials. But the market is moving toward reusable digital identities; credentials that can be verified once and reused across multiple services. This shift promises:

• Faster onboarding with lower abandonment rates
• Reduced fraud
• Lower operational costs
• Improved user experience

Solutions like the GOV.UK Wallet and the EU Digital Identity Wallet will allow individuals to store government-issued credentials (e.g. driving licences, tax or health records) on their devices and selectively share verified data. These decentralised models enhance privacy and put users in control.

More than 5 billion digital IDs have been issued worldwide, spanning both public and private sector ecosystems.

What these developments mean for Relying Parties and Regulated firms

The UK Government has confirmed that it will publish guidance on the use of digital IDs to comply with the Money Laundering Regulations later this year. This move is set to outline how digital identity can be confidently used in regulated checks, giving firms the assurance that their approach aligns with KYC and AML compliance expectations.

The GOV.UK Wallet is not a replacement for private sector identity providers, it’s a complementary tool. Similarly, the EU’s eIDAS2 regulation mandates that regulated industries (including banks and payment providers) must accept EU Digital Identity Wallets by December 2027.

Businesses will still need to work with trusted Digital Verification Service (DVS) providers to:

• Validate credentials shared via wallets
• Ensure compliance with the UK Digital Identity and Attributes Trust Framework
• Maintain robust fraud prevention and data protection standards

And not all consumers will choose to use a Digital ID Wallet, so alternative methods like data and document checks, or Open Banking will still play a key role in ID Verification processes.

Experian is actively engaged in shaping this ecosystem, ensuring our solutions remain interoperable, secure, and aligned with both UK and EU standards.

What’s new? Two important updates landed on 26 February 2026

1. New Government Guidance Linking Digital ID to AML Regulations

HM Treasury and the Department for Science, Innovation and Technology (DSIT) have jointly confirmed how Digital ID checks can be used to meet anti-money laundering obligations. This is the clearest signal yet that digital identity is becoming a mainstream, compliant route for regulated onboarding.

2. The UK Digital Identity Framework Has Been Renamed

The UK digital identity and attributes trust framework has been rebranded as the UK digital verification services trust framework. Digital verification services, including providers like Experian, can be independently certified against this framework to prove they meet Government-approved standards.

What does this mean?

Regulated firms can now meet Regulation 28 requirements by verifying an individual’s identity using certified and registered digital identity services listed on GOV.UK

Organisations gain greater legal certainty, clearer regulatory expectations and a stronger foundation for adopting digital identity tools with confidence

What hasn’t changed?

• Firms remain fully responsible for their own compliance decisions
• A risk-based approach and enhanced due diligence still apply where appropriate
• Digital ID supports identity verification, but does not replace full Customer Due Diligence requirements

What’s next?

We expect sector-specific guidance from industry regulators on how digital identity should be applied within customer due diligence journeys across different industries.

Key Considerations for organisations

To prepare for the coming changes, businesses should:

1. Review your current identity verification processes

Are they compliant with the Trust Framework? Are they ready to accept wallets and digital credentials?

2. Engage with certified DVS providers

Ensure your partners are certified under the new legislative framework and can support GOV.UK and EU Wallet integration.

3. Plan for interoperability

The future is hybrid, expect to handle both physical and digital credentials. Your systems must be flexible.

4. Educate your teams and customers

Build awareness of digital identity benefits and address concerns around privacy and inclusion.

5. Monitor regulatory developments

The Cabinet Office now leads strategic oversight of UK digital identity policy. Stay informed to remain compliant.

Experian’s Role in the Digital Identity Future

At Experian, we’re committed to helping organisations navigate this transformation. Our identity verification solutions already support millions of checks annually, and we’re investing to expand our ID checks and orchestration to enable flexible, secure, and privacy-preserving digital identity verification journeys. We plan to make ID Verification via Digital ID Wallets available in our solutions in 2026.