By the end of 2026, every European Union member state must provide citizens with a digital identity wallet, a regulatory push that analysts estimate will unlock a market worth nearly $47 billion in 2025 and grow to $135 billion by 2033, according to Grand View Research. The mandate, part of the eIDAS 2.0 regulation that took effect in May 2024, aims to make these wallets interoperable across all 27 EU countries, enabling seamless cross-border verification for services like banking, healthcare, and government interactions.
Erika Maslauskaitė, CEO of Lithuanian startup AlongID, describes the current digital identity landscape as fragmented. "Our digital identity attributes are scattered everywhere," she said, noting that individuals lack control over their personal data online. Her company is building what she calls "the missing trust layer on the internet," a reusable credential system that could reduce repetitive verification costs for businesses. The regulation, she argues, is an enabler for digitizing services across borders.
The commercial opportunity is substantial. MarketsandMarkets projects the digital identity market at $44 billion in 2025, rising to $132 billion by 2031. For investors, the key question is which companies will profit from building the underlying infrastructure. The field includes established players like Norway's Signicat, Germany's IDnow, and UK-listed GB Group, as well as Lithuanian rivals iDenfy and Ondato. AlongID, spun out of software firm Deverium, has secured a €2 million European grant and is preparing to launch with a European neobank.
Maslauskaitė draws parallels to the payments industry, where the EU's PSD2 regulation forced banks to open account data in 2018, creating the open banking sector overnight. She sees a similar dynamic for identity: "Same as Spotify did for music, connecting labels with artists, incentivizing them." AlongID aims to aggregate local identity providers into a single core infrastructure, much like Stripe did for payments. The model targets cost savings for banks and fintechs that currently pay per transaction for repeated know-your-customer (KYC) checks.
Implementation challenges remain. In April 2026, the European Commission expressed doubts that all member states would launch on time, and none had been certified to the new specifications early in the year. Domestic apps like Poland's mObywatel, which reached 12 million users by mid-2026, work only within their home country, highlighting the need for cross-border interoperability. Maslauskaitė emphasizes that an ecosystem is critical: "No one is talking about the need for the ecosystem. What the ecosystem does is bring all of the parties together."
Lithuania has emerged as a fintech hub, with Invest Lithuania counting about 248 fintech firms and ranking the country first in the EU by fintech licenses issued. The Bank of Lithuania's supportive regulatory environment attracted companies like Revolut, which secured a specialized bank license in Vilnius in 2018. This ecosystem has produced unicorns Vinted and Nord Security, and now supports identity startups like AlongID.
Maslauskaitė rejects concerns about surveillance, stating that credentials remain "on the device" and "hashed." She positions identity infrastructure as essential for the AI era, where verifying the authenticity of agents and transactions becomes critical. "With AI, currently you can fake everything," she said. "So then there is the point of trust."
For investors, the regulatory deadline creates a clear catalyst. Banks and regulated firms must accept the digital wallet by late 2027, driving demand for verification solutions. The market opportunity extends beyond big corporations to smaller accounting firms and businesses that lack identity expertise. As Maslauskaitė notes, regulation is often written for large companies, but the demand for affordable, scalable identity solutions is broad.
This article is for informational purposes only and does not constitute financial advice.
