The Dutch Authority for the Financial Markets has published an exploratory assessment of how the European Digital Identity (EDI) wallet could affect the financial sector, flagging both efficiency and innovation opportunities and risks of consumer harm and exclusion. The AFM links the expected changes in how financial services and products are taken out to potential implications for its supervisory approach. The EDI wallet is described as a mobile app for storing digital personal data and other digital proofs, and EU Member States must offer an EDI wallet to citizens and residents from the end of 2026. The AFM expects faster, simpler and more secure customer processes, potentially making services more inclusive and cheaper by reducing friction in digital onboarding and making cross-border services easier to access. At the same time, lower frictions could mean consumers enter into financial agreements without fully understanding long-term consequences, including taking foreign financial products for which supervision from the Netherlands may be less effective; risks also include identity fraud and consumers being nudged to share more data than necessary despite higher reliability and privacy features. The AFM also highlights that consumers with limited digital skills or without access to a suitable mobile phone may be excluded from certain services. For supervision, the AFM anticipates growth in fully digital firms within its perimeter, further digitisation of oversight of institutions’ gatekeeper role, and potentially easier compliance with Wwft requirements for financial service providers.

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