Could A Digital Identity Monopoly Be Forming in the UK?

April 2025

Fintech & Payments

Thomas Wilson

Research Analyst

In January 2025, the UK government set out its vision for digital identity: a digital wallet that would put key documents like driving licences, veteran cards, and Disclosure and Barring Service (DBS) checks directly onto citizens’ smartphones. By the end of 2027, government services will need to offer a digital alternative to paper documents under the Blueprint for Digital Government. However, using these digital versions will remain optional for the public.

Source: GOV.UK

To support this move, the government introduced the Digital Identity and Attributes Trust Framework (DIATF) in 2021. It was designed to ensure that digital identity solutions are secure, trusted, and aligned with international standards. Since then, the framework has been steadily refined and is already playing a key role in areas like right to work, right to rent, and criminal record checks.

Providers can choose to become accredited under the framework, making it easier for citizens to identify trusted services. Although accreditation isn’t compulsory, it acts as a valuable mark of quality. Many providers are also securing extra certifications for areas like DBS checks to strengthen their offer.

Tension Between the Public and Private Sectors

Not everyone is convinced by how these plans are shaping up. In a joint letter to the Secretary of State for Science, Innovation and Technology, three major associations – the Age Verification Providers Association, the Association of Digital Verification Professionals, and the Online Safety Tech Industry Association – raised serious concerns.

Their warning was clear: the GOV.UK Wallet and One Login systems should only be used for public sector authentication. Expanding them into private sector areas, such as age verification for commercial transactions, would put more than 50 certified private providers at risk. The letter described “shock waves” running through the sector, with rising uncertainty among suppliers and investors.

The associations cautioned that the government could inadvertently create a monopoly in digital identity services. This would risk stifling innovation, reducing consumer choice, and driving up taxpayer costs by duplicating services that the private sector already delivers efficiently.

To avoid this, they called for three key actions:

• Legally limit the GOV.UK Wallet and One Login to accessing public services only.
• Ensure that digital IDs from private providers, if compliant with the DIATF, are accepted for government authentication.
• Allow government-issued credentials, like digital driving licences, to work with any certified identity wallet; not just the GOV.UK Wallet.

They also proposed a joint technical working group to improve collaboration between government and industry. Their message was clear: protecting competition now is critical to the future health of the UK's digital identity market.

What We Found

Our latest report on the UK's digital identity and verification market highlights just how quickly the landscape is shifting. We expect 25.5 million UK citizens to have a digital identity app on their smartphones by 2029, with around 45% of adults using a civic identity app.

However, the rise of the GOV.UK app could create challenges for private sector providers. Our research shows that third-party digital ID apps will grow by just 9% between 2025 and 2029. Based on these insights, we believe the concerns raised by industry associations are well founded. Without a clear commitment from the government to support a competitive environment, there is a real risk that innovation could be squeezed out.

Installed Third-party and Civic Digital Identity Apps in the UK, 2025 vs. 2029

Source: Juniper Research

Why Collaboration Matters

The rollout of the GOV.UK Wallet, digital driving licences, and a unified app marks a major step towards a digital-first approach to government services. It offers clear benefits in terms of convenience and security, and the DIATF provides a strong foundation for quality and trust.

However, the long-term success of the UK’s digital identity strategy will depend on maintaining a fair, competitive market. Working closely with the private sector and giving citizens the choice to use private sector IDs will be essential to sustain investment, consumer trust, and innovation.

The UK is now at a pivotal point. By committing to open collaboration and keeping competition alive, the government can build a digital identity ecosystem that is secure, inclusive, and future-ready — one that works for everyone.

As a Research Analyst at Juniper Research, Thomas provides up-to-date trends analysis, competitive landscape appraisal, and market sizing for industries such as Digital ID & Verification & Merchant Fraud Prevention.