Banks already hold the key ingredients that define a digital wallet: trust, secure identity verification, strict regulatory compliance, and direct management of financial transactions. This foundation gives large banks with large customer base an inherent advantage in integrating identity and payments into one trusted environment, positioning them perfectly to lead in the new era of digital wallets.
As Europe moves decisively toward a unified digital identity and payment landscape, a new paradigm is emerging, one in which banks can reclaim their central role as trusted intermediaries between citizens, businesses, and the digital economy. The recent initiative by the Sparkassen Financial Group to integrate the European Digital Identity Wallet (EUDI Wallet) into its Sparkasse app offers a blueprint for what the future of banking could look like. It demonstrates not only technological innovation but also a strategic repositioning of financial institutions as digital trust anchors in an increasingly platform-driven world.
As a background information, the Sparkassen-Finanzgruppe (Sparkassen Finance Group) is the largest financial group in Europe and the market leader in Germany. In addition to the Sparkassen, it comprises regional banks (Landesbanken), regional building societies, insurance companies, and numerous other financial service providers. They participated in Large Scale Pilots and recently announced “plans to integrate the EUDI Wallet into the Sparkasse app and have it certified according to the upcoming requirements of the Federal Office for Information Security (BSI)”
The EUDI Wallet: A Cornerstone of Europe’s Digital Future
The EUDI Wallet, part of the European Commission’s eIDAS 2.0 regulation, represents a fundamental building block of Europe’s digital infrastructure. It aims to provide every EU citizen with a secure, interoperable, and user-controlled digital identity that can be used across borders, for both identification and transactions.
Unlike fragmented identity and payment systems of the past, the EUDI Wallet will integrate identity verification, attributes and payment functionalities within a single, trusted application. Citizens will be able to prove who they are, sign documents, and make payments seamlessly and securely, using the same wallet, compliant with European standards for security and privacy.
This convergence of identity and finance presents an unprecedented opportunity for banks.
At Namirial, we are fully convinced of the transformative potential of the digital wallet. We are investing heavily in this space and have recently launched our Namirial Wallet Platform, designed to support the secure integration of identity, attributes, and SCA capabilities for institutions aiming to take a leading role in this evolving ecosystem.
Why Banks Are Natural Wallet Providers
Banks have long been the custodians of trust, managing not only customers’ money but also their most sensitive data. In a digital ecosystem where identity is as valuable as currency, this trust capital is a critical advantage. By evolving into wallet providers, banks can extend their traditional role into the digital realm, offering customers a secure, regulated, and privacy-preserving alternative to the data-driven models of Big Tech.
The integration of the EUDI Wallet into the Sparkasse app is a concrete example of this strategy. Once certified by Germany’s Federal Office for Information Security (BSI), the app will effectively become an EUDI Wallet, enabling users to manage both identity and financial transactions from a single interface. This approach transforms the app into a secure digital hub, a powerful tool for life in a connected Europe.
The Central Role of Payments
Among all wallet functionalities, payments remain the beating heart of user engagement. Whether through contactless transactions, peer-to-peer transfers, or online checkouts, payment services are what bring users back to their wallets daily. This frequency of use is what has made wallets from Big Tech companies like Apple, Google, and PayPal household staples. Their ability to seamlessly blend convenience, ubiquity, and user experience has allowed them to dominate the digital payment space, often at the expense of traditional banks.
For European banks, this is both a challenge and an opportunity. The challenge lies in regaining the customer interface that Big Tech has captured through superior user experience and integration across devices. But the opportunity is even greater: by coupling payments with verified digital identities under the EUDI framework, banks can create a new generation of trusted, secure, and sovereign wallets that redefine how Europeans interact with the digital economy.
Today, the payment landscape remains largely dominated by credit card networks, but a significant evolution is underway. Account-to-account (A2A) payments, enabled by SEPA Instant Credit Transfer, are paving the way for real-time, low-cost transactions across Europe. Meanwhile, proprietary schemes such as Bizum, Bancomat Pay, and similar domestic networks demonstrate how local ecosystems can foster innovation and consumer adoption. On a broader scale, the European Payments Initiative (EPI), supported by 16 leading European banks and financial institutions, aims to launch Wero, a unified European payment solution that will further strengthen the continent’s financial sovereignty and interoperability.
In essence, whoever controls payments controls the frequency of user engagement. And whoever combines payments with identity will control the digital trust relationship itself. Banks are uniquely positioned to take this step, but they must act decisively.
Managing financial transactions can be a highly profitable business, but it also comes with significant risks and responsibilities that must be carefully regulated. For this reason, one of the European Commission’s working groups is currently focused on aligning the EUDI Wallet with payment regulations, particularly the Payment Services Regulation (PSR) and Payment Services Directive (PSD). This is currently one of the open discussions within the Architecture and Reference Framework (ARF) concerning the Support of Electronic Payments and Strong Customer Authentication (SCA) with the Wallet, given that under PSD2, users will need to perform certain actions through ASPSPs or PISPs (see discussion).
Note that, so far, neither DG FISMA nor the European Banking Authority (EBA) has issued any formal statement on this matter, even though the proposed solutions for EUDI Wallet payments appear to be both legally and operationally sound.
Strategic Advantages for Banks
Becoming a wallet provider grants banks multiple strategic advantages:
- First-Mover Positioning: banks that integrate EUDI Wallets early will occupy the customer interface at the point of identity and payment, preventing disintermediation by other players. The Sparkassen Financial Group, as one of the first institutions in Europe to adopt this model, exemplifies the power of early adoption. Other banks and neobanks will likely follow soon, recognizing the strategic opportunity to retain and expand their role in digital payments and identity management.
- Customer base retention and distribution: banks have a decisive advantage due to their existing relationships with millions of customers who already perceive them as trusted and secure financial counterparts. Their capillarity, established customer service networks, and physical and digital distribution channels enable them to reach end users efficiently, something that state-managed or purely technological wallet providers are unlikely to achieve. This strong user perception, combined with operational capacity and regulatory experience, makes banks uniquely suited to offer digital wallets at scale.
- Synergy with European Payment Systems: combined with initiatives like SEPA Instant Credit Transfer or European Payments Initiative, the EUDI Wallet can enable frictionless, identity-backed payments. This strengthens Europe’s autonomy in digital finance and supports a sovereign, interoperable infrastructure that reduces dependency on non-European providers. PSD and PSR will hopefully clarify the liabilities schema for SCA. Digital Euro will arrive in the future, but still in the very early phase of architecture/incentives definition.
- Compliance and Future-Proofing KYC: by aligning with eIDAS 2.0 and adhering to the highest cybersecurity standards, banks ensure their systems remain compliant with forthcoming regulations, including those related to KYC and AML. Beyond compliance, this proactive alignment also allows banks to innovate safely, launching new products and services such as instant credit offerings, embedded finance, and identity-based access to digital ecosystems. Their compliance culture becomes a competitive advantage, reinforcing their role as trusted financial anchors capable of delivering both innovation and security.
- Defensive approach: in several countries, non-bank wallet providers have already integrated proprietary payment schemes. This trend means banks risk losing both the frequency of use and governance over payment transactions if they fail to act quickly and assert their position as the primary wallet provider.
From Banking App to Wallet Ecosystem
The evolution from a simple banking app to a comprehensive wallet ecosystem opens up an entirely new landscape of financial services. Beyond payments and identity, banks will be able to integrate new layers of value-added services —all accessible from one secure and verified environment. This diversification not only increases frequency of use but also strengthens customer loyalty through seamless experiences and personalized financial interactions.
Healthy competition among financial players will probably emerge, where banks, fintechs, and wallet providers collaborate and innovate to deliver better, more inclusive digital services.
At Namirial, we are firmly convinced of the transformative potential of the digital wallet and of the central role banks can play in this evolution. That’s why we are investing heavily to empower financial institutions that aim to become trusted wallet providers. Our recently launched Namirial Wallet Platform is designed specifically for them, enabling the secure integration of digital identity, verified attributes, and strong customer authentication (SCA) in line with eIDAS 2.0 requirements. Through this platform, we help banks accelerate their transition into the digital wallet era while preserving their role as the most trusted gateway between people and the digital economy.