Germany is going through a critical phase in the second half of 2026 when building digital identity infrastructures. The upcoming Digital Identity at the European level and national platform initiatives are fundamentally changing the market. Administrations must prepare acceptance interfaces, IT service providers must adapt their systems – time pressure is increasing.

eIDAS 2.0 drives market dynamics

The revised eIDAS regulation sets the legal framework for the European digital wallet (EU Digital Identity Wallet). Member states must implement large-scale pilot projects by 2027. Germany is testing several wallet solutions in parallel, coordinated by the Federal Office of Administration and BSI. Technical standards are currently being finalized in Brussels – the architectural foundation is in place, but detailed specifications for attribute exchange and revocation registers are still missing.

For public administrations, this means: specialized procedures must support wallet authentication. Governikus, a long-time provider of eID solutions in Germany, is working on SDK components for wallet integration. Bundesdruckerei is restructuring its ID management platform and preparing verifier services to enable authorities to verify digital credentials from the wallet.

National providers position themselves

Dataport AöR is developing central authentication services for northern German states that will in the future accept wallet logins alongside BundID and Elster certificates. AKDB in Bavaria is integrating eID interfaces into municipal portals – currently, the usage rate of digital ID cards in citizen services is below 5 percent, a figure that wallet introduction is intended to increase in the long term.

System integrators such as Materna and msg systems offer consulting services for wallet readiness. The focus is on interoperability between specialized procedures, citizen portals, and future wallet backends. The challenge: many legacy systems do not even support SAML-based single sign-on protocols, let alone modern attribute exchange standards.

Regulatory requirements are tightening

The updated E-Government Act and OZG 2.0 require digital credential submission for administrative services. Citizens should be able to submit qualifications, proof of residence, or income certificates directly from the wallet. This requires connection to registers – register modernization and identity management are interconnected.

In terms of data protection law, strict requirements apply: selective disclosure (transferring only required attributes) and zero-knowledge proofs are technical minimum standards. The BSI reviews wallet implementations for compliance with TR-03159, the technical guideline catalog for eID systems.

Market consolidation and partnerships

Large IT service providers are consolidating expertise. T-Systems Public is cooperating with Governikus to integrate wallet services into existing state portals. Capgemini Public Sector is working on cross-border use cases – digital credentials should be recognized across Europe, for example in business registrations or university admissions.

Smaller providers are under pressure: proprietary solutions lose relevance once the EU wallet becomes the standard. Those who do not build a bridge to the new standards risk losing market share. At the same time, niches are emerging – such as in the area of attribute brokers or consent management systems that mediate between citizens, authorities, and data sources.

Practical challenges

Technical infrastructure is only part of the equation. Training government employees, building support structures, and communicating with citizens all take time and budget. Many municipalities are waiting for the federal government and states to provide reference implementations – a risky approach since adaptation deadlines are tight.

The acceptance question remains open: will citizens use the wallet if alternatives such as paper forms or on-site service exist? Pilot projects from Scandinavia show: administrative effort decreases noticeably only after 30 percent digital adoption. Germany is well below this for most OZG services.

Outlook: 2027 as a key year

From mid-2027, experts expect the first mandatory wallet connections at federal agencies. States and municipalities will follow in stages. Those who prepare architecture, processes, and contracts now will avoid bottlenecks. The market for digital identity in Germany is estimated at several hundred million euros annually – driven by integration projects, operations, and ongoing adaptation to EU requirements.

Cooperation between the federal government, states, and IT service providers will be crucial. Without standardized interfaces and central components, fragmentation threatens – exactly what OZG 2.0 is actually supposed to prevent.