The best identification processes for companies in 2025 – status and outlook

Customers increasingly need to identify themselves digitally—whether for logging into various portals, using services, making payments, opening accounts and securities deposits, or signing documents digitally. For businesses, it is crucial to integrate appropriate and secure identification procedures. Depending on the use case, customer identity verification must be as secure as necessary while remaining as convenient as possible.

What methods exist for digital identity verification? How do identification procedures differ, and what must businesses consider—especially in light of new challenges such as deepfakes and the EUDI Wallet?

Here is the most important information!

What is Identity Verification?

Identity verification ensures that a person is truly who they claim to be. Typically, a physical identification document (such as an ID card, passport, residence permit, or similar) is checked for authenticity, and the photo on the document is compared with the actual person. This verification can take place physically on-site or via online channels. Additionally, some modern online identification procedures no longer require physical ID documents, relying instead on verified digital data.

Why do businesses verify identity?

Some businesses are required by regulatory guidelines to verify their customers’ identities. Others choose to do so based on the demands of their business models. Moreover, an increasing number of contracts are being legally concluded online—ensuring the identity of the signer is essential for legally binding digital signatures.

Regulatory requirements are clearly defined, for example, by Germany’s Federal Financial Supervisory Authority (BaFin) or the Federal Network Agency (BNetzA). Businesses that must comply with these regulations are well aware of them. Unregulated businesses, on the other hand, decide on their own whether to establish identity verification procedures. Possible reasons for doing so include fraud prevention in orders and payments, protecting personal data when accessing service portals, or verifying identity and driver’s licenses, for example, in car-sharing services.

Identification vs. Authentication – What’s the Difference?

The term “identification” is commonly understood as “proving one’s identity.” This means that a person verifies their identity, for instance, by presenting an official identification document. Identification primarily refers to proving one’s identity for the first time—such as during an initial visit, first contact, opening an account, or registering for a service portal.

“Authentication,” on the other hand, is more familiar as “logging in.” It refers to confirming access rights based on already verified identity data. The goal here is to allow a customer to return after the initial identification, such as logging into online banking or a service portal. Each time, it must be ensured that the person logging in is the same person who was initially identified—without requiring them to prove their identity again.

Everyone is talking about ID Wallets—Why are they considered the future?

Identifying yourself once and then logging in repeatedly—this seems like a simple and obvious solution for every service portal or bank account. However, the more accounts and portals customers use, the more cumbersome the process becomes: repeatedly proving identity, dealing with different login mechanisms, forgotten passwords, locked accounts, customer service calls, re-identification, or even receiving new PIN letters. This is inconvenient for customers and costly for businesses.

ID wallets provide a solution: users store their identity documents in their ID wallet once and can then use this data anywhere—simply granting permission to share their identity details based on the specific use case. With an ID wallet, the user experience feels more like “logging in” rather than “identifying”—making the process much faster and more convenient. For businesses, ID wallets significantly lower entry barriers for new customers. This is similar to online payments: you can enter your credit card details every time, or you can store them with a payment provider and authorize all future payments through that service. Everyone knows that this is both far more convenient and much safer than sharing credit card details with each individual provider.

However, users must first verify their identity online when setting up an ID wallet, meaning they still need to go through an identification process. Just as you must register your credit card with an online payment provider or mobile payment service at the start, the same applies to ID wallets. Therefore, it is crucial to understand the available online identity verification methods. Additionally, widespread adoption of ID wallets will take time. As a result, many businesses still use direct “one-time identification” or “silo identification” methods—just as many businesses still allow direct credit card payments. In these cases, customers must continue to enter all their details manually each time.

How can identity be verified online?

Online identity verification presents the challenge that customers are not physically present to show their identification documents. This means that verifying document authenticity and matching the document photo with the person cannot be conducted in person by trained staff.

For this reason, numerous identity verification procedures enable remote, online verification. These methods offer significantly greater flexibility, allowing customers to complete the necessary identification process in a way that best fits their circumstances—rather than requiring them to appear in person. This often results in a highly positive customer experience. High customer satisfaction and low dropout rates are key goals in this process.

Why should you offer multiple digital identity verification methods?

Different customers have different life situations, needs, and expectations. A single method will not meet all their requirements. Some procedures are very easy for certain customer groups to use, while others may reach a broader audience but provide only a “lowest common denominator” experience. Offering a variety of options ensures the best possible experience for all customer segments. Three key factors determine the optimal mix of identification methods:

1. Fewer Dropouts
   Customers may abandon the identity verification process—either before starting or during the procedure. The reasons vary and depend on the method used, as outlined in the overview below. If customers have a choice, they can select the method that best suits their current circumstances.

2. Higher Conversion Rates
   Once customers choose a verification method, it should be as quick and easy as possible for them to complete. The focus here is on interaction and user guidance rather than the number of screens or the actual processing time. Dropouts due to technical issues, usability challenges, or long response times must be minimized. If a customer decides to switch to another method, the transition should be seamless.

3. Lower Costs
   The transaction costs of individual identification methods are usually negligible compared to the value of acquiring a new customer. If a customer abandons the onboarding process due to identity verification requirements, this significantly impacts overall customer acquisition costs. Since identity verification methods vary widely in cost, offering a well-balanced mix is essential to attracting a broad customer base.

Can the performance of identification methods be easily compared?

Unfortunately, no. Each method must be evaluated within the specific context of its intended use case. Here are three simple examples:

• A customer has spent a lot of time completing their online tax return. Will they abandon the process just because an identification step is required, and instead submit their tax return through another channel?
• A customer wants to pay via direct debit, enters their bank details, and the provider requires identity verification to prevent fraud. Will they prefer to verify their identity using their online banking access or their ID card?
• A customer is interested in an innovative car subscription service. They configure a vehicle and a subscription, and the final step is signing digitally. The customer abandons the process at the very start of the identification step—was the identification method the reason?

What different identification methods exist?

For each use case, different combinations of identification methods are possible. A key selection criterion is whether the identity verification is legally required (e.g., in banking, telecommunications, gambling, sports betting, public administration, or for digital signatures) or whether it is based on a company’s own, non-regulated requirements (e.g., onboarding for a service portal, fraud prevention, payment validation, access verification, driver’s license verification, etc.). Additionally, there are clear regulations on which methods are suitable for confirming identity for digital signatures.

In essence, there are six standard identification methods, each with variations and adaptations based on specific use case requirements—and future adjustments will likely emerge.

1. Identification using an online ID card (eID-Ident)

With the online ID method, customers can use their German ID card via a suitable app and the NFC interface of their smartphone, entering their ID PIN.

• What does the customer need? A German ID card, a smartphone with an app for reading the ID (e.g., Verimi app), and their eID PIN.
• User experience: The user downloads an app (e.g., Verimi), opens it, and selects the identification function. They then hold their ID card against the NFC antenna of their smartphone twice, entering their PIN in between.
• What is it suitable for? The online ID method is suitable for all use cases, both regulated and non-regulated. It can also be used to initiate a qualified electronic signature (QES).
• Costs: The online ID method has relatively low transaction costs.
• Key considerations: This method is best suited for “experts” familiar with the eID function. As of 2024, surveys show that only 22% of Germans have used the eID function—but those who do generally prefer it. However, the method faces challenges in achieving widespread adoption, as customers need an app, must locate the NFC antenna on their phone, hold their ID card correctly twice, and remember their PIN. Furthermore, it is limited to German ID cards.

2. Identification using Online Banking Access (Bank-Ident)

With Bank-Ident, customers use their personal online banking login to verify their identity. The bank’s already-verified identity data is used, but transaction history is not involved.

• What does the customer need? An online banking account—whether via smartphone or web. No physical ID is required!
• User experience: The user selects their bank interactively within the process, logs into online banking, and confirms the identification. Done.
• What is it suitable for? Bank-Ident is highly flexible and can be used for many applications. It can confirm access to a bank account (e.g., fraud prevention in online payments), verify identity data (e.g., portal access), trigger a qualified electronic signature (QES), or even be used in regulated processes such as anti-money laundering (AML) compliant onboarding.
• Costs: Basic Bank-Ident is a very cost-effective method, as it leverages already-digitized data. However, costs increase when additional modules are required (e.g., QES initiation, AML compliance).
• Key considerations: A major advantage of Bank-Ident is that customers do not need their physical ID—it is fully digital, making it easy to use from anywhere at any time. Bank-Ident is particularly convenient for customers who already use online banking and are comfortable using it for identification. However, not all Germans use online banking, and depending on the use case, the bank account may need to be within the SEPA zone or Germany.

3. Identifying via a video call (Video-Ident)

With Video-Ident, the customer has a video call with a trained agent.

What does the customer need?
The customer needs their ID document and suitable hardware to conduct a video call (e.g., camera, microphone, sufficient bandwidth), a mobile phone to receive an SMS, and a quiet environment. Depending on regulatory requirements, they may need to be alone in a room.

What is the user experience like?
The customer confirms that their hardware is suitable for the video call, waits for the call agent, and then completes the video call. At the end, they usually enter an SMS-TAN for confirmation. In many cases, the provider also requires the download of an extra identity verification app to ensure video quality and access to hardware components (camera, lighting, microphone).

What is it suitable for?
Basically, it can be used for many applications, including digital signatures and compliance with anti-money laundering regulations. However, it is a very time-consuming, expensive, and error-prone process, which should only be used selectively as a “fallback” solution.

What are the costs?
Video-Ident is a very costly procedure. A video agent is tied up for several minutes per identification, their availability must be ensured, and they usually require extensive training. Additionally, high security standards are imposed on the trustworthiness of agents and their workplaces, which explains the high costs.

What can be said about this method?
Video-Ident has many challenges, such as limited service hours from morning to evening, long waiting times before the call agent picks up (especially during peak times), long conversation durations of sometimes over 10 minutes, and potentially “personal” aspects of the customer dialogue—whether due to language barriers or interpersonal factors. Additionally, there is the risk of connection dropouts or other disruptions during the video call. At the same time, the personal interaction and guided user experience make it understandable for many customer groups.

4. Identifying via ID photo and selfie (Photo-Ident)

Photo-Ident uses artificial intelligence (AI) to verify identity by analyzing photos of the ID document in combination with a selfie. Typically, instead of just still photos, short video sequences are recorded and analyzed to check factors such as authenticity and liveliness. Various security measures further strengthen the process, such as location tracking, IP address verification, and prevention of multiple uses.

What does the customer need?
The customer needs their ID document and a suitable device to take photos and a selfie (e.g., smartphone or laptop).

What is the user experience like?
The customer takes photos of the front and back of their ID document, as well as a selfie. The process may also include short voice sequences or moving images for additional verification.

What is it suitable for?
It can be used for many fast and simple applications. In principle, Photo-Ident is also suitable for digital signatures. When combined with a reference transfer (similar to Bank-Ident), it can also be used for compliance with anti-money laundering regulations.

What are the costs?
Photo-Ident is a very efficient procedure. Depending on the level of verification required, additional checks can be added, including background checks by human agents. Accordingly, costs vary.

What can be said about this method?
Photo-Ident is quick, simple, and intuitive. However, it requires a physical ID document and some handling effort to take the necessary images, which can be challenging in certain situations. Nevertheless, it is accessible to a wide range of customers.

5. Identifying directly at the point of sale (Local-Ident)

Traditionally, identity verification takes place in person. To use the verified identity digitally afterward, trained agents on-site confirm the data in electronic systems. Many companies conduct this process for their own purposes in their branches. As a service, Germany offers the Post-Ident procedure, where a customer’s identity is verified on behalf of another company. The following description focuses on identity verification in a company’s own branches.

What does the customer need?
The customer needs their ID document and must be physically present at the branch.

What is the user experience like?
The customer shows their ID document to a trained agent. The actual identification process is handled by the agent.

What is it suitable for?
It can be used for a wide range of applications, including digital signatures and compliance with anti-money laundering regulations. A key advantage is that once the identity is digitally captured, subsequent signatures (e.g., for purchase agreements, leasing contracts, terms and conditions, consents, etc.) can be efficiently completed digitally using a QES batch signature.

What are the costs?
Local-Ident is efficiently supported by software. Hardware requirements must be met, but the main cost driver is the use of trained agents.

What can be said about this method?
Local-Ident is a traditional in-person method that works well when the customer is already at a branch and needs to be identified in a legally compliant manner. Additional processes can then be handled digitally, especially signatures, which makes follow-up processes significantly more efficient. Local-Ident also eliminates the need for traditional ID photocopies, helping branch operations overcome handling and compliance challenges.

6. Identifying with an ID wallet (Wallet-Ident)

With a personal ID wallet, the customer stores their verified ID data once—so they can easily reuse it for different applications later. The verified data is initially stored using one of the identity verification methods listed above. From then on, identification via an ID wallet feels more like “authentication” (logging in) rather than “identification” (proving one’s identity), making it comparable to Bank-Ident.

What does the customer need?
The customer needs an online access point, either via smartphone or web. They do not need a physical ID document!

What is the user experience like?
The customer logs into their ID wallet and confirms that their verified identity data can be transmitted to the partner.

What is it suitable for?
In principle, Wallet-Ident is suitable for all applications that are supported by the identity verification method used to store the data in the wallet.

What are the costs?
Wallet-Ident is highly efficient since already verified digital data is simply retrieved. In addition to the cost of the procedure, the high conversion rate is particularly relevant, as there are no dropout risks related to handling physical ID documents.

What can be said about this method?
Wallet-Ident is an innovative method that represents the future. Customers do not want to repeatedly present their ID; instead, they prefer to verify their identity directly online or via smartphone—just as mobile payment eliminates the need to carry a physical credit card.
By the way: Every identity verification method from Verimi automatically includes Wallet-Ident—once a customer has identified themselves with Verimi, they can seamlessly use Wallet-Ident for any partner.

Graphic with comparison to the Ident procedures

Which is the best identification method?

Wallet-Ident is fundamentally superior to all one-time identification methods, especially in terms of customer experience, conversion, and cost. However, the challenge is that ID wallets still have low practical adoption in Germany.

For one-time identification methods, it is crucial to consider the specific use case and define the right mix. This requires analyzing the individual case with experts before deciding on the actual mix of identification methods.

Verimi uniquely combines Wallet-Ident and one-time identification: With a one-time identification at partner companies, customers automatically create their personal ID wallet at Verimi. For any subsequent identification, Verimi automatically checks whether the user can use their Wallet-Ident. This ensures that Verimi partners always offer their customers the best possible experience.

The future of digital identification methods

The ID of the future is the smartphone—just as the smartphone has already become the music player, camera, calendar, messenger, newspaper, flight ticket, entry pass, credit card, and so much more. There is no doubt about that. The ID of the future will be accessible via an ID wallet on the smartphone. This ID wallet is a secure environment, not to be compared with today’s iOS/Android wallets, which store tickets, flight passes, membership cards, etc. Instead, it is more comparable to the mobile payment infrastructure, where the connection to the credit card account is secured at a high level.

Beyond the ID itself, the ID wallet will also include other official attributes in the future—at a minimum, the driver’s license, as well as official educational and qualification certificates. This enables further end-to-end digitalization of business transactions connected to ID wallets. One of the key drivers of this development is the EU’s mandatory introduction of EUDI wallets. As ID wallets become more widespread, the significance of “one-time identification methods” and “siloed identification methods” will change—this transformation will take time, but regulated businesses must prepare for it in the short term, as they will be required to accept EUDI wallets, regardless of their practical adoption.

In addition to the technical implementation, data sources and data recipients must adapt to the new possibilities, new standards, and new processes.

Furthermore, it will take time for customers and users to integrate the new ID wallet functionalities into their daily habits. One thing is certain: “Convenience wins!”—and mobile payment has shown how quickly a convenient method can take over customers’ everyday lives. A scenario where customers must repeatedly transfer their physical ID into the digital world will not be sustainable in the long run. The development of mobile payment serves as a clear blueprint and demonstrates that companies must prepare for new solutions early.

For companies, this means that ID wallets will become an increasingly relevant complement to identification methods in the coming years—offering customers an additional, and perhaps even the leading, option. For businesses, this also presents an opportunity to improve the cost and conversion rates of identification procedures. The inefficiency of “one-time identification methods” is obvious, as each company must independently bear the cost of creating a digital identity. Many companies face the same challenge, and a network that enables access to existing digital identity data makes economic sense. Therefore, offering a mix of identification methods that includes ID wallets is crucial for the future. The payment market has already shown that while mobile payments quickly gained significant market share, debit and credit cards, as well as cash, remain popular in practice. As a result, businesses must continue to support multiple identification methods.

With ongoing digitalization, it will become increasingly important to integrate identification and verification processes into digital customer interactions. Additionally, businesses are transitioning to fully digital transactions, which require legally binding agreements through digital signatures—these, in turn, rely on digital identities. Existing and new use cases will increasingly incorporate identification methods to mitigate fraud risks in cyberspace. This applies to all areas: payment transactions, e-commerce, personal data, mobility, and more. Fast, seamless, and flexible solutions are crucial to maintaining high conversion rates and customer satisfaction. High security and reliability of services will become an increasingly important success factor in the digital world.

 

EUDI wallets: Supplement, but not a replacement for established identification methods

With the introduction of EUDI wallets, the range of identification options in practice will expand but not fundamentally change overnight. EUDI wallets in Germany will be based on the eID function of the national ID card, meaning they must be initialized with an eID identification. Without this initialization, they cannot be used. However, as of 2024, the adoption rate of the eID function is still low at 22%. Even with high growth rates, widespread adoption among the population will be difficult to achieve.

Thus, established methods such as Photo-Ident, Bank-Ident, or Local-Ident will remain essential for broad customer onboarding coverage. Many of the use cases currently being discussed are already covered by existing solutions—the challenge is less about technology and more about creating incentives for businesses and users to adopt the new EUDI wallet in practice. A functioning ecosystem will be crucial to achieving widespread acceptance of the EUDI wallet.

EUDI wallets will be available in a certified form, and thus relevant to the market, at the earliest by the end of 2026. However, it is not unlikely that the timeline for their rollout will be further delayed. While the practical relevance of EUDI wallets among citizens will develop over time, regulated and large companies are particularly obligated to accept them from the outset for customer identification (onboarding) and as an authentication channel (2FA). Accordingly, these companies should prepare for the introduction of EUDI wallets early on.

The most important key questions and practical recommendations regarding the implications of EUDI wallets are summarized in our detailed blog post: EUDI Wallet Explained Simply.

Deepfakes: A challenge for identification methods and secure alternatives

Deepfakes pose an increasing threat to the security of digital identity verification methods. These highly realistic, AI-generated manipulations of images, videos, and voices make it harder to distinguish between real and fake identities. Traditional visual-based methods like Photo-Ident and Video-Ident are vulnerable to deepfake attacks.

For security reasons, methods such as eID-Ident and Bank-Ident are gaining importance. Both approaches are resistant to deepfake attacks and provide businesses with a reliable way to securely verify their customers’ identities.

Learn more about the growing threat of deepfakes and their impact on digital identity verification in our in-depth blog post: Deepfakes as a Catalyst for Digital Identity.