Exploring Approaches to Digital Wallets

Interviews Summary Report — An Independent Study of the Digital Wallet Market

Having dealt with their own clients’ confusion about how to approach digital wallets (for individuals/persons), MATTR is sponsoring Identity Woman in Business to conduct an independent study to understand the digital wallet landscape and offer insights and clarity to those looking to formulate their digital wallet strategy and plan.

A digital wallet is increasingly becoming a key piece of the puzzle when it comes to unlocking solutions for digital trust. While needs are diverse, we’ve seen from our customers and in talks with others in the community that wallets working together will be crucial for adoption. We’re excited to help shed some light on current thinking on digital wallets and we look forward to helping our customers navigate the considerations for implementation of digital wallets.

Luke McIntyre, Chief Product Officer at MATTR

The project involved reviewing existing market information and analysis, interviews with key players and industry experts and finally sharing our own insights and recommendations. Two project deliverables will be publicly available:

• An Interviews Summary Report that aggregates the input from the key players and industry experts interviewed by us.
• An article/report that will share our take on the current digital wallet market and insights and recommendations for any existing and potential new players.

Today, we are releasing the Interviews Summary Report, which is an aggregation of key points from the six interviews we conducted respectively with:

• David Birch, Internationally Known Digital Money and Identity Expert
• Daniel Goldscheider, Founder and Executive Director of OpenWallet Foundation
• Luke Mclntyre, Chief Product Officer at MATTR
• The Bhutan National Digital Identity Project Team
• Jo Spencer & John Phillips, Co-Founders of Sezoo
• Karan Puri, Associate Vice President at TD Bank

We spoke with them each for an hour and started with the same question of “How do you define digital wallets?”. The summary report is an aggregation of key points from them without blending in our own point of view or insights drawn from the interviews and the relevant material we reviewed. We have preserved the interviewees’ own words and expressions as much as we could so you can develop your own interpretations. Below are the four themes we covered and selected highlights from each of them.

Theme 1: Definition of Digital Wallet

• Layering of Digital Wallets: Digital wallets don’t have a definition that everyone agrees on or uses because there are different technical and presentation layers of digital wallets, leading to the use of the term in different contexts with different meanings.
• Digital vs. Physical Wallets: Physical wallets were commonly used as a reference by interviewees when they defined digital wallets.
• Key principle(s): User control is a key principle that was commonly mentioned when defining digital wallets.
• Digital Wallet and Ecosystem: A digital wallet is not a singular thing or app. Digital wallet is going to be contextually defined for end users and ecosystems as opposed to tightly defined as a particular component that is useful for X, Y, Z things. Users don’t necessarily understand a digital wallet to be a distinct component.

Theme 2: Wallet in the Ideal World

• Building Digital Wallet as an Infrastructure: There is an end-to-end infrastructure built through public-private partnerships that fully integrates all key stakeholders in an ecosystem. As a result, key stakeholders can easily participate in an ecosystem and users can consume services in their preferred channel(s) end to end.
• Single Wallet: Even though interviewees recognized that it was unlikely that we were going to have only one wallet, whether it was one application or a background component, many of them described a single-wallet state as an ideal scenario that could be used as a straw man.
• Government Roles: Whether governments define and provide wallet infrastructure, they are recognized as the key party that needs to 1) provide the right regulatory and policy framework, 2) provide root/foundation identities, 3) facilitate the establishment of meta network of different wallet ecosystems to create the right market conditions for digital wallets; 4) enable consumers to make informed decisions.
• Standardized Core: The actual core wallet technology needs to be effectively standardized just as Bluetooth is standardized for short-range wireless data exchanges — devices that speak Bluetooth “just work” and connect to each other easily. Let the layer above the wallet (e.g. user experience of the apps) be where competition thrives. We need to avoid extending the stack of a wallet up into the area where we get entangled with all sorts of stuff and keep the standardization of the wallet at a very utilitarian level.

Theme 3: Current Market Activities and Potential Evolution

• Diversity of Needs: It’s very rare that one model is ideal for every person everywhere on earth in every situation. We’re much more likely to be in a situation where different people in different use cases and different parts of the world will have different preferences on how they want to be able to access credentials and tokens and where those credentials should be.
• Multiple Wallets: Because of the diverse needs, we’re not going to end up in the near future with a unified wallet architecture. Much more likely we’re going to live in a world that is messy and complex, neither black nor white but gray, and have different shades of gray in different parts of the world.
• First Party vs. Third Party Wallet: A first party wallet is a wallet that is native to the ecosystem, and potentially built first-party by a network or ecosystem operator. Third party wallets are those not native to an ecosystem or built by the ecosystem operator, including wallets native to other ecosystems, platform wallets and other generic non-platform wallets.
• Evolving Standards and Technology: We can make very good use of what is available now. However, there are two diverging extremes, wallets embedded in siloed consumer apps and platform wallets “monopoly”. Only when we have a common core standard, can the two extremes become more aligned. The longer it takes us to get there, the more those two diversion paths become the preeminent.
• Credentials vs Wallets: Does the travel industry necessarily need a wallet themselves or do they just need to work out shared travel credentials? Would we actually care which wallet the travel credentials are in? (Probably not).
• Open Source Wallet Engine: We now have a lot of technologies, standards, architectural models, requirements and countries — open source can benefit everyone, including for-profit companies, both very large and very small, as well as nonprofits and governments.

Theme 4: Recommendations for Organizations Forming Digital Wallet Strategies

• Focus on Your Own Goals: You need to understand exactly what your own goals are and what you want to do in the wallet space.
• Commercialization and Use Cases: The technology and standards have decent maturity. It is time that everybody in the whole ecosystem thinks about the commercialization and use cases, and then tries to solve the technology part of it.
• Technology is NOT Hard: What is really difficult is the collaboration needed for interoperability where people building technology are working together to get the technology to work. It is essential to put the work into getting communication and education right so that nobody is left behind and ensuring that we don’t harm people.
• Principles First and Technology Next: It’s important to get the principles right before we look at technical solutions because technical is just a means to an end. We need to define what ends we’re trying to achieve and recognize that we’re always facing trade-offs. Technology will always evolve, so there will be different solutions.

To read the full summary of insightful perspectives, you can download the report here. We will publish another report/article sharing our own insights and recommendations in a few weeks.

Stay tuned!

About the Author — Identity Woman in Business

Identity Woman in Business is a boutique consulting firm with a global reach. We specialize in the business strategy, standards development, and technical implementation of Decentralized Identity as well as facilitating industry-wide collaborations in the space. We are committed to helping governments, industry organizations and companies of all sizes succeed in developing and investing in the new generation of identity infrastructure.

About the Sponsor — MATTR

MATTR is a global digital trust specialist, providing solutions that enhance information assurance and data privacy while increasing trust and confidence in digital interactions around the world. Its verifiable data platforms, MATTR VII and MATTR Pi, provide general-purpose building blocks and products with pre-built extensions that enable flexible solutions to scale trust across industries.