Is There a Future For Digital Croatian Wallets?

Lauren Simmonds

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croatian digital wallets

May the 29th, 2024 – Is there a flexible future for digital Croatian wallets? It all depends on convincing the government, according to one expert.

As Poslovni Dnevnik/Josipa Ban writes, at the European level, the possibilities of using digital identity are expanding, thus opening the market to companies that develop electronic identification solutions, such as digital wallets. However, in this segment, the market in Croatia is still very closed and reserved only for state-owned companies and large companies, such as banks. Is there a more flexible future for Croatian digital wallets? Perhaps.

A ray of light in the development and opening of the market has been provided by the new Regulation on electronic identification and trust services (eIDAS 2.0), which entered into force at the end of April, with which EU Member States must comply within two years.

Specifically, this means that all private service providers who already have electronic identification mechanisms for their users will have to upgrade those mechanisms so that users can log in with their ID wallets, says Robert Ilijaš, co-founder and CEO of Identyum.

Back in 2018, a company from Zagreb started developing Croatian digital wallets, i.e. a digital identity. In theory, Ilijaš explains, people with an ID wallet could easily and quickly log into the e-Citizens (e-Gradjani) system with high-security credentials using their smartphones.

“In addition, ID wallets will be able to store some other data besides a person’s identity, for example, their diploma, driver’s license… which you’ll be able to digitally “show” to a third party using only a smartphone. In addition, with the ID wallet, it will be possible to log in to Facebook, Instagram, Google, Amazon… and at the same time to the bank, your telecom etc,” explains Ilijaš.

banks and telecoms were the only privileged ones when it came to croatian digital wallets…

Although the aforementioned new regulation does and will up more possibilities for using digital identity, it is questionable whether it will be the same here for Croatian digital wallets.

“Our biggest challenge will be to convince the government that Croatia can and should have more than one state ID wallet and that market competition in identity services is a good thing that will benefit people the most”, emphasises the co-founder and CEO of the company whose digital wallet is currently being used by 70 thousand users.

Here on the domestic market, people typically use electronic identification when accessing the e-Citizens system, for which they most often use mTokens issued by their banks.

“We can thank the banks’ investments in the infrastructure for identification and the idea to create NIAS as a central point for authentication, which also accepts bank mTokens for electronic identification,” explains Ilijaš. However, he warns that the situation is quite poor if we’re talking about the highest level of authentication, because we only have around 50,000 active mobile ID users in all of Croatia.

“The private sector is being left to fend for itself in this sense. Banks were the first to build better quality identification-authentication infrastructure, and the only ones who could still afford it were some telecoms. For everyone else in the private sector, building their own infrastructure was simply too expensive,” he says.

akd holds all the cards

In such a system, the state institutions did not expect that, in addition to banks and state-owned companies such as AKD and Fina, third players – private startup companies – could appear as the providers of identity services.

“We constantly struggle to show that we also exist and try to break through the intertwining of state-owned companies and institutions that, as a rule, ignore us. We’re miles away from, for example, Scandinavian countries, where state institutions cooperate operationally and at the project level with startups in order to speed up the digitisation of the economy,” warns Ilijaš.

Admittedly, access to public infrastructure, more specifically to NIAS, which is the central point of application for the use of public e-services, should soon be granted to the private sector (after several years of waiting). Ilijaš however believes that these “openings” are all coming a bit too late.

“I think that it’s now an outdated user experience and that only ID wallets will bring real transformation and improvement,” he says. However, their more significant use in Croatia, regardless of the new EU regulation, will depend on the state’s inclination to open up market competition in this segment.

“The regulation is a good thing because we’ll finally have a specialised law and the possibility to be certified according to it as an accredited provider of ID wallet services at the EU level. That will enable users to recognise “real” providers of ID wallets. In Croatia itself, it remains to be seen whether new opportunities will open up for us. Everything depends on whether the state will continue to maintain and feed AKD’s monopoly position or will choose other platforms for Croatian digital wallets,” Ilijaš concludes.


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