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Digital identity wallets, compliance technology and privacy protections for AI are becoming more operational priorities in 2026—but the evidence does not show one global privacy-spending total or prove that a single technology will dominate. The clearest signals are a UK digital identity sector that is broadening, a legal requirement for EU member states to provide identity wallets by year-end, and growing attention to safeguards for AI and cloud workloads.
Are digital ID wallets actually taking off?
They are moving from frameworks and pilots toward wider deployment, but wallet availability and adoption vary by jurisdiction. The evidence points to a maturing and broadening market, not to every identity service or wallet being mature or universally used.
The UK market is broadening beyond established services
The UK Digital Identity Sectoral Analysis Report 2026, commissioned by the Department for Science, Innovation and Technology’s Office for Digital Identities and Attributes (OfDIA), estimates that 275 firms provide digital identity products and services: 233 dedicated providers and 42 diversified firms. It estimates annual sector revenue of £2,027 million in 2024/2025. These are modelled estimates, drawing on sources including audited accounts, web data and proportional allocation for diversified businesses—not audited accounts covering the whole sector. The report also cautions that comparisons with its 2025 baseline are affected by revisions, expanded consumer-survey weighting and improved coverage.
The report describes a mix of established background-screening and data-brokerage providers and newer verification and trust-service entrants. Areas of activity include age assurance, liveness detection, behavioural analysis and identity for AI agents. That range suggests the market is broadening into new use cases, rather than moving in one uniform direction.
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UK use is not the same as wallet adoption
OfDIA’s 2026 annual report says 77% of UK consumers had used digital identity services, rising to 85% among adults under 45. That measure covers digital identity services; it should not be read as the share of people using a digital identity wallet. Among non-users, the two most common reasons were preferring physical ID and not having needed to prove identity, each cited by 29%.
The report records 64 services from 46 providers on the UK register and nearly 4,700 unique businesses, organisations and partnerships across providers. It also describes work to support registered Digital Verification Services under Money Laundering Regulations and for proof of age in alcohol sales. In the UK, the Digital Verification Services Trust Framework sets requirements covering governance, information security, privacy and data protection, technical specifications and user experience. Its 1.0 framework includes rules for orchestration and holder services. A wallet can be a holder service: it uses information from third parties to verify a fact and then confirms that fact to someone else.
Europe has a deployment deadline, not proof of universal availability
Under eIDAS 2.0 (Regulation (EU) 2024/1183), each of the 27 EU member states must provide citizens, residents and businesses with at least one European Digital Identity Wallet by the end of 2026, according to the OECD’s Digital Government Outlook 2026. The wallets are intended to store verified identity information and other credentials—such as licences and qualifications—and let users share them selectively with public and private services.
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Cross-border use depends on common protocols, data formats and security requirements in the European Digital Identity Wallet Architecture and Reference Framework. Four large-scale pilots conducted in 2023–2025 tested real-world cross-border uses, involving more than 250 organisations across nearly every EU member state, as well as Norway, Iceland and Ukraine. The legal deadline and pilots indicate active deployment work; they do not establish that every wallet was already generally available when the OECD report was published.
One adoption number is a forecast, not a count
In 2024, Gartner forecast that at least 500 million smartphone users would regularly make verifiable claims using digital identity wallets by 2026. This is an analyst forecast, not a measured 2026 user total. Gartner also predicted that more mature portable digital identity solutions could reduce demand for standalone identity verification over the following five years. That is a view about how the market may change, not a settled outcome.
How much are companies investing in compliance?
There is no substantiated global 2026 total for privacy, compliance or confidential-AI investment in the evidence available here. One useful, tightly bounded figure is the UK digital identity sector’s £49 million in investment activity across 14 deals in 2025, reported by OfDIA in 2026. It is not a global privacy or compliance total, nor a measure of all investment in UK compliance technology. OfDIA also reports that approximately three in ten dedicated UK digital identity firms had received external investment since incorporation.
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The IAPP’s RegTech Report 2026, published on 21 September 2026, examines adoption of compliance and governance technologies amid regulatory complexity, AI governance obligations, cybersecurity requirements, privacy programmes and wider digital responsibility. Its publicly visible material establishes the report’s scope, but not a substantiated global spending figure.
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Other 2026 signals point to attention and priorities, not a dollar amount. A Data Privacy Day discussion hosted by IAPP on 26 January brought together practitioners working in privacy, cybersecurity, AI governance and digital responsibility. Gartner’s 2026 Hype Cycle for Privacy says that AI is renewing attention to safeguards against personal-data misuse and advises cybersecurity leaders to prioritise investment in scalable protection. These sources support the conclusion that organisations are treating privacy, AI governance and compliance as connected operational concerns; they do not establish how much the world is spending or which technology will win.
What is confidential AI?
“Confidential AI” generally describes protecting an AI workload and the sensitive data it handles while the workload runs, including in cloud infrastructure. Confidential computing extends encryption to data in active use, such as data being processed in memory. That addresses a different stage from protecting data at rest or while it travels between systems.
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NIST’s Hardware-Enabled Security: Confidential Computing of Data in Cloud Workloads (IR 8320E) was published as an initial public draft on 29 May 2026; its comment period closed on 13 July 2026. The draft outlines an example approach to protecting datasets used by AI workloads in cloud environments from malware, data theft and other security-related vulnerabilities. NIST describes confidential computing as a way to address security and privacy concerns for organisations moving sensitive workloads to the cloud.
What the protection layer does—and does not do
The NIST draft describes an architecture that uses encryption, secure enclaves and attestation to constrain access to an AI model and its data during execution. In broad terms, an enclave is a protected execution environment; attestation is a way to check that the environment meets expected conditions before sensitive data or keys are released. The approach depends on the hardware, configuration, key-management arrangements and verification process being trustworthy.
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- It can help protect: data and model assets from some threats to cloud workloads while they are executing.
- It does not guarantee: that all threats are blocked, that an AI system cannot expose sensitive information through its outputs, or that an organisation meets every legal or governance obligation.
- It does not replace: careful data governance, access controls, threat modelling, security operations or privacy-risk management.
NIST’s separate work on cybersecurity, privacy and AI notes that AI can increase re-identification risks and make it possible to infer more about people through prediction. Confidential computing is therefore one security layer in a wider risk-management approach, not a complete privacy solution or a compliance certification.
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Can I prove my identity without sharing everything?
That is a central purpose of selective disclosure: a wallet can present a verified fact or credential without necessarily exposing every piece of information used to establish it. For example, a service may need confirmation of an attribute rather than a full identity record. The OECD describes EUDI Wallets as intended to support selective sharing of verified identity and other credentials.
What a person can share, how much supporting information is revealed and whether uses can be linked depend on the wallet design, the credential, the relying service and the governing standards. A wallet label alone does not establish that every interaction is unlinkable or that every service requests only the minimum information. For any specific deployment, check which credentials it supports, what is disclosed in each transaction, what the user controls, and what data the service retains.
What should organisations watch in 2026?
The practical change is that privacy questions are increasingly tied to operational systems: how people present credentials, how organisations verify claims, how compliance processes are managed, and how sensitive AI workloads are protected. The evidence supports a transition year, but not a prediction of a single dominant product category or a quantified global spending surge.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesWhen assessing a wallet, verification service or confidential-computing approach, compare the real controls and deployment conditions rather than relying on broad privacy claims:
- Data and disclosure: Which credentials or attributes are supported? Can a user share only the needed claim? Can activity be linked across services or transactions?
- Assurance and governance: What framework, certification or independent evidence applies, and in which jurisdiction? A UK framework and EU wallet requirements are not interchangeable.
- Interoperability and portability: Do systems follow common protocols and data formats? Can credentials or workloads work across providers and borders?
- Security boundaries: For confidential computing, what data is protected—in storage, transit or active use? What hardware root of trust, attestation and key-control model is used?
- Operations and user needs: What are the implementation and ongoing operating burdens? Are accessibility needs addressed, and are physical or other alternatives available for people who need or prefer them?
- Deployment status: Is the capability generally available, being piloted, or required by a future deadline? Distinguish operational evidence from forecasts and announced plans.
These checks matter because 2026’s strongest signals are about implementation: legal obligations, registered services, pilots and technical architectures. Their value will depend on how well they work in real deployments and whether users and organisations can verify the protections being claimed.
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