Everyone’s watching AI. No one’s watching identity.
That’s a problem, because the SaaS identity layer is quietly being rebuilt. Not patched. Not upgraded. Rebuilt.
Across Europe and parts of Asia, enterprise buyers are moving toward decentralized digital identity models. It’s being driven by compliance pressure, rising security costs, and long-term scalability. Most SaaS providers are wildly underprepared.
If your product can’t interface with decentralized ID systems, you're not secure. You're not compliant. And increasingly, you're not even in the conversation when it comes to large-scale procurement.
This isn't a backend upgrade. It's a go-to-market threat.
What’s driving the shift
Three overlapping forces are accelerating this change:
- Regulation: eIDAS 2.0 and GDPR enforcement updates are making decentralized identity mandatory across much of Europe. State-backed digital wallets will be required infrastructure by 2026.
- Security economics: Centralized identity means liability. Decentralized ID shifts control to users and removes the burden of storing personal data.
- Procurement shifts: Big buyers are rewriting their vendor requirements. If your platform can't support decentralized credentials, you won’t make it past review.
Decentralized identity isn’t just a new compliance box. It’s a new default.
The risk most SaaS providers aren’t seeing
Most platforms today weren’t built for self-sovereign identity, verifiable credentials, or digital wallets. That creates real problems:
- Login flows become non-compliant.
- User provisioning fails in regulated sectors.
- Sales teams lose deals without knowing why.
Adobe, Microsoft, and Okta are already moving. Governments and banks are piloting live deployments. When the shift hits RFPs at scale, the market won’t wait for anyone to catch up.
First movers are gaining ground
This shift creates leverage for vendors that are ready.
Platforms building decentralized ID into their product stack now will:
- Win early with buyers in finance, healthcare, and public services
- Shorten procurement cycles in compliance-heavy markets
- Position themselves as future-ready infrastructure
Just like cloud-native platforms displaced on-prem software, identity-native platforms will replace legacy SaaS stacks that don’t evolve.
What you should be doing right now
- Audit current identity systems for compliance risk and rigidity
- Launch an R&D team focused on integrating decentralized identity standards
- Run pilot projects with buyers in high-risk sectors
- Use this shift as a story to differentiate and frame competitors as lagging
- Get involved with standards-setting bodies to stay ahead of policy
This isn’t optional
Decentralized identity is already shaping how software is bought, deployed, and renewed. If you’re a SaaS provider and don’t have a roadmap for this shift, you’re one regulation away from irrelevance.
The companies that move first won’t just be compliant. They’ll be the ones rewriting the rules.
