How digital identity is shaping a future-ready HR ecosystem

Human resources (HR) teams continue to digitise their processes, from employee onboarding and contract signing, to payroll and benefits management. This digital transformation, however, comes with the critical responsibility to ensure that HR modernisation does not compromise data security or violate compliance regulations, such as Know Your Customer (KYC), GDPR, and others.  

This HR transformation contributes to the growing importance of digital identity in HR, especially when used in employee benefits platforms. Digital ID offers a secure, trusted digital connection between individuals, employers, and service providers. This ensures that HR departments can manage employee information more securely and efficiently. Digital ID in HR also allows passwordless employee authentication, reduced fraud, and streamlined digital access to employee benefits and services. 

On a broader level, digital identity is playing a major role in helping HR to evolve into a strategic business function that transcends traditional administrative roles. By integrating digital identity with HR systems, HR teams can securely orchestrate the employee experience across the work environment, office settings, and remote work.

This blog explores six ways in which digital identity is shaping a future-ready HR ecosystem where security, compliance, and operational efficiency work together. 

Digital ID in HR refers to the secure, electronic representation of an employee’s personal, professional, and credentialing information. This includes key data such as name, contact details, work history, and qualifications, all stored and managed within digital systems. 

Digital identity management in HR optimises processes by enabling secure employee identity verification and authentication, and eliminating the need for paper records. It facilitates secure, automated HR onboarding, even for remote hires, while reducing fraud risks and improving compliance. Furthermore, HR digital identity enhances access control, allowing employees to securely log into HR systems, manage benefits, and update personal details using multi-factor, passwordless authentication tools. 

In contrast, traditional identity verification methods, such as passwords and paper-based document scans, are no longer sufficient in modern HR environments. They’re vulnerable to security breaches, compliance issues, and inefficiencies, which not only elevate the risk of fraud but also compromise the overall employee experience.

Achieve HR onboarding automation with digital identity

Digitising HR processes helps departments improve operational efficiency, reduce paperwork, and mitigate the risk of human error, while providing employees with a more streamlined, user-friendly experience. 

Digital identity is a critical enabler of HR’s digital transformation because it allows digitising employee identity verification and authentication. This makes it possible to automate essential HR tasks that range from remote employee onboarding and managing pay slips, to benefits enrolment and contract signing.

EU-based identity platform itsme^® enables companies like Proximus to tap into digital employee identification, enabling them to digitise employee identity verification, exchange data, and sign documents with confidence. Similarly, global human resource consulting firm Randstad and multinational consumer goods company Henkel leverage itsme^®'s e-signature technology to simplify and accelerate the signing of employment contracts and other HR-related documents. This helps HR cut down on administrative time and reduce the need for physical document exchanges.

Employees get frustrated by clunky tools and disconnected systems between HR and multiple benefits providers. This fragmentation can lead to inefficiencies and a poor employee experience when accessing or managing employee benefits. 

While employee benefits platforms help streamline the management of benefits, offering employees real-time access to track and manage their benefits easily, the true potential of these platforms is fully realised when paired with digital identity solutions.

Integrating a digital identity platform into employee benefits software enables HR onboarding automation. This is because employee KYC can be automated when employees use their verified identity to onboard, without the need to scan documents or wait for days to get their credentials manually approved. Besides improving employee onboarding experience, this significantly reduces fraud risks and ensures regulatory compliance in a secure and streamlined manner.

Digital ID platforms also eliminate friction in logging in, by allowing employee authentication without the need for a password or one-time codes. An employee simply needs to authenticate in seconds using their reusable digital identity, without having to remember passwords or recover them.

For example, digital identity platform itsme^® allows employees on benefits platforms Edenred and Monizee to securely access and manage their benefits using their verified digital identity. The re-usable digital identity that itsme^® provides eliminates friction in the employee experience while safeguarding sensitive data and preventing fraud. 

Learn more about digital identity for benefits platforms and HR teams

Employee benefits misuse by unauthorised individuals is a significant concern for HR teams. Examples include fraudulent claims for mobility and meal allowances, employee discount schemes, and health insurance and medical benefits. This happens, for instance, when employee benefits vouchers or gift cards are added to a non-authorised user’s digital wallet. Such cases of employee benefits fraud lead to financial losses, legal issues, and damage to company culture.  

Digital ID in HR helps prevent employee fraud by requiring multi-factor, passwordless employee authentication to access benefits platforms and authorise transactions. This approach is significantly more secure than passwords or one-time codes, and far less vulnerable to phishing or other forms of fraud. This ensures that only eligible employees can access corporate benefits platforms.

For example, Edenred integrates itsme^® into its digital HR benefits platform, allowing employees to securely log in and access their benefits and personal accounts. Similarly, AG Insurance uses itsme^® to enable secure employee sign-ins to their benefits management platform, incorporating multi-factor, passwordless authentication and data encryption for added security. In both cases, itsme^® ensures employee digital identity verification, so that only eligible employees can claim or redeem benefits, significantly reducing fraud.

Continue reading: The future of employee benefits: What HR teams need in 2025

HR platforms handle sensitive employee data, often sharing it with third-party vendors like insurance companies and banks. This raises significant challenges, particularly in ensuring human resources compliance with strict regulations such as GDPR and eIDAS. Improper access control or non-compliance can result in hefty penalties, with GDPR fines reaching up to €20 million or 4% of global turnover. This underscores the critical need for secure, verified access to data in HR. 

Digital identity technology helps secure HR GDPR compliance by ensuring that only necessary personal data is collected and processed. HR digital identity supports data minimisation, using only essential information like authentication credentials to verify identity. Strong employee authentication methods provided by digital identity tools ensure that only authorised individuals access personal data for legitimate purposes. Encryption secures data storage and transmission, reducing the risk of breaches and unauthorised access. All of these points result in GDPR compliance in HR departments.

When it comes to HR eIDAS compliance, digital identity solutions enable secure, authenticated data exchanges between HR platforms and third-party vendors (i.e. data sharing). This makes these transactions legally binding and compliant. Qualified electronic signatures further ensure secure, traceable actions, meeting eIDAS standards for trusted, cross-border transactions within the EU. 

Another crucial factor to consider is employee trust, particularly when HR shares personal and financial data with third-party providers. By integrating secure employee identity verification, employee benefits platforms and other HR systems can assure employees that their data is securely handled in compliance with data protection laws. This reinforces trust thanks to authorised access and secure storage, giving employees confidence that their personal information is only shared with trusted entities.

Learn more about leading digital identity platform itsme^®

HR departments have been traditionally bogged down by paper-based processes and manual employee identity verification systems, which are time-consuming and prone to errors. Digital identity in HR helps drive significant cost savings by reducing administrative burdens and operational costs.  

Digital identity platforms streamline tasks through enabling automated HR onboarding, document signing, and employee benefits enrolment. This shift leads to a more efficient HR operation, and helps cut down on labour costs associated with managing paper records and manual processes. For example, DocuSign estimates that businesses save up to 56% on average on hard costs by relying on e-signature, a service that many digital identity tools administer.  

Another way that digital identity helps reduce losses by combating benefit fraud, which is already explored above.

Digital identity tools that allow securely sharing data play a crucial role in helping employees quickly claim the benefits they deserve while combating fraud. Data sharing technology enables securely sharing credentials, such as diplomas, student attestations, energy certificates, and verified IBANs. It ensures that verified credentials are immediately received from trusted sources. This reduces the time and effort required to validate credentials, such as confirming the authenticity of a diploma. The result is simplifying approval processes for employers and similar third parties. 

Data sharing platforms also streamline the way verified credentials are shared. Instead of relying on outdated, manual methods like paper-based verification or email exchanges, employees can securely share their verified identity directly with HR or external service providers. When an employee applies for health insurance, they can securely share their verified identity with the insurer through such platforms, preventing unauthorised access to sensitive personal information. 

In a nutshell, integrating digital identity in HR reduces costs and increases trust in data and document verification processes, resulting in faster claims processing, seamless benefits enrolment, and a more efficient HR experience for both employees and HR departments. 

Learn more about digital identity for benefits platforms and HR teams