> Surely, any service only catered only to "naturally born citizen" is discriminatory and illegal?

No, that's also a question that is culturally dependent. In some contexts it's normal and expected.

I read that Iceland asks people to change their names if they naturalise there (because of the -sson or -dottir surname suffix).

But your point stands - not everyone in the system will follow this pattern.

Obviously, foreigners just living or visiting here will not have our strictly local names (thinking otherwise is what would be "silly"). Locals (people with my nationality, so either natural or naturalized citizens) will (*).

(*) I read up on it though, and it seems like exceptions can be requested and allowed, if it's "well supported". Kinda sours the whole thing unfortunately.

> is discriminatory and illegal?

Checked this too (well, using Copilot), it does appear to be illegal in most contexts, although not all.

But then, why would you want to perform name verification specific to my culture? One example I can think of is limiting abuse on social media sites for example. I vaguely recall Facebook being required to do such a thing like a decade ago (although they definitely did not go about it this way clearly).