Finite element model updating is a powerful technique to inversely identify material behaviour. A profound understanding of plastic anisotropy of sheet metal is crucial in controlling complex sheet forming applications through finite element simulations. In this contribution, a generic stereo finite element model updating approach combining stereo digital image correlation and finite element model updating is described to identify the plastic anisotropy of sheet metal DC06 which is represented by Hill’s 1948 yield criterion. The feasibility of stereo finite element model updating is illustrated by applying the proposed method to an Erichsen bulging test. Additionally, it is found that the unknown friction coefficient between the punch and the sheet can be simultaneously identified. Finally, the reliability of the identified parameters is scrutinized.