Evolving as a modern e-state : could governments become obsolete ?

As well as the unicorns who have introduced us to taxi, delivery and retail services we’ve never seen before, there’s been a revolution in the financial services sector that means we can now make payments without needing traditional banks. With FinTechs, we’re seeing new market entrants who can offer such speed and razor-sharp services that their traditional rivals are rapidly re-inventing themselves in response. As the Chief Executive Officer of one established Dutch bank said, “We are a new tech company that delivers financial services, and no longer a bank”.

Features of uberization

These kinds of highly disruptive, ‘uberized’ services have three distinctive characteristics. Firstly, they are better, faster and cheaper than what came previously; secondly, they use loads of technology to deliver a homogenized service with the same look and feel across the globe; and thirdly, the incumbents are replaced and/or pushed out of the market. And it’s not just in financial services that this is happening. There is equal disruption in health and the law as a result of HealthTech and LegalTech, where healthcare organizations and law firms must re-invent their business models (and their structure and culture) to maintain their relevance.

So, does this ‘uberization’ formula apply in the public sector, and does GovTech present a risk to governments? With recent estimates that the GovTech market is worth around USD 400 billion, and rising, innovative digitally native companies – from small start-ups all the way to the tech giants – are proving that faster, better, easier can apply equally to public services.

GovTech: a threat to government?

While governments certainly will not vanish overnight, the services they deliver could become less relevant to citizens – and therefore obsolete – as better digital alternatives become more and more available.The first signs of this are that banks, in some countries, are moving into the citizen ID space, and therefore controlling citizens’ access to government services. And there are other smaller steps, such as new ‘disaster response apps’ replacing public warning systems, or apps that collect data to apply for required government permits. Small start-ups, through the fast and easy apps and tools they provide, will start to replace old administrative paper trails, not necessarily to replace government, but to free it from some time-consuming bureaucracy.

Rebuilding trust

In 2019, the World Bank Group launched its GovTech Global Initiative to leverage and share GovTech sector expertise between developed and underdeveloped countries. In this context, the purpose of GovTech is to promote the use of technology to transform public services, increase efficiency, transparency and accountability, foster economic growth, reduce poverty, and boost shared prosperity. In other words: GovTech offers society a powerful way forward to help rebuild trust in democracy.

There are other national programs. The Danish Government, for example, has recently invited smaller companies to come up with clever digital solutions to administrative hiccoughs. Its ‘GovTech Program Denmark’ is a challenge-based initiative seeking to support, strengthen and further develop collaboration between the public sector and technology companies with innovative solutions for Government.

Digital forerunners

Turning to Estonia – a country whose fascinating digital journey I have followed for some time – the evolution of its modern e-state began by its Government launching the challenge to “build a fully functioning country from scratch, while knowing we cannot afford the bureaucracy of a developed democracy”.

What followed is a brilliant example of how a nation can make itself more relevant, not just to its citizens but to the citizens of other countries. Estonia’s concept of ‘Country-as-a-Service’ is based on the assumption that globalization creates more world citizens who want to choose a mix of services from different countries, assuming they have the status of an e-resident. Elsewhere similar initiatives are underway in Switzerland and Azerbaijan while Australia and New-Zealand are also investing heavily in their digital profile to keep attracting youngsters, travelers, businessmen and tourists to make the long journey to their part of their globe.

As all these examples demonstrate, when governments have a vision and see the benefits of evolving as modern e-states, they invest in a joined-up digital strategy that encompasses the purpose of government: to serve citizens and develop opportunities for all. The advance of GovTech – as in other sectors – will bring important opportunities for governments to collaborate with digital partners. Innovative digital transformation should be a priority for governments all over the world, not just to optimize their precious resources, but to stay relevant to citizens in an age of major disruption.

This blog is part of a series around eState 2025, examining the key priorities and outcomes of digital transformation for governments over the next decade. I invite you to read my first blogs "Obsolete and absolute e-states"; "Evolving as a modern state: the essential paradigm shift" and "Evolving as a modern e-state: why reinvent government services".