MIAMI BEACH, Fla.–Change only happens if there is great pain.
That tough but frank reality was shared by one country’s first-ever chief information officer, who helped to digitize the entire country—and found a way to avoid becoming Big Brother.
Taavi Kotka, who is now a digital transformation consultant, was the first-ever CIO for Estonia, the country of 1.3-million people in Northern Europe (and little known-fact—the same latitude as Alaska, Kotka noted).
In remarks to CO-OP’s THINK 19 Conference here, Kotka outlined how he was part of an effort to digitize an entire country (which outside of the capital of Tallinn, has a density of approximately four people per square kilometer).
“We needed a more economically wise solution. So we said let’s start pushing people to use the Internet,” he said of an initiative that began in the 1990s, prior to the availability of smartphones. “But it’s not like you push your business into the web and people use it.”
The first problem encountered by Estonia was the most fundamental and important: how to verify the identity of the user. Looking to its neighbors, Estonia saw the example being set by Sweden, which had just rolled out an identify card.
‘Cannot Be Voluntary’
“We copied it, 100%, but we added enormous innovation on top of that and made it mandatory,” said Kotka, who is now the head of Jio Research Center in Estonia. “It cannot be a voluntary thing. You have to make it in a way the customers cannot say no, or in this case, the citizens. Another thing we copied from Sweden was unique identifiers, a Social Security-like number that is public. “
What was created in Estonia was an effective means of connecting disparate parties using that unique identifier. Various government agencies, healthcare providers, schools and others can access a person’s data (although as Kotka made clear, below, there are strong controls).
To get Estonians to buy in, “We had to promise people something. We said, ‘What if you instead of figuring taxes over one or two days you could finish your taxes with three clicks?’”
Today, 96% of citizens pay taxes electronically, and 95% of that group doesn’t change anything on their tax declaration.
“That means they literally don’t have to do anything at all,” he said. “When people experience something good, they start to demand something more. In 2005, we began with electronic voting, but it’s not like the machines used in the U.S. In Estonia, it’s voting from any computer, and the data show it’s older voters who actually most prefer the system. In most recent elections, 45% of voters cast votes electronically.
Vote More Than Once?
“The beauty of e-voting,” added Kotka, “is you can vote as many times as you like, but only the last vote counts. My point is even with the things we have been doing for centuries, there are new ways of doing things. Don’t be afraid to think of new ways to do things using technology.”
Two Issues to Tackle
Overall, Kotka said Estonia has sought to answer two questions:
- How to create seamless digital society
- How to answer complicated questions using data
The first big challenge in Estonia will sound similar to anyone in credit unions: getting the different silos to talk to each other, an issue complicated in government by the fiefdoms some government officials and agencies build, he said.
“People don’t want to go to government portals. The problem with government services is how few people use them. How often do you apply for a construction permit, or child support money, or change your driver’s license?” he said. “So, when it comes to user experience in government, seamless services becomes the ideal.”
How to Avoid Big Brother
Kotka acknowledged all the data sharing in a government-sponsored system raises big fears of Big Brother. The solution, he said, lies in transparency. Information can only be connected by a government office once. Once it is collected, it is only shared on an as-needed basis, Kotka said of Estonia’s policy. That policy also allows each citizen to see who has reviewed their data, and if a party has no reasonable explanation for accessing data, that person is fired. If info is shared with a journalist, for instance, and the person is found guilty, they receive a jail term.
Sharing information is good if I as a person has a control over it,” said Kotka, adding he is a “big fan” of the European data standard known as GDPR.
Legacy Systems, Legacy Thinking
Kotka, who told the THINK conference artificial intelligence will be the key economic driver of the next 20 years, told credit unions their greatest enemy is “legacy systems” and legacy thinking.
“I said, we cannot use any meaningful system older than 13 years. Even if it works, you have to rewrite it. You plan that after certain number of years that you will have to rebuild,” he said. “And this leads to agile. What it means is you don’t use the old thinking; you use the new thinking. The reason it’s so important to be agile is there is no innovation without pain.”
As a government, Estonia had certain advantages others lack. Kotka noted that despite objections from teachers, many of whom were older, implementation of a new system requiring the input of student grades into a database took just two months. How did it do that? Teachers were not paid until they adapted to system.