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Competition, mindset change propelled Estonia’s digital transformation

LEIPZIG — In the two decades since Estonia embarked on teaching its senior citizens and children to be digitally literate, the northern European country has surged ahead when it comes to smart initiatives in government service.

Competition, mindset change propelled Estonia’s digital transformation

Screenshot taken from Estonia's e-residency site showing a digital ID card. Photo:

LEIPZIG — In the two decades since Estonia embarked on teaching its senior citizens and children to be digitally literate, the northern European country has surged ahead when it comes to smart initiatives in government service.

Estonia’s national digital ID system - which had recently been cited by Singapore’s Prime Minister Lee Hsien Loong as one to emulate - allows citizens to carry out a wide range of activities. Plugging into a nationwide electronic prescription service, doctors prescribe medicine online, and patients can collect their medicine from any pharmacy using just their ID card, for example.

Estonia’s former president Toomas Ilves said in an interview with TODAY that the willingness to constantly overhaul and adapt to competition is the cornerstone for its success. And it has to get to a point where going digital has become such a way of life that no one labels the country as a “smart nation”.

“We don’t use it in Estonia, we don’t say ‘smart nation’. It’s just normal, it’s the way things are done,” Mr Ilves, who was the country’s president from 2006 to 2016, said last week at the sidelines of the International Transport Forum in Leipzig, Germany. He is largely credited as the driving force behind Estonia’s e-Government efforts.

All hospitals and pharmacies are connected to Estonia’s digital ID system, and the next step is to make this system inter-operable with Finland, Mr IIves said. This means that when Estonians visit Finland, and vice versa, they can pick up their prescriptions even when they are not in their home country.

Estonia, which has a population of 1.3 million people, also set up an e-Residency programme over a year ago. It issues digital ID cards to anyone in the world, and these global e-Residents can set up and run a business that is able to operate within the European Union, start a bank account, and sign contracts digitally, among other services.

Known in Europe for being the frontrunner in terms of e-government, Estonia’s efforts have not gone unnoticed.

Speaking to a group of innovators and disrupters from around the world, Mr Lee had lamented in February that Singapore is not “going as fast as we ought to” in its Smart Nation drive. He had pointed to Estonia’s digital ID system which allows citizens to perform a wide variety of functions, such as accessing their healthcare information, picking up e-prescriptions, voting online or filing taxes.

“The Estonians have this; there is no reason why we should not have it,” he had said, noting that Singapore’s own SingPass system, which allows online users to gain access to more than 100 government e-services, is not extensive enough. “It does not extend to private sector services. It does not even extend to hospitals which are restructured, semi-privatised.”

In 1991, Estonia left the Soviet Union and became independent. Driven by keen competition from Finland, its closest neighbour, Estonia had started its digital efforts in the 1990s, teaching children and old people how to use computers, and the government “put computers and Wi-Fi everywhere”, Mr IIves said.

He added: “Once, we were at the same level. (Then) Finland was more advanced, (and) we were behind. So this created the feeling that we had to do things, and be bold.”

On the country’s digital transformation, he said: “We had the people who wanted to do it... (who wanted) to get ahead. We have a small group of strong-willed people within the government who really pushed for it.”

It progressed rapidly from there. In 2002, Estonia started the digital ID initiative, and in 2007, the e-Prescription scheme, and most recently, the e-Residency system, which has seen a rapid take-up rate — it has issued IDs to 20,440 e-citizens from 138 countries, who have started 3,256 companies.

Along the way, the government was not afraid to abandon legacy IT systems or any other investments, in favour of upgrading its IT infrastructure.

“This is life in the digital era. Keeping your information systems up to date is an operating expense, not a capital expenditure. You have to constantly phase out legacy systems,” he said.

Estonia has a policy, and that is, the government cannot use legacy systems because “you do not want to get hit by malware”.

“That’s a mental state you have to (get to). Most governments... think in terms of brick and mortar. It’s, like, ‘I built this highway, I don’t have to build it anymore for another 20 years’. But when it comes to IT, you have to constantly see what’s going on,” he stressed.

He raised the National Health Service (NHS) in the United Kingdom as the “best example” of this mindset.

“They were using 15-year-old software, not updated... it’s full of holes, and the whole system went down,” he said, referring to the recent cyber attack on NHS.

Mr Ilves now co-chairs the Global Futures Council on Blockchain Technology — a working group set up by the World Economic Forum that focuses on how blockchain technology can be used to improve the security of the Internet. Reflecting on how he got the entire digital eco-system going in Estonia, he said that another crucial point was that the government made the Digital ID compulsory for everyone, for both the public and the private sector.
“If they were not universal, then neither the private sector nor the government sector really feels motivated to develop new services. Since the private sector knows, and the government sector knows everyone has this, then they decided to invent new services, like digital prescriptions.”

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