Former Estonian president, Toomas Hendrik Ilves, shares best practices about implementing a digital ID that can transform government services

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Estonia’s e-government: a global model

In the early months of COVID, California’s unemployment insurance agency, the Employment Development Department (EDD), was completely overwhelmed.

It faced 1.3 million unprocessed claims ([link removed] ) , and it couldn’t keep up.

The task force brought in to fix the quagmire found a reality that’s far too common for many governments around the world: the agency’s technology was old; the policies around unemployment—slowly accruing over 25 years into a byzantine web—were only decipherable by experts; the agency was understaffed; and there was a culture of risk avoidance. At the center of it all, there was a disconnect between the people who worked on the policies and the people who implemented them.

The solution that ultimately fixed the problem was a tech-enabled ID-verification system. It unraveled years of jerry-rigged systems and policies, replaced manual procedures, and streamlined the process by which people accessed unemployment benefits.

This crisis would likely not happen in Estonia, where a digital ID system makes processes like applying for unemployment benefits simple. Estonia has become a worldwide model for how federal, state, and municipal agencies can bring government services into the 21st century.

For this newsletter, we spoke to Toomas Hendrik Ilves, the former president of Estonia, who oversaw the rollout of the country’s digital ID system, about the roadmap and challenges facing governments seeking to simplify and modernize the relationship between a country’s services and its people.

// Estonia's e-ID system

Since the first digital ID cards were issued 24 years ago, Estonia has redefined the way its citizens interact with their government through an “e-state” anchored around a digital national identity.

- 98% of Estonian citizens ([link removed] ) have an e-ID, a digital ID card accessible through the web or a smartphone. It allows them to pay bills, vote online, sign contracts, shop, and access health information.
- Estonia is a cashless society with over 99% of financial transactions ([link removed] ) occurring digitally.
- Through the e-ID, 99% of public services ([link removed] ) are available online 24 hours a day.

In 2014, Estonia launched its e-Residency program ([link removed] ) , which allows global citizens to access Estonia’s digital services and participate in its digital economy regardless of their physical location or citizenship.

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Estonia estimates its digitized public services save over 1400 years of working time and 2% of GDP.

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// Decentralized data: the source of security

A digital system is more vulnerable to data breaches, so Estonia’s e-ID system is secured through blockchain technology ([link removed] ) , or a distributed public ledger. After a series of cyber-attacks in 2007, the country began developing its own distributed-ledger blockchain technology in 2008 called KSI ([link removed] ) —even before the Bitcoin whitepaper coined the term (at the time, Estonia called it “hash-linked time-stamping”).

- KSI enforces the integrity of Estonian government data and systems, enabling data privacy and security. Because data is distributed and cryptographically secured, it reduces the catastrophic effects of a cyberattack.
- Although individual data isn’t stored on the blockchain, it allows the government and its citizens to prove the accuracy of data and information.
- Instead of residing on centralized servers, citizen-specific and country-wide data is distributed across multiple computers and secured through blockchain technology that detects any discrepancies or corruptions in the data.

// Reinventing government service

“For most governments, we’re stuck in the 1990s when it comes to their public services,” Ilves said. “They just don’t work very well.” But when 99% of public services are available 24 hours a day, bureaucracy can become a parallel process instead of a slow-moving sequential one.

- Sequential process bureaucracy: For most countries around the world, bureaucracy becomes burdensome because it is a sequential, step-by-step process of paperwork moving through a system. Once it gets approved by one department, it has to go to the next, and so on.
- Parallel process bureaucracy: In Estonia, the digitization of government services allows for parallel processes. Once a child is born, Ilves explained, multiple parallel processes begin simultaneously. The hospital sends the newborn child’s name to the population registry and the registry issues an e-ID number. That ID number automatically initiates multiple steps: It instantly generates health insurance for the child and electronic medical records; it creates a tax account for the child to be eligible for tax deductions, and it provides a record of population growth so government services and funding can be adjusted based on changes in demographics.

The country estimates its digitized public services save over 1400 years of working time and 2% of GDP ([link removed] ) .

// The playbook for governments to go digital

Today, Estonia represents a new approach to connecting government services to citizens, and Ilves has been advising other nations on how to roll-out their own digital ID systems. Ilves recommends a four-step approach:

- Secured Digital Identity: Start with a strong, secured digital identity rooted in a population registry and a distributed ledger. The ID is the core, atomic unit that anchors all other digital government services and allows for agencies to interoperate in parallel processes.
- Solve People Problems: Solve problems and provide services that citizens like and use often, like filing taxes or accessing prescriptions (for countries with government-managed healthcare). In the US, “the most horrendous interaction between the citizens and the state,” he said. But it doesn’t have to be this way. By making interactions with the government that were once onerous simple and easy, the popularity of digital services will grow.
- Make it Mandatory. If it’s not mandatory, then the uptake rate will only be 15%-25% of the population, Ilves said. If 85% of the population isn’t onboard, government agencies won’t have the incentive to make the investments in developing digital-first solutions.
- Mobile First: Start with mobile from day one. If citizens can accomplish everything on their phone, Ilves believes you can increase adoption and improve security. Ukraine, for example, used Estonian architecture to create its digital state, digital ID, and build a mobile platform called Diia ([link removed] ) that connects Ukrainians to their government services.

Countries ([link removed] ) from Sweden to Singapore and India to Nigeria are rolling out digital identity systems, and as Ilves continues to prove that it’s possible, more will follow.

// The future of government tech

Whether it’s a crisis like what the EDD faced during COVID with unemployment benefits or it’s a government seeking to provide everyday services that are secure from cyberattacks and data breaches, Estonia represents not only a model for how coordinated, government-wide innovation can drive streamlined processes and reduced bureaucracy, but a new relationship between the state and its people that is secure, private, and human-centric.

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