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Germany’s eID puzzle? Estonia has already cracked it.

by Hendrik Lume, Senior Consultant, May 25, 2018

A problem with authentication is standing in the way of Germany’s drive to put public services online. For answers, the country should look to Estonia.

As one of its last legislative accomplishments, Germany’s previous grand coalition government passed a law to make all public services available online by the end of 2022. It’s a bold project, but it comes with a serious roadblock: The country lacks a widely adopted method for online authentication, a way for citizens to prove their identities in an electronic environment. Without one, e-services can’t operate.

Unfortunately, the national ID card, which the agreement of the new grand coalition government specifies as the chosen universal medium for authentication, is a non-starter. Only about a third of users have bothered to activate its electronic function, and of those, only 15% say they’ve actually used it, according to Zeit Online. Card readers are high-priced, and free app-based reader works only on a limited number of Android phones and does not constitute a convenient mobile identity anyway.

What’s the way out? For clues, Germany can look to Estonia, a country that not only solved the authentication riddle long ago, but used electronic ID to lay the groundwork to digitize not only its public services, but its whole society.

Lessons from the Northeast

Back in the early 2000s, when Estonia was in a similar authentication bind, the government hit on a novel idea: partnering with the banking sector. The country’s banks had already designed the same high trust level into their online banking systems that the government needed for public e-services, so a deal was struck whereby bank logins could authenticate users of government e-services. Eventually this partnership developed into a wider public-private authentication environment, with banks, telecoms, public utilities and state agencies all sharing authentication infrastructure.

Opening the government’s authentication process to banks and telecoms might also work for Germany, leading to easier adoption of coming e-services in both public and private sectors. A number of German banks have recently become closely involved with authentication solutions, such as Yes and Verimi. The German telcos are said to consider providing an authentication service as well, so some of the foundations are already there.

A problem with authentication is standing in the way of Germany’s drive to put public services online. For answers, the country should look to Estonia

A country with an extensive offering of government e-services should not rely on one single method of electronic identification. In Estonia, where 99% of all government services are online, four methods of electronic identification are available. They are not competing, but are complementing each other to make sure all citizens can access e-services in the way that is most convenient for them.

The new coalition agreement in Germany also gives hope that the government will start working on its own new mobile method of authentication. In this area, Germany could benefit from Estonia’s most advanced authentication solution, Smart-ID. Launched in 2017, Smart-ID is a mobile app that ticks all the boxes for users: it’s free, it’s secure, it’s simple to use and it works anywhere. Unlike other mobile authentication tools, such as Mobile-ID, Smart-ID doesn’t require users to change their SIM cards. Though Smart-ID is relatively new, authentication via the app is already offered by all major commercial banks and dozens of other private companies.

The e-signature windfall

Most crucially: Soon, Estonians will most likely be able to use Smart-ID for electronic, legally binding signatures as well.

As Estonians learned, including an e-signature component in the authentication solution is an absolute must. The free state-sponsored e-signature solution and the decision that public administration must accept digital signatures helped to accelerate the creation and adoption of e-services in the public and private sectors, not to mention the fact that electronic identity helps attract talent. It is an essential building block of Estonia’s digital society.

Unfortunately, the elementary importance of easily available and widely accepted electronic signatures has been absolutely missing from the intense debate on digitization in Germany. Not once is this issue mentioned in the new coalition agreement. In essence, electronic signatures have suffered the same fate as e-ID in Germany. They exist in theory but are expensive and, in practice, have not been widely adopted by citizens, businesses or public administration.

The cost of this missed opportunity is immense, as the example of Estonia shows. The Estonian government estimates that digital signatures alone save the country the equivalent of 2% of GDP annually. Applying that figure to Germany’s €3.26 trillion GDP results in forgone savings exceeding €65 billion every year. Even if Germany’s gain were far more modest, the boost to the economy and the resulting tax revenue increase would more than pay for any investment in an Estonian-style authentication and e-signature mechanism.

Understanding the goal

There is a common lack of understanding of what e-government is supposed to accomplish. It’s not merely about increasing the efficiency of public services rendered to citizens and businesses; it’s about building the foundation for a seamless digital society where people, businesses and public administration can easily and securely interact with each other using the best available digital tools.

Germany is at a critical stage of its digital development. In solving its own authentication problem through a new mobile identity, the government also has the unique chance to include a convenient and affordable solution for digital signatures. That single capability could push its economy several years forward while it makes half-baked solutions such as De-Mail, POSTIDENT, identification via video chat or even fax finally obsolete.

Nortal has been involved in more than one-third of Estonia’s e-transformation projects, including its eID solutions. We have more than 10 years of experience in bringing and adapting this knowledge to countries around the world. Get in touch with me to hear more about how we can help you with our expertise.

In Nortal, we have written about how electronic identities can give any country or organization serious advantages a few times. For example, you can read ho it can help take the next step towards precision medicine or how Internet of Humans can be the next big thing after Internet of Things.

Hendrik Lume

Hendrik Lume, senior consultant at Nortal, has spent most of the past decade advising organizations on how to stay ahead of tech disruption and thrive in tomorrow's economy. Relying on his background in both the business and public policy arenas, he is laser-focused on bringing Estonia's seamless digital society to Germany. To learn more about Estonia's digital solutions, send him an email.