How governments and fintech companies can join in a collaborative way?

Álvaro Maldonado

Gerente Comercial @ Kushki Ecuador

December 17, 2020

4 min read

Slow and bureaucratic. That is the perception that has existed historically about public institutions and the formalities that are conducted through them. A sector that until recently had not been digitized, and that has not yet dimensioned the full benefits of doing so, nor has it counted the savings in the amounts of money and time that digitization could bring. But that pace has already been accelerated, because the pandemic has put face-to-face formalities at risk, forcing to make them available online.

According to data from the Inter-American Development Bank (IDB), a face-to-face procedure costs governments up to 40 times more than a digital procedure, given the resources that must be available. Also, it takes an average of 5.4 hours for a citizen to do a procedure, and up to 11 hours in some countries. In contrast, a digital process can take up to 74% less of that time.

In the European Union, 81% of procedures are online. In our region, only 7% of the population performed its last process digitally way. Data from the Economic Commission for Latin America and the Caribbean (ECAC), position the region at an intermediate development level in respect to other regions of the world in terms of a digital ecosystem. With an index of 49.9 (on a scale of 0 to 100), Latin America is lagging compared to Western Europe (71.06) and North America (80.8). In addition, the annual growth rate in digitization has also been slowed, growing by 6.21% between 2014 and 2018, the lowest of all emerging regions.

Some utilities already offer digital payments for procedures; however, dissemination is low, which does not encourage its use among contributors. In addition, many public portals are complex and user-unfriendly, which derives in a low conversion of transactions, and a delay compared with the different public administrations systems of the world. In fact, ID figures point that 40% of digital formalities are very difficult to understand and cannot be completed.

The opportunity

In Estonia, a leading country in terms of State digitalization, 99% of formalities are made online. One of the main advances are digital signatures, which are used 1.3 million times per week. According to the Government of that country, thanks to that, they save a working week per person per year or 2% of the Gross Domestic Product (GDP).

Other of its advances, have included eliminating the use of paper in procedures, implementing the digital vote, creating virtual residences or e-residencies, and even a digital identifier since a person is born in that country.

All that makes it clear that there much to advance and to imitate from the countries that take the lead and are more developed in this topic. The digitalization process of the public sector has a series of associated benefits: Advances can be reached in an agile and short-term term fashion, with an immediate positive perception and satisfaction of citizens. That is to say, they are measurable and testable in quick deadlines.

Also, the introduction of technology in the public administration generates less corruption, since everything is registered, there is less commuting and vehicle traffic, less pollution and environmental impact, and administrative efficiency with lower costs and bureaucracy.

A technological partner

In Colombia, Sushi digitalized the process for obtaining the Property Transfer Certificate, issued by the Superintendence of Notaries and Registry Offices (SNR). This certificate is required for a series of formalities in Colombia, and provides all the information about the property and its owners. Its demand is high: Between 23 thousand and 75 thousand certificates are issued each day, because it is required to buy or sell a property and apply for mortgage credits, among other things. With Sushi, SNR users can digitally acquire theircertificates, saving time and money in commutes to offices. Obtaining the certificate with this method takes less than a minute.

Another case is the Sole National Transit Register (RUNT), responsible for delivering cars’ vehicle records. Through the alliance with Sushi, it is now possible to pay for the document with cards and the PSE, expanding the available payment options.

The virtual counter

In Ecuador, the Municipality of Guayaquil has also started to digitalize with our solutions. Payment of the property tax, a mandatory levy that is charged once a year for each property, can now be made online through a portal with a payment button specifically developed for this entity. The user accepts the payment of a fee for the use of the service, but that equals time-saving and greater comfort.

For the implementation of this project, we have a multidisciplinary team of experts in the online collection, safety and payment experience industry. The current situation of the pandemic worldwide, has enhanced electronic commerce, and also the digitalization of public entities that seek to approach their users easily and safely.

State Transformation

In November 2020, the Sixth Ministerial Meeting of E-Government of Latin America and the Caribbean was held; where it was exposed that Ecuador has achieved substantial changes in digital transformation, rising 10 positions regarding 2018 in terms of application of E-Government at a global level (74th out of 193 countries). Currently, the country records more than 70% of online formalities of the Central Government, and it is expected to be 90% by May 2021.

Although the Cisco Digital Readiness Index 2019 ranked Chile as the most digitally ready country, followed by Uruguay and Costa Rica, countries of the region are still in a fairly low position regarding the global level, which shows that there are still unattended needs to solve by collaboration between fintech companies and governments.

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