How can blockchain help create better public services?

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The Monetary Authority of Singapore has been actively encouraging the use of blockchain technology with Project Ubin, a collaborative project with the financial services industry to explore the use of blockchain for clearing and settlement of payments and securities. Blockchain has shown potential in making financial transactions and processes more transparent, resilient and less costly.
JULY 15, 2019 - 5:36 AM

Blockchain can be hard to grasp and, despite popular belief, it is more than just cryptocurrency. It is the technology that enables it and it’s designed to be used by both enterprises and businesses. The central idea is simple: blockchain makes it easier to move any item of value from one individual (or organization) to another securely and without the need for a third party.

In the context of government operations, blockchain-based solutions have the potential to make them more efficient and improve the delivery of public services, while simultaneously increasing trust in the public sector. In mature economies, proponents of government blockchain solutions must provide strong evidence that such investments will save money and improve services that are already “good enough.” In emerging markets where there is a lack or immaturity of certain essential public services, blockchain can be a helpful tool enabling governments to achieve their aims.

In Southeast Asia, in light of the call for further integration, governments have an important role to play in cooperating to unlock the vast potential of blockchain technology for the benefit of the region’s economy. Countries that are early adopters of the technology are primed to be facilitators by creating a regulatory framework, setting standards to ensure security and building interoperability to allow the integration with existing non-blockchain systems within their public sector.

Governments also have the opportunity to be industry pioneers and collaborate with technology companies to enable the adoption of blockchain technology in areas of public service that affect the everyday lives of citizens. In ASEAN there are bright examples of how governments use blockchain already. The Monetary Authority of Singapore (MAS), has been actively encouraging the use of blockchain technology with Project Ubin, a collaborative project with the financial services industry to explore the use of blockchain for clearing and settlement of payments and securities. Blockchain has shown potential in making financial transactions and processes more transparent, resilient and less costly. The project aims to help the MAS and the financial services industry better understand the technology and the potential benefits it may bring through practical experimentation.

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Other areas of deployment

- Public finance management

Spending public money on behalf of citizens is one of the most important responsibilities of governments around the world.

At present, public finance managers face a series of challenges as money moves from the central budget authority, through government ministries and departments, to delivery agents. They lack timely, low-cost access to financial and non-financial information that could help improve decision-making and unlock better public finance outcomes. 

Blockchain has a role to play in public finance management, as it enables the tracking of assets, including money, across organizational boundaries, e.g. from central government to provincial governments or departments to the end-government agencies.

The technology will sit on any government system and external delivery agents that manage government transactions, to allow for allocation of resources, and exchange and measure of value created. This gives a complete view of financial and non-financial information in the system. In addition, data on the amount of money spent and whether KPIs are met, can be accessed in an instant by anyone along the value chain who have rights to the  information. This can allow governments and citizens, especially in emerging economies, to see, at any moment, where the money is being spent and what is achieved.

Beyond monetary resources, blockchain can be applied to track all forms of assets, e.g., the creation of physical assets, intellectual property, digital rights and certifications. It will be revolutionary even in the delivery of everyday government services such as the collection of taxes, delivery of benefits, issuance of documents and tracking of the usage of public services. 

- Data sharing and security

Around the globe, blockchain solutions are used to provide transparency through decentralization and allow the public to seek and verify data. The City of Vienna, for example, aspires to position itself as a blockchain hub in Europe. The city’s goal is to develop blockchain solutions for government services, as well as support technology development in the private sector. Working with EY, Vienna identified the notarization of Open Government Data as a use case for blockchain and developed a private blockchain for managing meal vouchers.

In Singapore, OpenCert is an initiative co-developed by the Ministry of Education, the Government Technology Agency, as well as the national educational movement SkillsFuture Singapore and Ngee Ann Polytechnic. Under this initiative students from 18 educational institutions will receive blockchain-based digital certificates starting in 2019. Powered by the Ethereum blockchain, the OpenCert’s open-source platform is expected to provide a reliable way to issue and verify certificates, boost the security of data, the efficiency of issuance and validation processes, and reduce costs associated with traditional paper certificates.

A supportive ecosystem is key

Blockchain shows tremendous potential for governments to deliver citizen services more effectively, thus increasing trust and goodwill, as well as providing savings for administrations. To reach its full potential, a supportive ecosystem is needed. The public and private sectors need to collaborate in developing standards and regulations, as well as creating welcoming environments for blockchain start-ups through tax incentives, grants and other mechanisms. What is clear is that establishing intelligent blockchain strategies at a national and local level can provide governments with a competitive advantage in this transformative age.

 

The author is Jimmy Ong, EY Asia-Pacific Blockchain Leader. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.