e-Finance Trends: Transforming governance through the Internet

Recently, there was a news article announcing the preparedness of Qatar's e-government project. The project is in an advanced stage of development. Once developed, the residents will be able to interact with 22 different departments through a single window using computers.

Residents of the country will no longer have to go to different ministries and departments for routine activities which do not require physical presence.

Not only that, even on the Internet one does not have to go through different portals to conduct transactions. Interaction with multiple departments for multiple services such as resident permit, health card, vehicle registration, driving licence renewals, municipal services, telecom services, postal services, commercial registrations and so on will be through one portal.

A similar initiative has also been undertaken by the Dubai government whereby a resident can have a single window interaction for all government services.

We are stepping into an era where the governance model is being transformed through the power of the Internet.

In the traditional governance model, we are used to visiting different government departments separately for regular services and payments. Each of the transactions is independent of the other, and there is no concept of aggregation.

Whatever automation-driven efforts we had been seeing were primarily initiated at department levels, and hence remained limited to a set of services.

With e-government initiatives, the efficiency gets multiplied due to lateral aggregation. We can visualise a situation where the number of transactions and physical trips to various offices could drop to half the existing level. So much efficiency can be generated and so much traffic reduced.

Technology-wise, what kind of infrastructure does it involve? We need to have multiple banks, government departments and residents linked to one another. From the banks' point of view, they need to have a robust payment and e-commerce gateway.

On the one hand it should be able to readily connect to any existing and new services so that all their existing customers are able to use the above services. On the other hand, it should have the ability to link up with as many payment systems as possible to receive payments for such services. We are then talking of good customer service and good business opportunity.

Today, we have multiple security standards followed by different generic and propriety authentication systems such as SSL, SET, 3D, SPA, among others.

Payment mechanisms are different for different instruments and institutions. The payment gateway should support multiple standards, multiple security protocols, multiple touch points and multiple payment systems to be able to connect to any new services without any further investment. This will save a lot of future expenditure to the bank and provide good value to customers in the long run.

Any e-government project is incomplete if banks are not ready to meet the challenge with equal zeal. Banks which are prepared can also provide access to other authorisation systems to access the above services via their payment and e-commerce gateway. This will provide some level playing to banks lagging technology-wise and a good business opportunity to banks that are well prepared.

From the governments' point of view, they should be able to be an effective aggregator of services as well as payment systems. Service providing departments should be able to 'push' their bills, notifications, statements to all or specific customers.

E-government should be able to acquire payment instructions through any bank the customer may choose. They need to make sure that e-commerce transactions flowing from service provider to customer, payment instructions from the customer to his bank, payment notification from bank to service provider are all seamless and operate in a secure environment.

Government departments should integrate such receipts directly with their receivable systems so that all back-office activities pertaining to settlement, reconciliation, etc are taken care of without any effort.

From the point of view of interfacing, having a focal aggregating point like e-government makes a lot of sense. If each bank were to connect to each government department separately, the number of similar projects running in isolation would be too many. The concept of aggregation would also never take off.

One of the key concerns and perhaps a barrier in speedy adoption of e-commerce is customer confidence in security. Lots of work has been done in these areas with standards such as SSL, SET and PKI infrastructures. While the SSL standard is geared towards providing secure data movement through medium, it does not address the issue of customer authentication.

Visa and MasterCard have come up with their own security features for authenticating the customer. However, its implementation, in order to be really effective, has lots of issues and requires preparedness and willingness from both merchants and issuers.

We are in an ironic situation where the risk of fraud or repudiation affects the acquiring merchants, whereas the addressing of such risks needs the active participation of issuing banks that are not facing the risk.

This has perhaps resulted in security not reaching the level it should have despite being a high profile topic. A lot needs to be done to have security as a mass market standard component, and we will discuss the issue in coming weeks.

The author is Assistant General Manager of Doha Bank.