Public perception of government services is at a record low. At the end of 2023, Ipsos found that eight in ten Brits say public services have worsened over the past five years. To fight against this, a boost of innovation in public services is needed
People are accustomed to long queues, which offers a grim symbol of continued underinvestment. There are legacy-system outages where glitches cause delays for case management. It’s a relentless uphill battle where inefficiencies need addressing.
The UK boasts an innovative fintech sector where new and emerging technologies transform how people manage their finances. However, such innovations have yet to be adopted throughout public services. The inconsistency is a stark realization that public services remain tethered to outdated systems, which have fostered a disconnect between services and communities.
Public services have an opportunity to leverage the same spirit of innovation fuelling the FinTech sector. Governments can breathe new life into public services with technology such as embedded finance, where financial services are available in non-financial areas. It’s time to look to alternative places to build service resilience and support the government in delivering the high-quality services Britain needs.
A tough economic and public climate
The challenge for public services is twofold. The way the public interacts with technology and accesses information has changed drastically. Google, once the go-to destination for answers, has been replaced with TikTok and Reddit. People are turning to each other for information as trust in governments and local authorities declines. As technology becomes more sophisticated and a part of people’s daily lives, so do consumer demands for simpler and more convenient experiences.
There is an air of pessimism about the future of public services. In 2023, strikes across the public sector, record-long waiting lists for the NHS, prisons at their maximum capacity and local authorities declaring bankruptcy meant it was a turbulent time for the sector. Although the challenges are complex, so too are the opportunities for positive change and growth. Over the next 12 months and beyond, the industry must be flexible and ready to adapt to change.
Innovation in public services: Driving efficiency where it matters most
Technology combined with process, policy, workforce, and regulatory innovations enables governments to enhance service delivery and operations. One opportunity that is yet to be realised is embedded finance, which has the power to drive efficiency in areas such as benefits, taxes, and parking.
By integrating financial technology directly into government platforms, citizens can say goodbye to clunky apps and hello to efficient, user-friendly experiences. This shift meets the demands of a digitally-driven society and rebuilds trust in public institutions through tangible improvements in service delivery.
The impact of embedded finance extends far beyond the realm of citizen-facing services. It supports the internal operations of local authorities. From revenue collection to expenditure management, digital financial solutions help reduce manual errors and optimise resource allocation. The ability to disburse subsidies and grants seamlessly ensures that funds reach intended beneficiaries promptly, reducing administrative overhead and minimising the risk of fraud. By embracing embedded finance, governments can unlock significant cost savings while enhancing the overall effectiveness of public expenditure.
Financial inclusion through innovation
One of the most compelling aspects of embedded finance is its potential to bridge the gap between underserved communities and essential government services. For the millions of unbanked individuals who lack access to traditional financial institutions, embedded finance solutions offer alternative payment methods.
From mobile wallets to prepaid cards, public services can open doors to financial literacy initiatives and microfinance opportunities to get more people enrolled on health and education initiatives, for example. As a result, people feel empowered and local authorities continue to build that important resilience for the public sector.
Data privacy: Security meets personalisation
The integration of technology into public services raises concerns about data privacy. However, this needn’t be a roadblock. Partnering with fintech providers who are experts on compliance, risk, and regulation can help build a robust security infrastructure. With encryption protocols, licensing and stringent data protection rules, governments help sensitive public information remain protected.
Transparency around data usage is paramount to continuing the journey to rebuilding public trust. Understanding how the public feels about technology and data use is crucial to successful implementation and rollout. Clear consent, regular checks and security monitoring are crucial. To improve the quality of service delivery, the government must work closely with the public and ensure both are on the same page to pave the way for an innovative, personalised and secure public sector.
Untapped potential for the public
The integration of embedded finance into public services represents more than just a modernisation effort – it embodies a fundamental shift in how governments engage with their citizens. By leveraging payment innovation, governments have the opportunity to transcend traditional barriers and forge deeper connections with communities. Yet, this is just the beginning.
Though the embedded finance market is estimated to exceed $228bn by 2028, its true potential remains untapped. The technology promises a future where public services are not only efficient and accessible but also deeply personalised and responsive to individual needs.
The journey towards this vision will undoubtedly see challenges, but the rewards – greater trust, enhanced service delivery, and a more inclusive society – are worth the effort. As we embark on this transformative journey, one thing is certain: we’re only at the start in bringing innovation to the public sector.
This piece was written and provided by Ivo Gueorguiev, co-founder of e-money institution Paynetics
