GLOBAL GOVERNMENT FINTECH LAB 2025: PANEL SESSION TWO

The Global Government Fintech Lab 2025’s second panel session focused on fintech’s opportunities for finance across government, Ian Hall reports

Technology has a growing role in helping government finance professionals in fields ranging from tax payment efficiencies and fiscal compliance to cross-government financial data-sharing.

Objectives with using such technology are often the same: for example, to create more agile and user-friendly finance operations, processing money in and out with seamless efficiency and real-time accuracy. But governments typically also face similar challenges, often related to existing systems and teams operating in siloes; and different appetites for technology-led transformation.

Global Government Fintech Lab 2025’s second panel session – ‘Government finance: which (fin)technologies have the most potential?’ – sought to explore which topics and trends are most front-of-mind for senior representatives from the event’s host nation Ireland, Latvia and Microsoft (one of the event’s private-sector knowledge partners).

Ireland exemplifies how many administrations see the possibilities of digital transformation for government finance. ‘Technological change will… offer opportunities to reimagine taxation and welfare systems administration, allowing for the basis of charges and payments to be rethought, the use of more streamlined processes, and the development of real-time ways to pay,’ noted one report (published at the government’s behest) – ‘Foundations for the Future: Report of the Commission on Taxation and Welfare’ – in 2022.

‘People increasingly expect seamless integration of technology with their day-to-day activities, as more and more goods and services are a few short clicks away,’ the report stated. ‘The digital environment has created an opportunity to reimagine the administration of tax in a manner that can design out non-compliance and reduce the administrative burden for both taxpayers and the Revenue Commissioners (Revenue) thereby reducing errors, speeding up services and driving down costs.’

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‘Natural tax’ ambition

Ruth Kennedy

Ireland’s revenue commissioner Ruth Kennedy spoke of an ambition of achieving “natural taxation” – the idea that tax systems should fit around businesses’ and citizens’ existing practices, rather than requiring them to carry out additional administrative processes to calculate their tax liabilities and report to government.

Tax payments, she said, would “just happen digitally and seamlessly” (without chasing and reminders), partly enabled by “ecosystem partners” in financial services.

She highlighted milestones on Ireland’s journey to date as including PAYE (Pay As You Earn) modernisation, including the introduction of ‘real-time reporting’ in 2019. This is designed to make it easier for the department to receive tax payments and for people and businesses to make tax returns.

The European Union (EU)’s three-pillar ‘VAT in the Digital Age (ViDA)’ package was mentioned. This aims to modernise VAT reporting and compliance through digital means. (Ireland’s Revenue department published a report – ‘Modernising Ireland’s administration of VAT: Report on the initial Public Consultation process’ – 12 months ago).

On the technology side she described the importance of “integration between systems”, typically enabled by application programming interfaces (APIs) as the “lifeblood” of such integration. Security, trust and identity verification are, she said, “really, really important”, with open APIs (publicly available standardised ways for software systems to communicate) allowing businesses to interconnect their systems and get financial data flowing in real-time (and with users’ consent), including with the government.

RELATED ARTICLE ‘Death to the tax return’: tracking the revolution in revenue collection – a write-up from the Global Finance Summit 2024 – an event organised by our sister title Global Government Forum (also in Dublin) during which Ruth Kennedy also discussed ‘natural taxation’

Data modernisation journey

Dina Buse

Dina Buse, who is both deputy director of Latvia’s Ministry of Finance’s Financial Market Policy Department and head of its Credit Institution and Payment Services Policy Division, was the session’s second speaker.

She began by highlighting the importance of data modernisation as the “very first stage of digitalisation” – and indeed a “baseline” achievement.

Latvia’s authorities, she said, working towards creating one “point of entry” for tax-related data, so everyone inside and outside government has the same point of reference – and government itself has “accurate, timely and reliable” data. After this baseline has been achieved, new technology-related challenges and opportunities emerge, she said. So, for example, using “more specific techniques” for analysing and (where necessary) adjusting data in the case of errors.

When the Latvian government published a strategy to encourage the development of the fintech sector in 2023, 21 action points included ‘evaluating possible solutions for the reduction of administrative burden, including optimisation of data exchange between financial market participants and the State Revenue Service in relation to income earned and taxes paid by all investors.’

“There is a lot of potential for financial innovation – also for fintech companies to step in and provide services – if this first level is already well established: if all the information is interconnected and audited, with one point of entry,” Buse said, concluding her opening remarks. “Then you have a very, very good foundation for the next steps.”

GenAI and quantum computing

Valentina Ion

Valentina Ion, public finance global lead at Microsoft, gave an overview of some of the technologies being used around the world, illustrated by a presentation titled ‘The power of innovative technologies in public finance.’

Her presentation slides highlighted how organisations can ‘start with data and artificial intelligence and drive strategic innovation in public finance’ via initiatives such as the use of ‘cloud native services’ to accelerate the adoption of AI and machine learning; smart contracts; and ‘predictive FinOps.’

She pointed out that, however, technology adoption involves considerations significantly beyond the technology itself: from the growing importance of international standards initiatives, through to skills and ethical considerations (for example with the use of AI).

The “low-hanging fruits” that AI and generative AI (often abbreviated to ‘GenAI’) can bring are “efficiencies” for government, she said. (Lab 2025 had begun with a keynote speech by Ireland’s minister for digitalisation, Jack Chambers, who highlighted genAI – which refers to the use of AI to create new content such as text, audio, images and video that can appear like it has been made by a human – and distributed-ledger technology (DLT) as among the “disruptive technologies” that will have a “transformative impact” for everyone using financial services).

Ion also mentioned the growing importance of quantum computing (Microsoft unveiled ‘Majorana 1’, described as ‘the world’s first quantum processor powered by topological qubits’ in February). Quantum computers are significantly more powerful than classic computers and bring both opportunities and threats for the public sector: for example, it offers potential for new, more secure methods of data protection but can also break existing encryption methods. (EU member states, supported by the European Commission, on 23 June issued a roadmap and timeline to start using so-called post-quantum cryptography (PQC) as a ‘more complex’ form of cybersecurity – it said that ‘the protection of critical infrastructures should be transitioned to PQC as soon as possible, no later than by the end of 2030’).

Transformational thinking required

With opening comments out the way, Kennedy picked up on references to the benefits of technology as being to increase government efficiency, urging that those engaging technology “think beyond streamlining what we currently do” – a point that Ion fully agreed with.

Re-stating an analogy she made at the Global Finance Summit 2024, Kennedy was keen to explore ‘transformation’ in its fullest sense. “I always use the caterpillar and the butterfly,” she said (a metaphor for growth and overcoming challenges).

“If we’re really to leverage the power of technology, we need the transformative aspect to it and not actually say: ‘Let’s apply AI to our current processes’ because while it can give us efficiencies, it really doesn’t get the true benefits,” she said. “I think we need to say: ‘If we were designing the finance function today with the technologies we have, we definitely wouldn’t start with what we have now’.”

Traditional paper-based tax returns and AI almost symbolise a juxtaposition of the ‘old’ and the ‘new’. “What is a tax return in the world of AI?,” Kennedy asked rhetorically.

Progressive transformational thinking was already enabling public finance-related considerations and insights to “play a bigger role” across many governments, Ion said, in the same spirit.

Private-sector opportunities

Kennedy highlighted how the evolution towards digital processes was creating opportunities for the private sector, including those with fintech-related products.

The public sector “often gets criticised” for placing additional administrative frictions on businesses, she said. But, actually, “the market [private sector providers] has to come in and develop solutions.”

“Really, I think where private-sector technology can add value to their customers is by providing that ability to seamlessly report the data that administrations are looking for – and it isn’t a ‘form’, it isn’t a ‘burden’, it is part of running a business,” she said.

Buse said that, with effect from January 2025, all invoices sent to Latvian state institutions need to be electronic (and by 2026, e-invoicing will become mandatory in the business-to-business sector).

“You can have an instant flow of information from these digitalised invoices,” Buse said, adding that it creates the “possibility for very fast aggregation of data and fast decision-making on taxation.”

Echoing Kennedy’s point, she said that this was an opportunities for “all the financial technology companies [to] then step in” in enabling the private sector to help transform their own financial systems.

‘Government finance: which (fin)technologies have the most potential?’: panel discussion at Global Government Fintech Lab 2025 in Ireland on 11 June | Credit: Deirdre Brennan for Global Government Fintech

From CapEx to OpEx

The panel was asked what they see as the biggest challenges for the public sector in adopting emerging technologies.

Kennedy identified skills, adding that it was likely necessary to partner external organisations to help in this regard; as well as procurement.

“We talk about ‘pace of change’,” she said, setting the context to tech-related procurement challenges. “What are we actually procuring, and how do you define that?”. More specific procurement-related challenges, she said, include “avoiding vendor lock-in” (a situation where an organisation becomes overly reliant on a specific vendor’s product or service, making it difficult or costly to switch to a competitor); and challenges related to budgeting (and budgetary cycles) when “moving from a CapEx [capital expenditure] model to an OpEx [operating expenditure] model.”

“So, if I’m using AI models in the cloud, do I pay per transaction? Do I ‘turn them off’ in September when I run out of money and how does that work?,” she asked rhetorically.

“The other big thing – I always tell this to my colleagues in [the Department of] Public Expenditure – is: technology is for life, not just for Christmas,” Kennedy continued. “You don’t just buy it [and not invest further]. There’s a need for ongoing technical maintenance. A lot of people think that it’s just ‘something at the top’. But there are layers of middleware, hardware, networks, infrastructure – all of which the private-sector market changes, stops using, upgrades… [etc].”

In the area of skills, Buse made the point that it was important that “general society” was also able to understand technology – and why government should invest in it. This was important, she said, because of challenges related to “retaining trust in what the public service [and] public authorities are doing” – for example, in the area of personal data protection.

RELATED ARTICLE Unchained melody: finance ministries explore blockchain – a write-up of a session on blockchain at Global Government Fintech Lab 2023 (Dina Buse was on among the panellists)

Blockchain considerations

Ion had previously mentioned the growing prominence of distributed-ledger technology (DLT) – of which blockchain is the most well-known type.

In response to an audience question about other panel members’ interest in blockchain, Kennedy responded that – in the field of tax administration – she would “sometimes” describe it as a “technology looking for a use case”. However, she was aware another European country’s tax administration “starting to use it” in the field of payroll reporting (and acknowledged blockchain’s significance more broadly in the field of digital currencies, for example).

Buse said that a forthcoming update of Latvia’s fintech strategy would likely include sections on blockchain use cases.

In a Global Government Fintech webinar two years ago (write-up: ‘Blockchain bonds: digital issuance breakthroughs build buzz’), she had spoken of the technology’s potential for government bond issuance, including for sustainability bonds. She recalled this interest, as well as the “possibility of tax collection using blockchain technologies” (also “collecting tax using cryptocurrencies”); and “the possibility of using blockchain in [the field of] digitalised assets, for example, the Land Register”.

But she said that a lot of this work remained “in the exploration phase” and the government was taking a “very cautious” approach, adding that legislation was also important.

Towards a collaborative future

To what extent will many of the areas of ambition and interest discussed lead to action?

Buse’s reference to legislation is significant as neither government action nor technology development takes place in a vacuum.

Indeed national and/or supranational legislation is pivotal to everything from building awareness of the technology in the first place (among policymakers and society) to actually enabling some of the newer technologies to be used to deliver public functions.

Deep challenges remain that are not unique to technology – for example, improving cross-government working and, of course, the unspoken but ubiquitous pressures on the public purse.

But pressure within government to capitalise on technology is increasing – and fintech suppliers are ready to collaborate when public sector authorities take either a toe-tip or full plunge into the future.