Public services are frequently perceived as rigid, cumbersome and difficult to navigate. They often lack speed, user-friendly interfaces and other essential features. This is not merely a subjective matter; governments worldwide have acknowledged the need to enhance the efficiency and inclusivity of their services.
For example, the United Arab Emirates created its Digital Government Strategy 2025, which aims for comprehensive digital integration across government sectors. Furthermore, in 2023, the city of Hamburg, Germany, launched a govtech Campus to digitize its administration and enhance collaboration with innovators and startups through cloud technology.
Being the co-owner of a company that develops platforms for businesses and government agencies, I’ve seen how digital platforms can provide a wide range of services to citizens and organizations, including automated tax filings, real-time public transportation updates, online voting systems, digital health records access and more. Government platforms can also help to engage communities and, together with them, tackle emerging issues.
Govtech is also a prospective market that’s grown in recent years. Here are what I see as the most intriguing technological innovations that can elevate public services to a new level and create an enticing niche for entrepreneurs.
Artificial Intelligence
The latest buzz surrounding AI has not gone unnoticed by governments. In January, the European Commission outlined a strategic vision “to foster the internal development and use of lawful, safe and trustworthy” AI systems in anticipation of implementing the EU AI Act, “the world’s first comprehensive law on AI.” In the U.S., New Jersey and California governments are exploring potential uses for generative AI in streamlining operations, such as drafting memos or analyzing public feedback on state policies.
A Deloitte report noted that generative AI can play a valuable role in government agencies. It recommended agencies launch more pilot projects to explore generative AI’s capabilities and ensure its safe, secure application. AI’s potential for policy analysis, summarizing extensive documents or data and generating review-worthy content stands out as key benefits, per the report. I believe anomaly detection represents another valuable area of application, as AI can conduct real-time monitoring to help identify discrepancies, errors or potential fraud.
Smart Cities
Smart Cities, another growing trend, focus on integrating technology, such as the Internet of Things, AI and big data analytics, into urban infrastructure and services. The smart cities market worldwide is projected to have a compound annual growth rate of 12.15% from 2024 and 2028, resulting in a market volume of $165.8 billion in 2028. Through smart technology, cities can optimize everything from traffic and public transport to energy use and waste management. This has the potential to make urban areas more livable, responsive and environmentally friendly.
Several cities around the world have already made strides toward becoming smart cities. One notable example is Singapore’s Smart Nation initiative, which supports leveraging data analytics, IoT and AI to improve urban living. Smart Nation focuses on areas such as transport, health and urban solutions. Dubai’s smart city project aims to make Dubai the “happiest city on Earth” through smart technology integration in areas such as government services and transportation. Furthermore, for years, Barcelona has used the Internet of Everything to improve parking, lighting and waste management, enhancing energy efficiency and urban planning.
Blockchain
The global blockchain government market was valued at $2.5 billion in 2022 and is expected to exceed $218 billion by 2032. Blockchain technology in govtech offers new ways to enhance transparency, security and efficiency within governments. By enabling decentralized and tamper-proof data storage, blockchain can help streamline processes, reduce fraud and improve trust between government entities and the public. Its potential applications include smart contracts for automated government transactions, identity management solutions and more.
There are several countries around the world that have embraced blockchain technology in govtech. These include the UAE, Australia, Georgia and India. Estonia is another example; it has been at the forefront of integrating blockchain to secure its e-governance ecosystem. A notable example is its KSI Blockchain, which supports various state registries, including business, healthcare, property, digital court and more.
Lessons For Entrepreneurs
To sum up, the demand for govtech is growing, serving to enhance the efficiency, transparency of local governments and citizen engagement. With strategic visions and comprehensive laws guiding the implementation of the Internet of Things, AI and blockchain, these technologies have the potential to reshape administrative operations and urban landscapes, thus paving the way for more sustainable and digitally empowered societies.
As a result, I believe there are possibilities for entrepreneurs to either create new startups with a focus on govtech or expand their businesses by adding new products. However, there are some aspects to bear in mind before entering this market.
Firstly, you have to know not only about technologies but also about regulations of public services. Carefully studying local legislation is one of the keys to success. Secondly, you’ll need to secure a government contract to create a govtech product. That can take some time, considering bureaucratic procedures. Finally, geographical scaling can be tricky. Researching the new market, competitors’ field, and simply adapting your existing product is not enough. You have to dive into every detail of how public services work in a new region, what rules they follow, etc. That is a time-consuming process that could require significant funding. But do not be scared. Hard work and patience will not let you down.
