by Tara Davda
Why do ‘insiders’ resist new technologies?
A new paper, Working Politically and Adaptively in Practice: The Case Study of ‘YuTru’, examines this question. Drawn from a series of interviews and key reports, it examines the ‘Yu Tru’ scheme (an Australian Government funded, now private sector-led, digital trust framework), and explores the obstacles a small group of ‘outsiders’ (a collection of individuals from diverse backgrounds and with uniquely complementary skillsets) faced and why. It lays bare the surlier side of the PNG financial industry (i.e., the ‘insiders’), and sheds light on the strategies used to navigate it.
In PNG, only 15% of children are registered at birth. One reason is that formal registration of life events is weak; until recently, PNG lacked a central agency for the collection and management of citizen records. This, combined with a culture steeped in tradition and oral storytelling, a large population, inhospitable terrain and poor communications infrastructure, has meant that formalising identity has been overlooked, and only recently has this been made a legal requirement (see National Identity Document, or NID). This affects the ability of many Papua New Guineans to participate in the social, cultural and economic rituals of everyday life, and – critically – prevents them from accessing financial services. This is because commercial banks are required by regulators to apply stringent standards to verify an individual; without identity documents, there are significant barriers to accessing financial services (i.e., banking the ‘unbanked’). The result? Millions of Papua New Guineans excluded from the PNG banking system.
But this is changing: ‘Yu Tru’ will provide Papua New Guineans with an identity recognisable throughout PNG. It’s an innovative solution to PNG’s ‘unbanked’, and one around which the PNG financial industry closed ranks. In general terms, this ‘resistance’ came from three sources: (i) from ‘insiders’; established financial players or organisations whose profit or market shares were threatened by the ‘open-banking’ approach proposed by ‘Yu Tru’; (ii) from the prevailing ‘wisdom’ on how to solve one of PNG’s most intractable poverty problems, and which favoured low risk, tried-and-tested approaches like microfinance; and (iii), from individuals, who feared professional displacement or simply failed to understand the scheme.
The Case Study tells a story of digital disruption: how a series of technological advances in image analytics, machine learning, and cloud and mobile computing matured (in terms of the cost curve and the marginal cost of using them), making it feasible to use them to store and manage digital identity attributes in PNG, and enabling financial institutions to verify individuals in a matter of milliseconds. These changes reduced the cost of digital identification and increased financial inclusion. Previously, digital identity verification needed too many inputs (people, time, money) to achieve the necessary output (verifying an identity), meaning it wasn’t cost effective to use[i]. Yu Tru has changed this.
As well as the application of new technologies, ‘Yu Tru’ proposes a set of ‘rules’ for how digital identity verification should be performed. It sets out how sensitive personal identification information (i.e., tax file numbers, date of birth) should be managed, stored and used, and how to formalise ‘referrals’ (a process where an individual already in the banking system vouches for someone who is not) as a legitimate method for establishing an identity.
In this context, Yu Tru can be understood as a “digital identity ecosystem”, where participants in the ecosystem include customers and the parties issuing and verifying identities. Customers can obtain a single digital identity credential which is accepted by major PNG institutions, and these identities can be accessed offline or online, carried either on a customer’s person (in a smartphone or wearable device etc) or stored in the cloud. It is in these ‘rules’ that the real value of the ‘Yu Tru’ ecosystem lies, more so than the technology.
Unfortunately, it was an ongoing challenge to communicate this; a key reason ‘Yu Tru’ was initially undervalued (and where Thinking Working Politically comes in). Woven through the technical story is a narrative about how the ‘outsiders’ saw potential in ‘Yu Tru’ to reduce poverty in PNG, and how their deft, creative application of TWP principles and understanding of the political economy of the environment they operated in, enabled them to navigate obstacles which at times threatened to derail the project.
Where is ‘Yu Tru’ now?
Despite the opposition against ‘Yu Tru’, there is clearly a compelling need for it, evident by the milestones the scheme continues to reach. In June this year, Yu Tru had hired its first operational staff, raised sufficient capital to be self-sustaining, and had been proposed as a regional solution to provide scale and value to small island Pacific states’ identity management. These are all clear signals of YuTru’s economic value. This belief united the ‘outsiders’: while others were focused on the technology, they recognised that the technology was simply a tool, and that it didn’t matter what the rules in the ecosystem were, just that everyone agreed to follow them.
Financial inclusion is considered a development problem, and as a result, is often ascribed ‘financial’ solutions (i.e., microloans or microfinance) to address it. But Yu Tru illustrates that sometimes, the key to solving a problem lies not with tried and tested approaches, or with ‘insiders’, but with ‘outsiders’; people willing to take risks, iterate and who are unafraid to try new approaches. This is surely a lesson for all of us – development practitioners and donor agencies alike.
[i] This is an oversimplification. There were also regulatory changes imposed by financial sector regulators which changed the way identity verification could be performed – i.e., away from manual ‘onboarding’ processes and towards digital processes. See Working Politically and Adaptively in Practice: The Case Study of ‘YuTru’ for further detail.