X-Road Trust Federation for Cross-border Data Exchange - Observatory of Public Sector Innovation

The Governments of Estonia and Finland are exchanging data across borders in an X-Road Trust Federation. The countries had already developed and implemented their own national data exchange layers based on the X-Road technology. The two instances now communicate with each other in the first international interoperability ecosystem of its kind, facilitating the real-time availability of information on population and businesses in the face of increasing trans-border economic activity.

Innovation Summary

Innovation Overview

A significant level of interdependence characterises the Finnish and Estonian economies. This applies to workers commuting between the two countries and businesses operating in trade, service, and the secondary sector – both nationally and across borders. With ever-increasing global economic integration, neighbouring countries see their economic relations tighten, and public administrations need to exchange accurate data on population and businesses securely.

Estonia and Finland, respectively, had already developed and implemented their national data exchange layers to enable interoperability across government agencies of the same country. Both data exchange platforms – X-tee in Estonia and Suomi.fi Data Exchange Layer in Finland – are based on the same technology, X-Road. In this framework, all prerequisites were in place to give birth to the world's first X-Road Trust Federation.

X-Road is an open-source software solution that provides unified and secure data exchange between organisations. It is also a digital public good, verified by Digital Public Goods Alliance. The X-Road Trust Federation is an ecosystem for cross-border data exchange allowing for interoperability between two X-Road-based data exchange layers from different jurisdictions – be these regions, federal states, or countries.

By linking the two X-Road-based instances initially developed separately in Estonia and Finland, government agencies in the two countries are now exchanging relevant census and labour market data on population and businesses via the internet, across borders.

The high-level objectives of this novel interoperability framework are three-fold:

1) Enhancing capacity building on the matter of data exchange between the two countries. With already-existing political agreements on cross-border information access in place, X-Road offers an easy-to-deploy solution to support such exchange from a technical point of view.
2) Making information on Estonian and Finnish residents, workers, and businesses more readily available to relevant government counterparties to perform routine checks, provide operational permits, and maintain a high level of data accuracy across borders more seamlessly.
3) Allowing governments to keep pace with increasing economic and market interdependence between the two countries, with the outcome of smoothening public service provision to citizens, workers, and entrepreneurs.

The X-Road Trust Federation makes data on Estonian residents and businesses available to relevant, approved Finnish government agencies and vice-versa. This was achieved by capitalising on the previous national successes in interoperability across government agencies in the respective countries.

To start exchanging data on the platform, two government agencies must conclude a bilateral agreement setting the standards for the information exchange – data quality, responsibilities, and limitations. In a national X-Road environment, such formalised understanding is reached between two parties belonging to the same public administration or with the inclusion of private sector service providers. In the case of a cross-border X-Road Trust Federation, counterparties from two national X-Road instances configure their certificate verification standards and establish bilateral agreements to exchange information across borders seamlessly.

To this day, data is exchanged across borders between Estonia and Finland through 3 different channels and bilateral agreements: between national commercial registers (1), tax boards (2), and population registers (3).

Benefits are immediately identifiable in organisations’ reduced workload and request processing times. Public officials can access the data they need more seamlessly, shorten waiting times, increase information availability, and grant data accuracy. Thus, service provision becomes more hassle-free for the public administration involved. As a consequence, the recipient of such public services – be them citizens, workers, or businesses – enjoy a more efficiently operative public sector, have their data automatically available for the government entities they must interact with, and do not need to update personal or company-related information as these change in their home country.

The cooperation on cross-border interoperability between Estonia and Finland is deep-seated in memoranda and formal arrangements that dotted the past twenty years. Since 2019, the first data exchanges have been taking place on population management and core labour market information on workers and businesses. However, with the two national X-Road instances already fully developed and deployed in both countries, the potential for scalability of this cross-border X-Road Trust Federation is high. It already offers the necessary technical support for more international bilateral agreements to come to be.

Innovation Description

What Makes Your Project Innovative?

The X-Road Trust Federation is, to the best of the authors' knowledge, the first project of its kind in the world. Although the exchange of data between agencies across borders is not a new development, this project's uniqueness consists of federating two interoperability ecosystems in their entirety. The data exchange previously enabled nationally in Estonia and Finland by the respective X-Road-based platforms becomes shared as more use cases of bilateral agreements realize on top of the federative capabilities of the underlying technology.

The technical basis for the Federation to take place are in-built in the X-Road technology. This allows for more use cases to spring up upon the initiative of two counterparties already part of their respective ecosystems, whether these are public or private organizations. And there is ample room for scalability to other domains or existing services in one ecosystem towards the other.

What is the current status of your innovation?

In Finland and Estonia, three government agencies are currently engaging in secure data exchange via the X-Road Trust Federation:

- The Estonian (EMTA) and the Finnish (VERO) tax boards.
- The Estonian Ministry of Justice with the Finnish Patent and Registration Office (PRH).
- The Population Register of Estonia and the Finnish Digital Agency (DVV).

The focus now lies on the identification of other potential use cases within the X-Road Trust Federation environment. So far, government agencies have been the subjects involved in cross-border data exchange. The goal is now to remove barriers to utilising the Federation in full also for private sector organizations, especially concerning granting access to data and setting the necessary security standards. While the platform (X-Road) might be technically ready, negotiations on formalizing bilateral agreements are currently the most cumbersome stage of the integration process.

Innovation Development

Collaborations & Partnerships

The first agreement on cross-border data exchange was entered into by the Estonian Information System Authority (RIA) and the Finnish Digital Agency (DVV).

The Nordic Institute for Interoperability Solutions (NIIS) has been overseeing the development of the core technology of X-Road since 2017, thus enabling the Trust Federation.

Other stakeholders are the government agencies currently federated. They provide the first use cases for the X-Road Trust Federation, triggering further adoption.

Users, Stakeholders & Beneficiaries

Today, government authorities are the principal users of the X-Road Trust Federation – all six public sector agencies currently federated between Estonia and Finland. Organizations already included in the respective national ecosystems benefit from the federated data exchange setting too.

Moreover, citizens and companies indirectly benefit from X-Road, ensuring smooth information exchange in the background. They are end-users of the services more efficiently provided by the public sector.

Innovation Reflections

Results, Outcomes & Impacts

The overarching result of the X-Road Trust Federation is the secure exchange of data happening now in real-time across borders, between Estonian and Finnish counterparties. This applies to all use cases currently active – population registers, commercial registers, and the tax boards.

Expect impact in the future spans beyond the use cases currently already at the production stage. They indeed set the stage for further expansion to other uses cases in the public sector of the two countries and the involvement of private organisations. A core value of the platform is the potential for scalability it offers. From a technical perspective, there are no limits to its extensive use for cross-border exchange in other domains within the Trust Federation.

Challenges and Failures

One challenge has been related to the perceived and reaped cost/benefit ratio. In essence, the costs of setting up and starting the exchange of data across borders have been mainly sustained by the organisations directly involved in the establishment of the bilateral link. However, the benefits of such projects are instead at the state level than at the implementing organisation in itself.

Another challenge can be ascribed to service consumers refraining from joining the X-Road Trust Federation due to a low number of services already in place and, in turn, service providers unwilling to join because of a lack of potential consumers. However, with core agencies and providers joining the Trust Federation, such as the population and business registers with their use cases, this can attract more consumers towards the platform – and scale up from thereon.

Lack of systematic change management towards facilitating cross-border use cases has also been an issue observed by NIIS.

Conditions for Success

As for most digital transformation projects, political support and will are crucial to succeed in creating an X-Road Trust Federation. In parallel with trust between the implementing countries and between organisations exchanging data, willingness to cooperate is critical to foster a change that is organisational and operational but only enabled by the right technology.

Institutional structures establishing high-level agreements and responsibilities are also vital, such as the Estonian Information System Authority and the Finnish Digital Agency in the present case. They can also contribute to providing the necessary legal framework to support cross-border data exchange.

Last but not least, an interoperable technical infrastructure based on X-Road is necessary to federate different ecosystems and compatibly create a Trust Federation.

Replication

Since the source code of X-Road was released as open-source under MIT license and is available free of charge, the potential for replication at relatively contained costs is high.

Interoperability platforms based on the X-Road technology have been deployed in other countries around the world – the count is up to 19 so far, including countries in Europe and Latin America. As they rely on the same technological basis, they all potentially make a case for cross-border data exchange between each other.

The goal is always to increase the efficiency of regions’ or countries’ public administration by opening up information systems and exchanging data across government institutions via the Internet to provide better services to citizens and businesses.

For example, an X-Road Trust Federation could be created in Latin America between countries where X-Road has been adopted or between federal states within the same nation (such as in Brazil).

Lessons Learned

Implementation costs are mainly sustained by the member organisations directly involved. The ratio should be more balanced, with returns and investments proceeding hand-in-hand, so that organisations involved would find more reasons to invest resources to make cross-border interoperability happen.

Systematic change management towards enabling cross-border data exchange should also be in place. The positive, direct effects of such a shift in approach would enable better and faster implementation of the bilateral agreements. Moreover, they would help avoid problems that might arise when scaling up the platform and ease adoption in other domains for new use cases.

X-Road is much easier to implement than many other existing technologies where secure interoperability is the goal. And the potential for scalability is vital, as the X-Road Trust Federation itself is a feature in the current X-Road version.

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