5 Questions to… Douwe Lycklama, INNOPAY
Besides being a founding partner of INNOPAY, Douwe Lycklama is also co-author of the award-winning book ‘Everything Transaction’. Here, he talks among other things about digital sleepwalkers, digital citizenship, digital duct tape and INNOPAY’s contribution to creating a more digitally sustainable world.
“It’s full steam ahead for the digital sustainability train, and this is the time for forward-thinking companies to climb aboard”
How would you define the term ‘digital sustainability’? And why is it so important to INNOPAY?
The thought behind digital sustainability is very similar to traditional sustainability; it’s about the awareness that things can be done differently and better to support evolution, rather than simply taking existing practices for granted. I’ve explored various paths over the past couple of decades, but they’ve all led me to the same conclusion: that we’ve lost control over our data. Admittedly, we’ve received some very nice, convenient, ‘free’ services in return, but I believe that there should be a fairer, more digitally sustainable alternative to the internet’s current dominant business model which revolves around the platform approach popularised by the BigTechs and their monopoly on data sources.
This alternative system should be built on ‘data sovereignty’, i.e. our data also belongs to us, and we have full control over it. If we as individuals are the ‘product’ being monetised by businesses – which we are – then we should at least have the right to know what data is being held about us, where and by whom, and we should be the ones to determine how it is used. Last but not least, we should be able to re-use it in other contexts to create value for ourselves with our digital selves. There is also an important identity aspect to this, because in today’s digital world – and especially among younger generations – a person’s digital self is becoming just as important as their physical self. However, there’s so much data about you scattered all over the place nowadays that it’s impossible to piece your digital self together, and there’s no map to guide you.
Additionally, data sovereignty would overcome the lock-in effect that people currently experience with online services such as Facebook, Twitter and Amazon, where you’re free to leave the platform in theory, but the penalty for doing so is unfairly high: you ‘lose’ all your friends or your history, so switching is complex and costly. One defining point in my own digital sustainability journey was when I was involved in the iDEAL project in 2004 to create a standardised, interoperable payments system for and with the Dutch banks. This project proved that the centralised platform is not the only model for two-sided markets on a mass scale; it’s also possible to provide digital services in a decentralised way if there’s a proper business model and governance in place and the middlemen – in this case the banks – are interoperable. So I started wondering why we couldn’t do that in other areas such as electronic invoicing, digital identity and data sharing across sectors. Since then, based on what we’ve learned in the banking industry and elsewhere, INNOPAY has been supporting the development of digitally sustainable alternatives based on transparent, fair, trust-based data sharing in many other two-sided markets. You could say digital sustainability has become part of INNOPAY’s purpose.
What is the current state of awareness about digital sustainability among people in general, and how is this changing?
Public awareness is growing, but it still leaves a lot to be desired. There are so many examples of things we meekly accept in the digital world that we would immediately question in other settings. For example, why can’t I use WhatsApp to send a message to someone who uses Telegram? Can you imagine if you could only use your Vodafone mobile phone number to call other Vodafone users? Similarly, my local Neighbourhood Watch group’s promotional street signs display a WhatsApp logo, which means I can only help my local community to stay safe if I’m willing to hand over all my data to Facebook! In many cases the intentions are honourable, but it shows just how deeply ingrained the BigTechs – and therefore also platform thinking – have become in our daily lives. It’s as if we’re digital sleepwalkers, allowing ourselves to be seduced by free services and convenience, without stopping to think about the consequences. A few initiatives are helping more people to wake up to the situation, such as Mastodon, Bluesky and Nostr as decentralised social media alternatives, and Tim Berners-Lee’s web decentralisation project called Solid. Although currently still on a small scale, they are slowly gaining traction, and the social media alternatives have definitely been accelerating since Elon Musk’s takeover of Twitter.
In the context of digital sustainability, I believe a lot more should be done in terms of communicating the risks associated with our current approach to data, and in my view this can’t start young enough. Today’s children are growing up in the digital age, but at best schools teach them about how to stay ‘safe’ online and to avoid dangers such as cyberbullying and so on. But these are all just symptoms of the current platform-based system, so in effect we’re teaching them to simply accept how things are and deal with the risks as best they can. Instead, we should be educating them about digital citizenship, about how you can retain control over your data and your digital self, and what can happen if you don’t. It’s about helping people to realise that they have a choice. But to be honest, building awareness is only the first hurdle. Even when we understand the risks and implications, it’s terribly difficult to actually change our behaviour because everything works so well right now. And behavioural change is a challenge in the business world too. The more actors that are involved, the more complex it is to get digital sustainability initiatives off the ground, plus the early phase of any initiative costs money. Therefore, finding the solution is often the easy part; it’s getting started that’s so difficult, because the real value doesn’t emerge until you achieve mass adoption.
What should governments and policymakers be doing to support digital sustainability?
Governments can play a key role in stimulating the necessary mass adoption, such as through first-mover government adoption, by offering incentives for businesses and with legislation. We saw this with SEPA in the EU, and another good example is the Unified Payment Interface in India, a standardised API framework including a digital ID for all kinds of fintech services. Introduced top-down by the Indian government in 2016, this has definitely accelerated the digital transformation in India. But many governments still fail to fully grasp the importance of digital sustainability. When explaining what we’re doing at INNOPAY, I often describe it as creating a ‘soft infrastructure’ to enable safer, fairer and more effective data sharing that will benefit society as a whole. But it’s often much easier to secure government funding for a ‘hard infrastructure’ project such as a new bridge or railway line in the physical world than it is for a digital infrastructure project. Even if they are approved, such projects are often seen as ‘building a platform’ and turned into IT projects, but they are more than that; it’s important to take care of the functional and legal aspects as well. For example, if you focus on the technical side of a data exchange project but don’t make interoperability mandatory, you’ll end up with ‘digital duct tape’; the solution might work fine in the short term, but it won’t hold up in the long run in terms of scalability and innovation. Failed initiatives often stem from ‘solutionising’ a problem and focusing too much on execution, without spending enough time on the first principles. If the goal is clear and the first principles are sound, then the market will do the rest – usually better and faster, too. The EU’s Data Act is a good example of a government acknowledging the issues related to BigTechs and striving to embed data sovereignty in today’s digital society. It is the result of a lengthy and complex process involving countless different interests and therefore also some compromises, so it’s not perfect, but it’s definitely a step in the right direction. And it’s not a moment too soon, because the longer we wait, the stronger the BigTechs’ position becomes. Before we know it, their platforms will have formed the basis for the soft infrastructure for data and there won’t be room for a digitally sustainable alternative. So there’s a lot at stake, and there’s no time to waste. But in fact, there’s no reason why the BigTechs can’t become part of the solution if they participate in the soft infrastructure and also offer data sovereignty and data mobility for their users.
How can companies become more digitally sustainable, and what is your advice for them?
Merely complying with GDPR doesn’t make you digitally sustainable, you need to go a step further than that. It’s about providing people with transparency about which data you hold about them, what you use it for, who you share it with and also about allowing it to be reused elsewhere by themselves or others through APIs – always with the data owner’s permission, of course. I’d love to see bus shelters full of advertisements from companies promoting data sovereignty as a unique selling point. Because adopting a digital sustainability mindset really can give you a competitive edge, not necessarily in terms of image – because, let’s face it, consumer awareness isn’t quite at the right level yet – but in terms of innovation and also costs. Many of today’s leading companies often see themselves as the only ecosystem, which effectively results in them pursuing a platform strategy of their own. At INNOPAY, we help our clients to go beyond that and understand the benefits of participating in multiple ecosystems – often even with their competitors at first – in which data sharing is standardised based on a set of mutual agreements. This creates a level playing field on which everyone can compete fairly, and ultimately generates opportunities for new and innovative business models and revenue streams based on better access to data. This requires a certain open-mindedness, because there’s often a strong psychological barrier to collaborating – especially with your competitors. But standardisation always offers tangible rewards, including more scalability thanks to lower costs for IT development projects and maintenance. It’s full steam ahead for the digital sustainability train, and this is the time for forward-thinking companies to climb aboard as early adopters so that we can build a fairer digital future together.
What do you regard as good examples of how digital sustainability is being put into practice?
As I mentioned earlier, the iDEAL project with Dutch banks showed how you can achieve a big impact with some relatively small and simple technical adjustments, providing that interoperability agreements are in place. Personally, I regard Open Banking as the ‘poster child’ of data sovereignty; it shows how legislation that effectively paves the way for a soft infrastructure for data – PSD2 in this case – can bring about positive change and tons of new commercial opportunities. There’s no reason why this idea couldn’t be applied to all kinds of other sectors in the next couple of decades. Another very topical industry is the energy sector. The ongoing energy transition is making the sector increasingly decentralised. For example, home electricity meters used to measure a one-way flow of consumption, so the platform model worked fine. But now that more and more people own solar panels, rechargeable batteries and/or electric cars, a complex many-to-many network of buyers and sellers of energy is emerging. The industry needs a new paradigm so that all the necessary data about the amount of electricity being generated, stored and consumed can be shared and coordinated in order to keep the grid stable at all times. And ideally, to avoid imbalances of power and prevent lock-in situations, the solution should be an ecosystem based on standardisation and interoperability rather than a platform-based approach. So I’m delighted that INNOPAY’s activities in other industries – such as the iSHARE data-sharing scheme for the Dutch logistics sector – have recently provided inspiration for a new data-sharing approach in the Dutch energy sector, governed by a new entity called MFFBAS. In my view, this initiative is the perfect fusion of ecological sustainability with digital sustainability!