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How Estonia is leading the way to our digital future

  • Estonian-born CEO and co-founder of TransferWise, Taavet Hinrikus, spoke to CNBC's Life Hacks Live about Estonia's digital future.
  • Estonia's digitalisation is highlighted in it's e-identity programme, and e-residency initiative.
  • Hinrikus also says the success story of Skype is a pivotal chapter in Estonia's digitalisation.
Tallinn, Estonia
Nico Tondini | Getty Images
Tallinn, Estonia

Estonia has become a leader in technology and innovation, but how?

For Estonian-born CEO and co-founder of TransferWise, Taavet Hinrikus, the answer is in the past.

"We (Estonia) kind of started rebuilding the nation in 1991 after we became independent again. And we did things the smart way."

Formerly a part of the Soviet Union, since gaining its independence Estonia has reinvented itself by modernizing and digitising many of its old analogue systems.

Estonia's digitalisation is highlighted in it's e-identity programme, and e-residency initiative.

Its e-identity programme has streamlined financial services and day-to-day tasks for the 98% of Estonians who have an ID card, and Estonia's e-residency initiative offers foreigners the chance to become a digital resident of the country – all at the click of a few buttons.

Talking to CNBC in an episode of Life Hacks Live, Hinrikus credits Estonia's digital growth to its reinvention.

"We did things from the beginning in the right way, setting up the right kind of structure in the economy. I think partially that's thanks to the entrepreneurial tech success story, but also the government has some very smart people."

"We've done many things digitally, we have the electronic government, and we have the EU residency programme, so all of these things are now starting to prove that it means there's much less bureaucracy, things are running much more smoothly, it's cheaper to administer and it's more pleasant for consumers; the residents of Estonia."

Hinrikus also believes the success story of Skype, which was founded in the northern European country, is a pivotal chapter in not just Estonia's digitalisation, but also its rebirth as a haven for tech start-ups and entrepreneurs.

As the first-ever employee at Skype, Hinrikus saw first-hand how the video chat service's entrepreneurial success story inspired working Estonians.

Taavet Hinrikus and Kristo Käärmann, founders of TransferWise
Source: Transferwise
Taavet Hinrikus and Kristo Käärmann, founders of TransferWise

"The fact that Skype was founded in Estonia, the fact that Skype had a successful exit, which meant that Estonia benefited in a major way, meant that entrepreneurship became legitimate," said Hinrikus.

"There were more than a thousand people who either worked or had worked at Skype who had seen what it takes to build a global business."

"These people then had some money which they either put aside as a result of having the well-paid job in later years at Skype, or maybe they made some money when Skype was sold," added Hinrikus.

In terms of replicating Estonia's success in other countries, Hinrikus sees Estonia as a "test bed" for the rest of the world.

"The benefit that Estonia has is that we're (Estonia) a tiny country. If you have 1.3 million people it's easier to change things when compared to if you have a billion people. So I think in that sense we should be a really good test bed for the world."

"We're (Estonia) creating new ways for people to live their life which is very exciting."