A Simple Example of Why Germany is Not a Leader in Digitalization

Germans love their cash and they love their cars. Let me compare a situation in which both come together: Parking in Germany (a digitally developing country) and in China (a digitally matured country), and let’s discuss together why it is as it is. 

The “German Way”

I stop in front of the barrier, open the window, and press the button of the machine. A paper ticket will come out which I take with me. I park my car and walk away. When I come back, I first go to the cashier where I enter my paper ticket. The amount that I have to pay is displayed on the screen. If you are unlucky, the machine does not take any credit or debit card, but only cash. If you are very unlucky, you can only pay with coins and not even with bank notes. Having finished searching for the sufficient number of coins, I get my change, and take the ticket from the machine and go back to the car. I drive to the barrier of the exit, where I stop and enter my ticket, and wait until the barrier opens. Then I can finally leave.  

The “Chinese Way”

It is quite different in a modern parking lot in China. Let’s take an example from Shanghai: you just enter the parking lot, and park your car and leave. When you enter the parking lot, there is no barrier, but a camera that takes a photo of your license plate and saves it together with your arrival time in the system. When you come back, you stop at a terminal of the system with a touch screen where you can enter your approximate time of arrival. The system provides photos that have been taken around the given time for you to identify and choose your own car just by one click. The parking fee is calculated based on the time prints stored in the system, and you may then choose your payment method – generally Alipay or Wechat. After scanning the QR code provided by the terminal, you can confirm the payment on your smart phone. You go back to your car, drive to the exit and slow down in front of the barrier. The camera at the exit recognizes that the car with the corresponding license plate has just been paid and the barrier opens for you to leave. 

The “Chinese Way” of the process is overall much more efficient, faster, and digitized compared to the traditional “German Way”. However, there are mainly two obstacles that currently prevent this process from being successfully rolled-out in Germany: 

1.    Germans are reluctant to pay with their smart phones, but rather prefer paying with cash or cards. This lies mainly in the lack of experience with mobile payments and security concerns. Moreover, mobile payment belongs to one of those technologies that rely heavily on the network effect, i.e. the more users of the technology, the better the experience for single users. In this case, if hardly anybody uses mobile payment, the few users of a mobile payment service have only limited benefits. Most shops will not implement mobile payment method, and hence the malicious loop goes on. In China, there are two major service providers of mobile payments, Wechat and Alipay, and both are generally accepted everywhere. Small shops even prefer mobile payments to cash payments, since they don’t need to worry about changes in this case. In Germany, there are a few services providers that offer mobile payment solutions (e.g. Paypal, Apple Pay, etc.). However, none of them is widely accepted, and even if a shop accepts one of them, it might as well be the only mobile payment solution that is accepted.

2.    The second topic is data privacy. German data privacy laws are famous in the world for being stricter than any other data privacy laws. With the new European data privacy regulation “GDPR” (General Data Protection Regulation), which will be effective from 25thof May 2018 onwards, a similar viewpoint on data protection will be legally binding for every company that collects business data within Europe. In a digital era in which data trading can be the source of billion dollars of revenues, such laws targets at helping individuals to keep the ownership of their personal data. However, they also restrict opportunities to exploit many business ideas, especially in the area of data analytics. 

However, I don’t think that either of the both obstacles will be a real showstopper for introducing smarter parking systems in Germany. It might take the mobile payment just a little longer to be established than it takes in a more digitally matured country. And the stricter data privacy regulations will – in the end – not block the whole process, but rather encourage adapting the process and make it safer for the data involved. One could for instance enter his or her car plate number instead of directly getting the picture. Also, the process could be enhanced with face recognition technology so that a person can only see his or her own data. 

Do you have more suggestions, thoughts or ideas of how such a process could be improved? Do you have more examples of situations in which the upcoming GDPR is working as a constraint rather than as something beneficial? Happy to receive your comments!