At the Smart City Exchange Forum, hundreds of urban visionaries gathered in Tallinn to explore how data, artificial intelligence and cross-sector partnerships could help shape more human-centred and sustainable cities across Estonia and Europe.
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A smart city is a collaborative city
Published on 10.04.2025
Written by Silver Tambur, Editor-in-Chief of Trialoog
On 13 March 2025, the Proto Invention Factory in Tallinn – its industrial brick walls still echoing with the legacy of the past – welcomed a vibrant crowd of city leaders, entrepreneurs, researchers and policy professionals. Amidst historic machinery and the forward-looking hum of conversation, the FinEst Centre for Smart Cities convened its annual Smart City Exchange Forum.
The event brought together voices from across the public and private sectors, united by a shared ambition: to rethink how cities are governed in an age shaped by digital innovation, environmental urgency and demographic shifts. Over strong coffee and spirited exchanges, the participants discussed how data, artificial intelligence and smarter governance might be harnessed to build cities that are not only efficient, but liveable and resilient.
Smart cities require smart institutions
Opening the forum, Tallinn’s Mayor, Jevgeni Ossinovski, acknowledged that Estonia’s cities face a new generation of challenges – ones that demand not only technological innovation, but also meaningful collaboration. His remarks led into the forum’s overarching theme: how to govern wisely in an era of constant change.
The keynote address was delivered by Professor Rainer Kattel of University College London, a leading thinker in public sector innovation. He introduced a new global initiative: the Public Sector Capabilities Index, designed to evaluate how well city governments are equipped to tackle complex, interconnected problems. The index focuses on public engagement, cross-sector collaboration and the strategic use of data infrastructures – three pillars, Kattel argued, that will define a city’s resilience in the 21st century.
Such a tool, he added, would act as a mirror: helping mayors, ministries and funders to identify institutional strengths, locate blind spots, and ultimately build more adaptive and capable urban governance.
Continuing this thread, Professor Einari Kisel spoke about the fast-evolving demands of the energy sector. A successful transition to renewable energy, he said, requires not only new technologies but flexible policymaking, new forms of leadership, and legal frameworks that support experimentation. Without well-functioning institutions, even the most advanced technology risks lying idle. In short: smart cities require smart governance.
Data that moves people
One of the day’s most resonant ideas was that technology alone does not make a city “smart” – collaboration does. That premise shaped the forum’s next major topic: how data on urban mobility could support joint efforts between cities, businesses and communities.
Anniki Puura, a researcher at the FinEst Centre, spoke of both the successes and struggles of implementing smart mobility solutions. She cited examples of cities where shared data on public and private transport had created space for new partnerships and citizen-led innovation. “Smart mobility is not just about technology – it’s about cooperation,” Puura stressed. “It’s data that helps us find a common language.”
Whether the issue is autonomous buses, bicycle infrastructure or parking platforms, the real test lies in aligning people and institutions around shared objectives. Nordic examples provided inspiration – open data portals have seeded a range of new services – but Puura cautioned that such success depends on trust. Data sharing between municipalities and companies must be underpinned by clear rules and equitable agreements.
Innovation needs room to play: the regulatory sandbox
Though the phrase “regulatory innovation” may seem unexciting at first glance, it became one of the liveliest themes of the forum. In a morning panel discussion, participants addressed a pressing question: can experimental legal frameworks – the so-called “regulatory sandboxes” – coexist meaningfully with the realities of public governance?
A regulatory sandbox allows companies to operate temporarily outside of strict legal constraints, offering a controlled space to trial new technologies and services. The aim: to test innovation without immediate regulatory burden, and to assess its real-world viability.
A panel of experts brought both insight and challenge. Egert Juuse of TalTech provided an overview of how regulation can be shaped to support innovation rather than constrain it. Moderated by urban innovation adviser Jarmo Eskelinen, the discussion featured Greta Elva-Jõemaa of Accelerate Estonia, Helena Lepp of Digital Nation, and Tomaž Lanišek, representing the Slovenian city of Kranj, which has tested new approaches to citizen engagement.
But the conversation was not without scepticism. Will sandbox-born solutions ever mature into real-world systems, or will they remain stuck in prototype? Can public interest be balanced against commercial ambition? While no firm consensus emerged, a clear takeaway was this: innovation and regulation must not be viewed as opposing forces. Rather, they must evolve together – with thoughtful legal frameworks that enable experimentation while safeguarding public trust.
Estonia, the panellists noted, is well placed to lead in this space. Its digital-first reputation makes it an ideal testbed for flexible regulatory environments. A smaller city, for instance, could serve as a sandbox for autonomous public transport or data-driven health services. Still, the warning was equally clear: even the best ideas can be smothered by poorly conceived rules.
Governing the citiverse
One of the forum’s more provocative sessions explored the merging of urban governance with virtual realities. Titled “How to Govern the Citiverse?”, the conversation between public sector innovation expert Alessandro Paciaroni and TalTech’s sociologist of big data, Anu Masso, touched on what it might mean to govern cities not just physically, but digitally.
The term “citiverse” was at the heart of their discussion – a blend of “city” and “metaverse”, describing a future where immersive digital spaces supplement urban life. In an exchange that felt more fireside chat than formal debate, the two experts considered digital twins, virtual city planning, and even the idea of appointing a “virtual mayor” for these emerging environments.
Though playful in tone, the discussion surfaced serious concerns: data privacy, cybersecurity and citizen inclusion in the design of digital public spaces. Masso warned that without regulatory foresight, these virtual realms could become “Wild West” environments. Paciaroni, on the other hand, envisioned their promise: virtual twins as safe testbeds for residents to experience proposed urban changes – new parks, plazas or layouts – before physical construction ever begins.
For many in the audience, the session was both inspiring and sobering. It signalled that the notion of the smart city is expanding into uncharted digital territory – one where physical and virtual spaces blend in increasingly tangible ways.
Digital sovereignty in an uncertain world
From immersive simulations to immediate realities, the conversation then shifted sharply to digital sovereignty. Luukas Kristjan Ilves – former Estonian chief information officer and adviser to Ukraine’s digital minister – spoke candidly about the growing need for cities to secure control over their data and digital infrastructure.
In an age marked by cyberattacks and geopolitical instability, he posed a simple question: are our cities ready for the day when cloud services are disrupted, or a tech giant unilaterally changes the rules?
Ilves called for a new kind of resilience. Cities, he said, must treat digital autonomy as seriously as energy security. That means developing contingency plans, investing in local data centres, and strengthening awareness of long-term data ownership. While praising Europe’s regulatory frameworks for protecting citizen rights, he also warned that excessive bureaucracy could hinder local innovation.
His proposed solution was direct: Estonian cities should work together to safeguard critical systems – such as traffic management and emergency communications – from both cyber and geopolitical risks. Where necessary, they must build their own independent infrastructure.
Rules shouldn’t kill good ideas
The final panel of the day, “Regulation and Innovation – Friends or Foes?”, brought together voices from academia, local government and the tech industry to grapple with the EU’s sweeping new digital and AI legislation.
Moderated by Sille Sepp, head of data ecosystems at the FinEst Centre, the discussion opened with a sharp-edged question: will the EU’s regulatory wave help or hinder smart city development?
Silver Kelk, innovation lead at Ülemiste City, offered the entrepreneur’s view. The private sector, he argued, is hungry for rules that are clear yet flexible. Excessively rigid regulation can kill a good idea before it has a chance to prove itself – but no solution can reach the market without a dependable legal foundation.
Rainer Kattel, this time in the role of panelist, reflected on Europe’s caution-first culture. It has made the continent a champion of ethical tech, he said – but it must not smother innovation in the process. Tallinn’s Deputy Mayor, Margot Roose, added real-world examples: from drone traffic to smart waste bins, cities often find themselves innovating faster than national laws can adapt. In her words, a city is “a living laboratory where innovation often precedes legislation.”
From the Ministry of Justice and Digital Affairs, Stina Avvo defended the need for strong rules. Without them, she said, public trust in new technologies could quickly erode.
Inevitably, the conversation turned to the EU’s AI Act. The panel agreed that Estonia must speak clearly in Brussels and advocate for proportionate legislation. If done right, regulations can empower innovation – not suffocate it.
A smart city must balance code and soul
As the forum drew to a close, a final speaker offered a more grounded and emotional perspective. Green innovation advocate Mari-Liis Kell shared insights from the Hundipea development project – an ambitious new district on Tallinn’s waterfront being designed from scratch.
What sets Hundipea apart, Kell explained, is its commitment to data-informed planning: biodiversity data influences park design, while climate simulations shape architectural decisions. In every detail, the goal is to balance ecological intelligence with human need.
Her parting message was poignant: the essence of a smart city lies not in the quantity of technology, but in its capacity to serve people and the planet. The truly smart city, she said, is one that balances concrete with green, algorithms with empathy, and innovation with dignity.
In his closing remarks, Ralf-Martin Soe, Director of the FinEst Centre for Smart Cities, reminded attendees that while the forum is held once a year, the work of building smarter cities is constant. “It is a daily process,” he said, “of collaboration, experimentation and learning.” He encouraged participants to take the ideas home, to share knowledge, and to stay connected – because real progress, he emphasised, is always collective.
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