According to a report, technology could help local authorities avoid losing more than £1.3bn a year in tax fraud.
Data collected from different available resources could be used to predict the likelihood of Council Tax Fraud, benefit fraud and housing tenancy fraud to prevent the loss of funds.
A document by the Policy Exchange explained how smarter use of technology and data could prevent fraud, funding cuts and the need to close services.
Report author Eddie Copeland, head of technology policy at Policy Exchange said: "While there are examples of innovative councils that have used technology and data to deliver better, more efficient public services, many local authorities have failed to reform.
"Using technology and data in a smart way could save local authorities £10bn by the end of the next parliament - money which could be better targeted at helping some of the most vulnerable in our communities."
The report claimed the single greatest barrier to achieving a technology-enabled reform for local councils is fragmentation throughout the sector. But as each local council has its own infrastructure, replacing each interconnected system will cost too much, leading to new IT being layered on top of old systems - which is similar to the financial services industry.
Natalie Bateman head of health, government and social care at techUK, said that local authorities don't have the skills and resources needed to correctly use the digital agenda to transform delivery of services.
She said: "To mirror some of the progress being made in central government, a body with a similar remit to the Government Digital Service [GDS] should be established to act at the regional level to help local authorities identify the common building blocks of software, hardware and processes that can be standardised and commoditised across local government."
"Development of common approaches to support transformational change and cogent engagement in a cost-effective way with suppliers also needs to be emphasised. However, we see this as setting frameworks for the local authorities to operate within to accelerate delivery of technology through best practice, and not a centralised approach."
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