What the world can learn from Nordic collaboration
As financial communities go, it’s fair to say that the Nordics are one of the most forward thinking.
Home to some of the world’s largest banks and one of the fastest growing fintech sectors, efforts are constantly being made to integrate technologies into banking systems. To achieve this, collaboration is king. This article emphasises the point, setting out how Swedish, Danish, Norwegian and Finnish banks are set to launch a pan-Nordic payment network.
The platform – called P27, as it will serve a combined population of 27 million people – should be online next year, with the seven biggest Nordic banks lobbying for its creation. Once central bank approval is received, it would create the world’s first area for domestic and cross-border payments in a variety of currencies. It would also offer significant regulatory advantages and cheapen the cost of payments for all users. It seems win-win for all in the region.
Given the shift toward fractious competition and isolationism amongst global financial powers, this level of intercountry interconnectivity is heartening. Its success can hopefully be held as an example of what international collaboration can achieve if countries are open to dialogue, partnership and reach across borders, rather than looking inward and building walls.
The platform isn’t Nordic financial services’ only forward-thinking thought. Regional banks are constantly pushing tech boundaries to improve customer experience. They don’t segment by country. They share technology beyond borders, seeking customers region-wide. Banks know that they can put this philosophy firmly into action via technology. In fact, a report last year from DNB found 74% of Nordic banks hoped to partner with a fintech firm in the coming 12 months.
This payment network is another step towards a cashless nirvana in a region where a common goal is to go cashless by 2030. According to its central bank, Norway is already there, with 90% of payments electronic. Given this shift, you can see why there has been such huge investment into Nordic fintech over the past few years. A chunk of this is coming from the financial sector.
Given the column inches generated by crypto, cashless can be confused with a shift towards decentralised, stateless currencies, such as bitcoin. But P27 will retain the currencies of each state, facilitating their seamless transfer crossborder. This could be considered another blow for crypto-enthusiasts who consider crypto’s ‘stateless-ness’ one of its strengths. If technology can allow for quick, smooth transfer of existing currencies, crypto will remain on the sidelines as, it would seem, is the wish of central bankers who question its volatility and lack of regulation.
In spite of Nordic enthusiasm, it’s important to remember that electro-payments come with risks too. In Norway, for example, credit risks linked to electronic payments are rising as a result of customers being able to send and receive monies before they have actually been transferred to their banks. As Bloomberg states, “the speed of the instant payment highway has regulators in Norway thinking about the guardrails”. But as they’ve proven through history with other forms of financial technology, the Nordics are working hard – and together – to find a way to facilitate and regulate these transactions. In time, as technology improves and beds in, risks will lessen.
Once again, a Nordic willingness to collaborate shows what is possible when banks share ideas and invest in utilities that they will all use, rather than building their own siloed applications and platforms. In the UK, we’re getting better at collaboration in financial services but we can learn a heck of a lot by following the Nordic example. Imagine if Barclays, BNP and Deutsche – aided by the BoE, BdF and the Bundesbank – centralised and shared resources and brainpower in order to seek positive change? The outcomes could be remarkable.
At Origin, we’re big supporters of the region, with Danske, Swedbank, DNB and SEB customers and we have users in all four countries. In many ways, their enthusiasm for collaboration and cooperation, as well as their willingness to embrace future technologies, mirrors our approach as a company. As a result, I’d expect our interactions with the Nordics to be fruitful and longstanding.