While banks, businesses and customers operate across the Nordics, infrastructure remains national. At NextGen Nordics: P27 Momentum, executive advisor at Nordea Johanna Lybeck-Lilja continues discussion on the pan-Nordic clearing system to be launched in early 2021 and reiterates that while the region has a long history of cooperation, the cross-border challenge has not been solved.
Addressing that today’s event is about spreading the word about P27, Lybeck-Lilja highlights that payments is now strategic for all participants. “The shift is down to the speed and how we behave. We cannot do anything today without digital means.
As a result of the technology change, we could argue that P27 is the logical follow through.”
Lybeck-Lilja continues: “Most banks in Sweden are 200-year-old companies and while all have legacy systems, it is not the case that we do not change our IT infrastructure. With new products and customer changes, we are constantly upgrading.”
However, in the following panel session, Klarna’s Fredrik Romehed says that P27 is a “natural movement”, but “technology standardisation in clearing infrastructure makes a lot of sense. From our perspective, customers are expecting a lot more because they are dealing with less friction.”
The transition needs to be made from a couple of days to an immediate response. Romehed also states that customers should not be aware of what is happening behind the scenes, they are focused on their task. In the same vein, he says that customers should not have to consider which currency or payment method to settle with.
Michael Busk-Jepsen, director of Digitisation-Danish Bankers Association, goes on to discuss how the robustness of the system needs to be considered, especially from a central bank perspective. “We have to simply be better to address all security concerns and solve problems in the interconnected society.”
He adds that as Nordic societies resemble each other, they are also subject to the same financial crimes, so again, an interconnected approach would be useful. Further, “it is important to be fast because of the threat from Big Techs. This very involving and transparent process means that we are on the road where we are converging.”
In the next panel, Jenny Winther, Secretary General-Nordics Payments Council, reiterates that “networking and collaboration is the key to everything” and the Nordic region should leverage its tradition of being open and trusting and implement it in payments.
Berit Svendsen, EVP international business at Vipps, uses the example of roaming charges to describe how the payments industry should evolve, which Kim Fuglsang Kristoffersen, head of operational excellence at MobilePay also explores, stating that “pain” should be removed from customer experience.
Maria Sundvall, managing director from Equinix, summarises the main points of the session and says the potential for P27 is enormous, while Sami Uski, lead solution consultant at Tieto, believes that unifying with the system is a “no-brainer.”
McKinsey’s Albion Murati takes this point to the next level and explores how P27’s “customer first approach, close collaboration with infrastructure and ensuring that distribution is part of the ecosystem has resulted in an innovative rethinking of the payments value chain – a successful recipe for the next 20-30 years.
“The Nordics never really had their SEPA moment, so for P27 to receive vast engagement of all relevant stakeholders from the beginning, it sets a high standard of transformation but it is important to get central banks involved.”
P27’s Anna Maria Nyström riffs on this point and says that while global transformation in this area has been ongoing in regard to real time or instant payments, there is a certain amount of knowledge that needs to be built upon.
Murati adds: “P27 is good at prioritising where to innovate and where to reuse. However, getting agreements on the design of the infrastructure is time-consuming and the hardest parts have already been achieved. Implementation will bring surprises as well.”
Nyström believes that “an investment needs to take place now to make the transition happen.” And it’s not about technical changes, good synergies between departments need to be created and it needs to be recognised that changes will take place broadly in a community.
ACI’s John Ballantyne follows this point and states that it all depends on how systems have been architected today and where they are in their digital journey – whether they have attempted to transform their legacy system into real-time or used a third party to help.
However, the challenge remains of ensuring that the project will create value. Martin Georgzén, P27, says: “All parties need to do their own calculations. We don’t know how this will end and what kind of innovation will emerge, but we will make sure we are in the best position for innovation in the future.”