Cross-sector collaboration was on the agenda as Nets joined the opening panel discussion along with Coop Danmark and Nordea, and it still plays a role in the development of new payment methods.
Why does cross-sector collaboration work in the Nordics while it does not in other regions? The topic of the opening debate intrigues moderator Annich McIntosh, who is curious to know the secret behind the Nordic cross-sector collaboration throughout the payments value chain. McIntoch has invited Torsten Hagen Jørgensen, Deputy CEO & Group COO, Nordea, Jan Madsen, COO, Coop Danmark and Bo Nilsson, CEO, Nets, onto the stage and learns that some of answer historically lies in the size of the Nordic countries, making collaboration a way to achieve the necessary scale.
"Statistics by the European Commission shows how the Nordic countries come out as some of the most digital ones in Northern Europe, with the highest number of users of non-cash payments," says Nets CEO Bo Nilsson and explains how consumers in the region are anxious to use new technology:
"We have merchants and corporates investing heavily in the digital agenda, we have banks pushing digital banking, and central banks pushing for a real-time economy, and we have governments with a clear digital agenda, " he goes on, pointing to the Dankort as an example of how merchants, banks and scheme owners collaborate to build business systems that are competitive, low cost, easy to use and have high levels of security: "The good news is that it hasn't stopped, and recently we've seen banks, merchants and Nets coming together to push for contactless physical payments, while last year we signed an agreement with merchants in co-operation with banks to roll out contactless mobile payments in all of the shops in Denmark."
You want payments to be as swift and easy as possible
Situated at the tough side of the equation as they are dealing with the end-users, Coop Danmark has undergone a transformation process.
"We're owned by our customers. At the base of our business is a loyalty programme in which we distribute part of our profits back to our owners. So we want to engage our members, our owners, in a much closer relationship, and by using digital solutions we are able to do that," explains Jan Madsen, COO at Coop Danmark, which is the largest cooperative retailer in Denmark. Their loyalty programme is currently card-based, but the company is trying out different solutions.
"By using digital solutions, we can start building a relationship with value-added features, removing a lot of friction from the shopping experience – this is a demand from our customers," says Jan Madsen.
The company has about a million transactions in their POS' every day, and moving those transactions from a card to a mobile device will give the company a range of opportunities for the future:
"We're a retailer, so basically you want the payment to be as swift and easy as possible. Denmark has the Dankort solution, which everybody knows and thinks is a safe solution – if we can have the same feeling moving to the mobile device, it would be beneficial to us," says Jan Madsen, stressing how payment is crucial for the retailer as a key point in the shopping transaction where a mutual relationship is created.
Do banks want to change?
Incumbent banks face change, not least in the light of recent regulatory changes. But why would a successful bank want to change, and what indeed would push it to change?
"There are things at the core of what we do that we don't want to change, as we want to maintain focus on being a relationship bank," says Torsten H. Jørgensen, Deputy CEO of Nordea, who sees the development in the industry as one of several waves.
"The next wave will be in the next couple of years, or five. I think it will be tactical, as many things will be merged, there will be long discussions on different types of standards and solutions. We must try to be more innovative and agile and offer more value-adding services to maintain our core relationships with our core customers, including merchants, " Torsten H. Sørensen adds.
"You can't do all this on your own, though, can you?" challenges moderator Annich McIntoch, alluding to the Fin Tech companies present in the audience: "You can tell the new guys – they're the ones wearing jeans, while the rest are wearing suits. Are you going to fight them or absorb them?"
"Going back to Bo's point on collaboration having been around for a long time – Nordea is still a Nordic bank with a total market of 22 million bankable customers based in 4-5 distinct Nordic countries, so scale does matter. It has forced banks and other players into a more collaborative type of working," Torsten H. Jørgensen explains.
The power of the network
Based at the centre of the payment ecosystem, with merchants on one side and banks on the other, the question is if the company is asked by existing players not to bring any newcomers on board that could be a competition, challenged as they may be with PSD2?
"We fundamentally believe in the power of the network. Creating scale in everything we do is beneficial for all players. We believe in a strong ecosystem, but it will be inevitable that other people will enter, and we welcome anyone who can add value into the frame," says Bo Nilsson, adding that stability remains a core focus:
"When we ask our customers what they need from us, the very clear answer is: 'stability in our systems,' as we're dealing with people's money, people's information, people's identity. Security has to be a top priority, but we also need to stay relevant in technology terms, " he concludes and stresses how the Copenhagen-based company intends to use data to add more value to the payment experience rather than as a separate business per se.
Money20/20 is the world’s largest payments & financial services innovation event. Its first European event was hosted in Copenhagen 4-7 April 2016 with more than 1,000 attending companies.