Interview with Torsten Hagen Jørgensen, CEO, Issuer & eSecurity Services, Nets Group, for Karten.
In December 2019, you joined Nets Group as the new CEO for Issuer and eSecurity Services. As a senior executive with years of experience from the banking world, most recently at Nordea, what was your motivation for moving over to Nets?
"Having worked for many years with digital transformation in a Nordic bank, I have followed closely the dynamics within the payments industry, seeing new strong trends evolving, consumer behaviours changing and new fintech players emerging.
This development has challenged the world of banking to rethink their own role and increase their ability to change to stay relevant for their customers, which will in many ways also transform our societies in the years to come.
As a long-year customer of Nets, I have followed the transformational journey for the company into becoming an innovative regional payments provider driving the digitisation of payments in the Nordics. In the coming years, I am convinced that Nets will be playing a similar key role in the digitisation of payments in Europe. To lead the company on this ambitious journey is obviously a very exciting and highly motivating and important job for me."
Nets is well positioned and has a long heritage in the Nordic region. What makes it so important for you to build a position in the European payments market?
"Payments across Europe are consolidating and being able to operate across Europe is becoming the norm. To truly develop, Nets must broaden its geographic footprint just as our competitors are doing and become a true European payments provider.
Also, being Nordic means that we have a very highly digitised offering within payments that can serve as a strong and future-proof platform also for customers outside our previous "home region" who, with increasing interest, are looking to focus on their core offerings and source payments services via an external, international provider like Nets.
Thirdly, and importantly, our customers are increasingly looking to expansion across Europe. Being a true partner means we must be there for them and provide the services they require in the markets they develop into. Nets wants to be the partner of choice for our existing customers and our future customers wherever they operate."
What is in your view the current situation and outlook for the European payment industry? And do you think the COVID-19 has changed or maybe even accelerated this development?
"The recent COVID-19 situation has certainly changed life on many levels! In respect to Payments, it is very clearly driving the need for contact-free commerce, whether that's a push towards online ecommerce or mobile payments (ApplePay, GooglePay or similar), the Payments landscape is certainly changing very quickly.
There was always a gradual trend towards digital payments anyway, COVID has simply accelerated things. For Nets this means that the digital nature of life in the Nordics allows other European countries to benefit from an established model. We can help our customers realise their own digital strategies as their consumers demand it."
The Nordics are said to be further developed in digitization than most countries in continental Europe. How important do you believe the Nets heritage of "digital life" has become for banks and consumers across the remainder of Europe? Does this impact the way you will approach the European payments market?
"It is absolutely clear, from looking at any Payments industry analytics, that digital life in Nordic countries has progressed at a faster pace than many other European countries. We have embraced the digital opportunity to the point where it has become 'normal'. It is equally clear that not all countries have reached the same level of take-up, but many are certainly heading in that direction, and many at an increasing pace.
Having that digital heritage is important for Nets in supporting our customers throughout Europe as their own consumers demand evermore digital services. That said, Nets is about far more than just digital distinction. We have an abundance of products and services from which our customers benefit and develop. Digital life is an important benchmark but so is how we partner with our customers more generally. And how those relationships are allowed to flourish wherever we are in Europe."
How do you assess the German payments market in this context? And what are the most important opportunities, or risks, for the German issuers?
"Germany, like many countries in Europe, is moving more and more towards a new Payments landscape. We have seen that with the appearance, and success, of challenger banks and new payment instruments. For example, the standardisation of online payment options such as instalments, alongside the more general trend towards contactless payments, which has only picked up further during the COVID-19 crisis, and the emergence of well-known brands in payments that, two or three years ago, were unknown. This is all evidence of how fast things can move in the payments industry. And Germany is right in the middle of that accelerated development.
Helping our customers provide to their own consumers the products and services they desire with cost efficiency and very fast delivery is of paramount importance. Nets must, of course, operate at an incredibly high service delivery level with all the benefits of safety, security and scale. But equally, any processor must provide all those good things alongside open and agile development opportunities. We simply must operate with immediacy and innovation at the heart of our proposition. As we enrich relationships with our customers in Germany, we are in no doubt as to the requirements placed upon us by customers and their consumers."
Do you see any common reservations among German issuers towards outsourcing, changing processors and migrating portfolios?
"There is always risk associated with changing something, but in all honesty, what we do see is an overwhelming desire to reach new heights in how issuers serve their customers. Genuinely, I don't believe that standing still on technology from the last century is a viable option for issuers wishing to serve their consumers.
Also, the task of migrating portfolios or changing processors has become significantly less of a risk given the development of skills and experience over the last 15 or so years. When I talk to our own customers who have recently migrated portfolios, they very quickly turn to conversations about how to develop next! Innovation, being aware of ever-increasing and changing consumer requirements, having an open infrastructure that enables ease and speed of integration are typical topics that customers turn to very quickly. That's not to say that migrations or changing processors is easy, but the risks are known, anticipated and often mitigated such that business can very quickly return to normal at pace."
It's great to see Nets now established in Germany. How far have you advanced in building up local operations and what are the next steps for you?
"Well, Nets has a large presence already in Germany with our Concardis business. We like to think that the development of our issuing business is incremental to an already established and successful business within acquiring. In short, we see ourselves as German first, Nordic second.
That said, as our issuing business develops, I fully expect us to build our capability still further, that means more people, more opportunities, and more autonomy in-market. Germany is one of the most important countries to Nets for both issuing and acquiring, something we will continue to significantly invest in as our presence develops."
When Nets took over Concardis, you said the businesses were very complementary. What synergy effects have you seen, and what advantages will this give you in the positioning of Nets towards issuers in the German market?
"That's a good question! The first and most obvious synergy is in the availability of local knowledge and experience, such a critical part of the success of any business. Our ability to engage with customers at a detailed and knowledgeable level is critical to how we see ourselves as a true partner. Not just knowing the local industry but also the demands and needs of our customers' businesses themselves. Being a trusted advisor is an important cornerstone of how we want to engage with customers. Having Concardis within the Nets community is an excellent foundation and an obvious advantage."
It is an open secret, that European banks are currently evaluating options to develop a European Payment System / Scheme (PEPSI / EPI). What opportunities do you see for a common European payment scheme and how would Nets position?
"The development of SEPA has helped create a more level playing field in terms of setting a common framework and rules. However, we still see a very fragmented legacy platform landscape across Europe.
Three years ago, Nets started to build a new future proof processing platform, where the first customers are now live, which will allow us to consolidate across many platforms – ultimately also cross the different European countries.
We see more European banks, also in Germany, who strategically consider reaping the potential benefits of focusing on the core of banking and sourcing the issuing services with an external partner as they leave their legacy platform environment behind.
I believe that any initiative that brings the European banks closer together, e.g. a joint payment scheme, will help stimulate a European market perspective and support a more international perspective on payments which – in effect – will enhance the trend towards outsourcing of issuing services."
In May, you took part in the establishing of the European Digital Payments Industry Alliance (EDPIA), a new European industry association between Nets, Ingenico, Nexi and Worldline. Why have you chosen to participate in this initiative, and what do you expect from it?
"The EDPIA alliance brings together the largest European independent payment service providers behind a common cause: fuelling the completion of a digital single market in Europe. A market, where everyone can carry out payments anywhere and anytime in a secure, digital, fast and cost-efficient manner. Ultimately, this will benefit all levels of the European community – the European citizens, institutions and business as well as the banks and issuers.
EDPIA will proactively engage with all relevant stakeholders on policy matters providing perspectives from the payment industry which will hopefully contribute to building a world-class payments ecosystem in Europe."
Nets handles millions of transactions every single day and is among the top payment processors in Europe, playing an important role in shaping a digital mindset through innovative, secure and stable solutions.
With a focus on constantly improving digital payments and related services, enhancing its current offerings and developing new and even more intuitive solutions for customers to handle, Nets is committed to help making life easier for every citizen, bank and business across Europe.
Created in 2009 as a merger of the Danish and Norwegian banking sector companies, Nets has since expanded to the rest of the Nordics, mainly through acquisitions in Finland and Sweden, and transformed into a commercial and innovative payment service provider.
Today, headquartered in Copenhagen, Denmark, Nets operates in 13 countries across Europe, including Germany, and processes over 8 billion card transactions every year.
In 2019, Nets further advanced its European expansion with the merger with Concardis in Germany, later followed by the acquisition of several Polish entities.
Nets is the co-founder and chairman of EDPIA, the new alliance of Europe’s leading independent payment services providers.
See more at https://www.nets.eu/who-we-are and