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Experience from a small country

Small countries have many disadvantages - small home markets, small languages, smaller skill pools and smaller resources - to mention a few.

But they also have advantages -  better opportunities for networking, smaller vested interest groups, better public-private co-operation, better agility - that they can benefit from - subject of course to having leadership that creates enthusiasm, co-operation and open standards. We have seen good examples of this - Singapore, Taiwan, Estonia - and when it comes to the digitalizing banking, payments and financial administration - Finland.

Bigger countries should use these as laboratories - see what works and how standards and services evolve - to form stepping stone after stepping stone (layers) towards a fully automated real time financial administration. All with natural links to the other side of the coin - e-commerce and e-government services.

Looking back it all started somewhere in the 60s -

1st Layer: a centralised but centerless strongly standardized payment service that created standards for giro payments, payment references, file transfers, account statements replacing separate receipts, salary payments to bank accounts, bank cards, ATM-operations - to mention a few early ones.

This strong tradition continued later with standards for Edifact, e-invoicing, e-salary, e-commerce-payments, e-id services and many ISO20022 initiatives.

2nd Layer: The above enabled fast development of e-banking- as payments were the first services. E-banking for large corporates was launched in 1979, SME and home-banking in 1982. Foreign payments and in practise all transaction services were available in PC-banking well before Internet.

3rd Layer: If the above created the base for cutting the cost of transaction banking in half the 3rd layer (using e-banking) started to build the base for cutting SME-administration cost in half. Here services like e-commerce payments, e-id services, e-invoicing, e-salary created entirely new and hugely useful ecosystems.

4th Layer: e-invoicing and e-id ecosystems (but also e-salary and e-payments) created the base for the next target: Ecosystem for fully automated and towards real time accounting, cash flow estimates and public sector reporting (VAT, anti-grey-economy etc etc). This holds enormous productivity, service improvement and stuctured big-data potential - especially as row specific EAN code card payment transactions can be obtained directlly from POS in e-invoice format!

5th Layer: building on real time accounting, real time cash flow estimates, real time ownership information from CDS-services and the national income register finance processes will be automated both for the SME-sector on and off balance sheet financing, housing loans and other consumer finance. This will of course also support risk evaluation for investments, partner evaluation etc.

Layers 4 and 5 are now in focus and much is happening every week. Interesting? Say No More.... Keep watching this space..and feel free to copy.


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Comments: (2)

A Finextra member
A Finextra member 12 January, 2016, 08:24Be the first to give this comment the thumbs up 0 likes

Great to look back on how these countries succeeded in building payment systems that have so well supported the country business models. Reading your post made me reflect on other small countries, for instance UAE (specially Dubai) where a very different flavour of payment systems developed, to support a very different business model.

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 13 January, 2016, 07:18Be the first to give this comment the thumbs up 0 likes

Thank you! I am of course looking backward to demonstrate the steps needed on a ladder-to-the-future in a European type of payment environment. Would be interesting to learn more about the innovations in Dubai - maybe we could find interesting shortcuts...

Bo Harald

Bo Harald

Chairman/Founding member, board member

Transmeri, Demos, Real Time Economy Program,MyData

Member since

04 Nov 2008


Helsinki Region

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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