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Innovation and Collaboration in the Nordics

The recent Swift Business Forum Nordics in Helsinki saw over 250 delegates gather to take stock of the transformation of financial services that is currently taking place. Two of the main themes that emerged throughout the day's sessions were innovation and collaboration, both in the Nordics and also globally.

Innovation progressing

Erica Ahman, Swift's head of Nordics, set the tone for the day in her opening address, by noting that innovation is not optional in the Nordics. There is a sense of urgency in the transformation of the financial services industry, but this is very much a transformation journey in progress rather than one where the destination has been reached. In Ahman's four stages of innovation - prospecting, proof of concept, procurement, and implementation - she said that the industry is at the proof of concept stage. The day highlighted many examples of innovation and collaboration, including EBA Clearing's RT1 instant payments platform Swift's gpi and its Customer Security Programme (CSP), , but Ahman noted that while strides forward are being taken, legacy systems still hold the community back.

These comments were backed by the audience in a poll question during the main plenary panel, which was posed by Javier Pérez-Tasso, chief executive, Americas & UK Region at Swift. Asked if they believe that innovation is already improving business and customer experience in financial services, a good majority of delegates (70%) said that there has been good progress but that there is still a long way to go.

A region-specific issue around innovation was brought up by Erik Zingmark, head of Transaction Banking at Nordea, who noted that while the Nordics are in the top three in the world in terms of innovation, the region lacks the scale of some other markets, in terms of impact and cost, with only 27 million people. However, there are steps that can be taken to try to address this. Zingmark used the P27 initiative as an example of a project to bring this type of scale and impact. This project is a collaborative effort in the region to bring real-time account-to-account payments to the region.

While innovation is vital through technology, it is equally important not to overlook innovation in the way we work. Paula da Silva, head of Transaction Services with SEB noted that financial institutions have been well used to control everything, but that as banks open up they need to understand how to work without controlling everything. Institutions and corporates both need to learn how to embrace this culture with open banking becoming a reality.

Change should also be driven by customer need and demand, something that was underlined in a session on the future of cross-border payments. Participants in this session were surveyed on what they thought the key drivers for change in cross-border payments are, with options ranging from regulation to cyber threats, technology, and customer demands. The delegates in the Nordics put customer demands firmly top the list with 55%, far ahead of technology (26%) in second place. Commenting on this finding, Terje Albert, senior business developer at DNB said that he wished this had been the case for the past few years, rather than "regulation, regulation, regulation." Thomas Green, IT manager and Treasury and Cash Management with Metso Corporation also noted that fintechs have listened to customer demand and are already active in this way.

Benefits of collaboration

With new entrants and disruptors to financial services riding on a wave of technological developments, how can incumbent institutions remain relevant to the transforming financial services landscape?  Collaboration emerged as a key strategy with the Nordics audience. When polled, few thought that to compete with fintechs (2%) or to acquire them (4%) was the answer. Collaboration scored 30% of the vote, while the flexible 'all of the above' option topped the poll with 64%.

There is of course a balance to be struck between collaborating to move the industry forward and then competing for business. Tanya Juul Kjaer, senior manager payments, Global Partnerships at Klarna provided a 'fintech gone banking' perspective on this discussion, describing how Klarna enters partnerships with companies that share a similar culture to them. She said that this is critical to a successful collaboration. In the past, potential partners saw them as a rival, but this has become easier more recently. Having a similar culture and approach to product development and customer servicing creates a good partnership, she noted.

In a securities session, 86% of the audience said that collaboration between banks, fintechs and infrastructures is critical to drive innovation. Veronica Augustsson, CEO of Cinnober, pointed out that you are less likely to respond to threats rather than opportunities. Taking a new path can require a big investment, so infrastructures need to evaluate who the best partners for them on that journey would be.

New market players could passport in to challenge in certain areas of the securities business. Sveinung Dyrdal, executive vice president at VPS, commented that he wants to see more collaboration between the CSDs in the Nordics to address the core and be a 'Nordic lighthouse' to interest investors from around the world. However, he noted that this type of future couldn’t be built on the current systems.

Collaboration was also mentioned as a strategy to tackle the threat of cyber crime. Cinnober's Augustsson said that nobody thinks they can solve physical crime on their own, so why anyone think this would be the case with cyber? Facing cyber crime as an industry is essential, and the community needs to talk about it in the open to move forward.


Opening up

Undoubtedly one of the biggest challenges, but also one of the biggest opportunities, facing the financial services community is the move to open banking. When asked which technology shift will have the largest impact on financial services in the next 3-5 years, almost half (49%) of delegates voted for APIs and data. This was significantly ahead of AI (32%), while DLT (11%) and cryptocurrencies (8%) trailed behind. Augustsson says that APIs and data are critical for the industry, allowing banks to distinguish themselves through their services.

Using an example from another industry, Augustsson noted that the success of Apple's iPhone was thanks to the open nature of apps that allowed a community of developers to work on apps rather than Apple only generated their own. She said that a similar collaborative and open environment in financial services is necessary for success. Julia McKenny, head, Market Advocacy, Securities Services with Standard Chartered Bank agreed with this point, and added that having something that works well domestically is good, but being able to scale this for the community as a whole is even more powerful.

For full coverage of the Swift Business Forum Nordics 2018, visit the Finextra live blog.


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Thea George

Thea George

Director of Research


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10 Oct



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