While the programme has attracted a lot of attention outside of the Nordics - given its unprecedented position as a multi-currency automated clearing house (ACH) in a real-time environment - there are still plenty of questions surrounding integration and progress.

Addressing the obstacles upfront

Developing a clear regulatory framework has been challenging explains Lars Sjogren, CEO, P27 Payments platform. “We’ve found that building regulation for P27 is like renovating a home when you aren’t able to live in it. This is particularly challenging because we are something new. We are a cross-border multi-currency payments platform. There is just nothing like us.”

Observing that most structures and regulations aren’t currently designed for something like P27, he says that “we will need to engage in a close dialogue with the regulators, answer any concerns they hold, so that they feel comfortable. We are a critical infrastructure and we need to live up to all requirements.

“It’s very interesting to work in P27 these days I can promise you that.”

Questioned on whether every bank is equally placed to benefit from the initiative, Sjogren explains that while there are many small banks across the Nordics who didn’t immediately see the upside in engaging with the project, the attitude has become more positive.

“We have a lot of interaction with small banks, large banks, global banks, domestic banks all across the Nordics…so I would say that to be honest, the smaller banks have a very big voice in the development of P27.”

While it has been raised in the past that larger banks may be receive bigger benefits from this type of initiative, Sjogren furthers that the significant reduction of transaction price is a key advantage for every institution involved. He adds that the project will allow smaller banks to improve their service offering for clients and to piggyback on the scale which is provided by virtue of the bigger banks’ presence.

“We are a platform for collaboration across the Nordics and you are all invited.”

Roberto Tittarelli, EVP, market development, new payments platforms, Mastercard, explains how its ‘Hub’ will provide the core infrastructure to enable the P27 payments platform. “We are very ambitious and proud that together with P27, we are providing the first multi-currency clearing and settlement system and infrastructure across four different countries.”

European alignment

Sjogren also downplays the widely discussed concern that P27 may be pushing ahead with their regional initiative at the expense or other interoperable initiatives, highlighting the European Commission and the European Union’s decision to add instant payments to their roadmap in parallel to P27’s vision.

“This is in fact helping us in the Nordics, because it is bringing a lot of attention to the real-time payments environment. I don’t see any conflict. In fact, when the European Union describe their retail payments strategy, they mention P27 as an example of an interesting and important regional initiative.”

He adds that in order to connect to the broader European solution as a goal would necessitate removing the complexity of the Nordics through standardisation and rectifying legacy issues.

Norwegian warning

The panel also touched on a slightly contentious element of the project, being levels of participation across the Nordics, particularly the position of Norway.

“Norway’s position is a little on the outside,” Sjogren adds, and that after being a driving force for P27 in its first year, it has stepped back from the project for the layer one services.

“From our side, I don’t really understand why Norway is on the outside. It would be rational for them to do this together with us, and we are repeatedly inviting them back in to the P27 family.”

“I would say to the Norwegian part of the audience, it’s not too late, but there will come a time that we will move ahead. Hopefully we’ll do so together with you.”

These comments are interesting given the optimistic picture of Norway’s involvement painted by Sjogren in July this year.

Tittarelli also makes an interesting observation regarding the value of Mastercard’s established presence in the region, noting that given their historical role across the Nordics, “we know how to deal with the culture and work effectively with the banks.”

He underscores the importance of inclusivity and perhaps the distaste of preferential treatment across the Nordics, adding that every bank which is integrated into the service in the coming years will be accommodated in the same way as the first adopters.

Business benefits

Sjogren clearly outlined P27’s desire to help people understand that the true benefits of P27 go beyond the core infrastructure itself. Bill payments, for instance, currently face complete fragmentation across the Nordics, this is a clear scenario for collaboration.

Supporting the comment, Erik Zingmark, head of transaction banking, Nordea, elaborates that the benefits from P27 for banks are the same benefits that corporate customers are looking for. “For example, treasuries want to minimise the number of different solutions available, they want a harmonised, transparent, simple infrastructure for their own business and it’s the same for us.”

Zingmark believes that this shared ambition is realised in a handful of fundamental ways: “By having fewer payment types, fewer clearing houses, fewer of everything, we as Nordea can simplify for our customers.

“Just imagine a corporate customer for example which is active in more than one Nordic country, they are exposed to twenty, thirty, forty payment types and in the future, they would be exposed to a maximum of ten. This can radically simplify their operations.”

Jesper Nielsen, CEO, BEC speaks to the change of attitude regarding the benefits smaller banks can see by joining P27. “The big signals [such as the pricing decision] to embrace the entire community of banks in the region has been very important to building a better attitude.

“A clear conclusion has also emerged over the last couple of years that we need a new structure and technology around payments. The understanding that the way P27 has been set up means that scheme structures are decided upon commonly across the sector and ensures we can avoid a monopolistic structure that strengthens our end [small banks] of the spectrum.”

Where now with integration?

Zingmark describes the work being carried out within Nordea to ready themselves for the change, explaining that in parallel to the development of P27 they are throwing out the old and introducing modern technology.

“While this is complex, so far so good. What is positive is that the different solutions in order to connect to infrastructures are already there. It seems that P27 is providing standards and certified solutions which will make it easy for us to ingrate with the firepower on.”

Zingmark recommends that banks begin working toward this by reaching out to P27 to obtain as much information as possible on how to prepare and what to think about in order to be ready when the time comes to connect.

“There is already a lot of information available on what needs to be done within organisations, and as we all know, projects such as this tend to take longer and are more complex than you first anticipate.”

P27 will be discussed in depth at EBAday 2020. For delegate passes, register now and join leaders from across Europe's payments ecosystem as EBAday addresses 'The Turning Point in Payments Transformation'.