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NGN 2023: Nordic interoperability advantageous, yet remains challenging

NGN 2023: Nordic interoperability advantageous, yet remains challenging

NextGen Nordics will return to Stockholm on 25 April 2023, and we will be welcoming a range of speakers who will discuss topics such as P27, cross border payments, open banking, BNPL, CBDCs, digital assets and Web 3.0.

Christian Schwarz, director of payments Europe at Finastra, will be speaking on the panel ‘Open banking, open finance and enabling the API economy’ at NextGen Nordics, and we chatted to him about the advantages of interoperability in the region.

Schwarz points to Finastra research from the end of 2022, which surveyed 750 financial services professionals from seven countries, and found that 94% of global financial institutions regard open finance as a ‘must have’ or ‘important’ in the context of data sharing, and 85% agree that open finance is already making the industry more collaborative.

From this global look, Schwarz commented that “the Nordic region is seeing a similar impact, yet it has some added advantages. The region is renowned for its high adoption of technology and digital banking which has long placed it at the forefront of payments innovation. In Sweden for example, Swish, the real-time account-to-account payments platform, was launched by six of the largest Swedish banks back in 2012 and the region is today virtually cashless.”

He continued: “the Nordic countries were also regarded as one of the fastest adopters of open banking in Europe alongside the UK, and we can expect a similar uptake for open finance. As this evolves, industry collaboration and innovation will continue to flourish to bring new and improved services to market.”

In a similar perspective to Dr Hubertus von Poser, a member of the management board at PPI, Schwarz commented that open finance and P27 helps facilitate cross-border and cross-currency transaction. He argued: “Today, making payments across the Nordics – a region with multiple currencies – can be time-consuming, expensive, and often contains a lot of friction. With the P27 payments platform, institutions can process payments and collections across borders and currencies in the Nordics via a common and harmonised infrastructure, quickly and seamlessly.”

Further, on P27, Schwarz stated: “The initiative is opening up a lot more space for third party providers. On the one hand, P27 aims to help banks compete with the wealth of fintechs that are dominating the payments industry. On the other, the ISO 20022 messaging format underpinning P27 is supporting the emergence of new payments services for the entire ecosystem.”

He continued: “This includes salary, single, total booking, remittance information and reconciliation services, which are handled by banks or third parties. These services can be reused for all ISO 20022-based payments, whether P27 or SEPA, enabling standardised services regardless of payments and country.”

Schwarz highlighted where P27 offers opportunities for growth: “Standardising the clearing of payments also makes it easier for banks and fintechs to collaborate. With a harmonised and open infrastructure, banks can easily integrate third party solutions that complement their existing offering to provide a better service, experience, and additional services for their customers.

“As P27 also supports access to frameworks such as Request to Pay and Confirmation of Payee, there is a big opportunity for third party providers to offer a wide range of value-added services to banks, who may otherwise struggle to adapt quick enough.”

However, Schwarz argued: “Interoperability in payments is still a big challenge in the Nordics and worldwide. Whilst P27 aims to solve this, the initiative is still a massive work in progress and so we’re yet to see the outcome.”

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