Our world is getting more mobile every day. Whether you’re clothes shopping, buying plane tickets or booking an appointment—almost all of it can be done on your smartphone. And this is changing consumer demands. We spoke to Nordea’s experts about the biggest mobile payment trends in the Nordics, and what they expect to see in the next five years.
In our increasingly digital world, 24/7 convenience is everything. E-commerce doesn’t sleep—goods and services are being bought, sold and consumed internationally, every second of every day. To help businesses meet these demands, countries around the world are adopting instant payment schemes to facilitate real-time, cost-effective payments—and soon this will apply across borders.
As e-commerce grows in the Nordic region, consumers are demanding more from merchants—including 24/7 convenience, flexible deliveries and their preferred choice of payment methods. We spoke to Nordea’s experts about the challenges B2C and B2B businesses face when transitioning to an e-commerce model, and how our upcoming payment solution can help.
Nordea Markets latest report investigates the area of cybersecurity and predicts that cybercrime will continue to grow in step with increased human interaction online. The report also reviews real life cases of cyber attacks that occurred in 2017 and documents the adverse effects of these attacks on the organisations involved. Increased concern from large corporates related to cybercrime risk is now the main driver for a high growth in global cybersecurity spending. Key actors involved in the changing cybersecurity environment are interviewed for a personal reflection on the challenges ahead.
You can read the full Nordea Markets report by Johan Trocmé and Ellen Benktander here:
The landscape of trade finance has changed dramatically in recent years. With globalisation intensifying competition, more businesses are turning to open account trade—but this has inherent risks for sellers. We spoke to the experts from Nordea and leading global credit insurance provider, Euler Hermes, about the future of trade finance—and how companies could benefit from banks and credit insurers working together.
The rise of open account trading
Trade finance has never stood still—but in the last decade its most fundamental rules have changed. Cultural, geographic and communication barriers are dissolving, facilitating a significant increase in international trade. In this hyper-connected world, even the smallest companies can use technology to sell their products overseas. And shipments that once took weeks or months now happen in a matter of days.
“It’s not only the pace of physical movement which is changing, there’s also been a huge increase in the volume of trade,” says Patrik Zekkar, Head of Trade and Working Capital Management Sales at Nordea. “We’re seeing new trade routes. We’re also seeing new types of products—intangible goods like software—being sold internationally.”
With globalisation increasing trade volumes, bringing new players to the market and intensifying competition, there’s increasing pressure on sellers to meet buyers’ demands. This often happens in the form of flexible payment terms. There’s been a shift towards open account trading—where goods are delivered sometimes weeks or months before payment is due.
Open account trading can benefit growing companies and SMEs, making them more attractive to buyers and helping them gain a competitive edge. It also speeds up the transaction cycle and frees businesses from reliance on traditional finance instruments like letters of credit. But it’s far from a perfect solution.
International trade risks are increasing
While open account trading has benefits for buyers, it substantially increases the risk of sellers not being paid. “In the current world of B2B trade, there’s a high risk of customers becoming insolvent and not paying their invoices, or failing to pay within the agreed terms and conditions,” says Raphaël Caruso, Head of Innovation Lab UK-NEUR, Euler Hermes Digital Agency. “However, today only 5% of B2B trading is credit insured. That means 95% of global transactions are at risk.”
It’s notoriously difficult for sellers to predict which transactions will go wrong. “On average, 40% of a company’s assets are in the form of trade debts. And sometimes this figure can be much higher. So it’s very hard for most businesses to predict who will default on payments,” explains Caruso. “Almost 50% of payment defaults come from vendors with whom a stable and long-term trade relationship has already been established.”
Globalisation and new technologies are having a major impact on how the corporate treasury manages liquidity. Many treasuries are shrinking in size at the same time as their financial responsibilities continue to grow. In this article, we take a closer look at the biggest liquidity challenges facing today’s treasuries.
With the rapid increase of international trade and digitalisation, treasuries need to find new ways of working. They face common challenges, such as risks posed by instability in overseas markets, international trade regulations and language barriers. They also need to ensure robust communication between the treasury and other parts of the business—notably the supply chain, sales and procurement departments. We spoke to Nordea’s liquidity management experts to learn more.
Treasuries are doing more with less
The group treasury is responsible for its company’s liquidity management. It’s charged with ensuring that cash is readily available and developing strategies to mitigate any financial risks. But treasuries around the world are facing increasing pressure to fulfil these objectives with less human resources at their disposal.
“There’s pressure to have fewer people in the group treasury than a few years ago. Now there might only be two or three people. Meanwhile, the treasury’s responsibilities are expanding,” says Vesa Paukku, Head of Business Insight at Nordea. “There are new challenges coming from the changing world and digitalisation.”
These new challenges include managing the use of rapidly evolving technologies. As businesses enter a world of increasingly real-time technology, where payments can happen in a matter of seconds, there are greater risks of cyber fraud to contend with. Treasuries need to strategise carefully to harness the benefits of digitalisation, while working closely with IT and taking concrete steps to communicate these risks across departments.
In the past, treasuries may have looked at bespoke IT solutions that were designed to support the way they operated. But now, they’re realising the benefits of streamlining and simplifying the technology they use.
“Before it was fashionable to have tailor-made solutions for your treasury, but now we’re seeing more interest in basic setups and file formats—companies want to use common technical standards,” says Paukku. This standardisation makes it easier to upgrade technology, maintain security and meet the objectives of both the treasury and the wider business. It also means that treasuries can work more efficiently with other parties—which is important as companies deal with increasingly complex international networks of buyers and suppliers.