2021 promises to be a year of recovery for companies in the Nordics. Erik Zingmark, Head of Transaction Banking at Nordea, looks back at the things the crisis has shown us so far and shares his expectations for the year ahead.
Since the Covid-19 crisis first started to emerge in the early months of 2020, economies around the world have struggled to operate in the face of lockdowns and national restrictions. In the Nordics, what was first felt as a crisis involving Far Eastern supply chains quickly moved closer to home as operating conditions for companies and consumers became severely restricted.
Nordic banks proved resilient
At Nordea, we moved rapidly to switch our workforce to remote ways of working and from split locations. We placed an extra effort on keeping a steady ship running and reaching out to companies with support and advice wherever we could. For most of us, working from home for extended periods was something new and untested. Both our technology and team spirit held up through the challenges and I’m personally proud that despite the physical isolation, we pulled together as a team more than ever.
Over the months, we have introduced new efficient ways of working and we have managed to stay as rock solid partners to our customers. In some cases, we now meet our customers digitally more often than when we only met in person.
One thing the corona crisis has proven is the ability and resilience of Nordic banking in general. There have been no stories that I’ve encountered of system failures or any larger problems due to the crisis. Nordic banks have once again proved themselves to be resilient against shocks and provided a critical role in society in keeping the wheels of commerce turning. As an industry, we have been able to switch from a situation where most people are at the office to having the majority of employees working remotely and proved that we can still run the things we need to run. Switching that quickly and with no disruptions has I think been quite impressive.
Nordic banks are for the most part well capitalised with strong balance sheets and very capable of weathering the extreme economic downswings we experienced at the beginning of the crisis. The combination of balance sheet and technical competence, combined with the ability and strength to move into different operating models puts Nordic banks in a good position to navigate any further crises ahead.
A challenging year
We have obviously seen at first hand many of the struggles companies have been experiencing in the market. For a large number, 2020 has put them under pressure like never before as revenues have completely disappeared or dried up. This has placed an even greater emphasis on liquidity and finding alternative ways of sourcing income.
Business and private travel, leisure and entertainment in particular have been hard hit and to some extent consumption fell steeply almost across the board. Despite this, aside from business travel, we are already seeing that most industries are recovering and business is flowing once again. Even as a spike in infections brings more lockdowns across the region, the recovery continues, albeit at a slower pace.
We can only hope that the promise of vaccines and thorough test & trace systems will see economies open up and leap forward in 2021. We know that many companies and consumers have built up large reserves of cash during the periods of inactivity and we hope this will provide a big boost to the economy when things fully take off.
Another obvious thing we have seen from the Covid-19 crisis is the way it has turbo charged all aspects of digitalisation and especially contactless payments.
Erik Zingmark, Head of Transaction Banking at Nordea
Going digital – offline to online
Another obvious thing we have seen from the Covid-19 crisis is the way it has turbo charged all aspects of digitalisation and especially contactless payments. The Nordics were already well on the way to becoming fully fledged digital societies before the crisis and events this year have only hastened digital adoption in all areas of business. Wherever a problem has needed to be overcome, the solution has invariably involved technology of one kind or another. Whether this has been contactless payments, the rise of e-commerce or the use of digital trade tools such as the we.trade platform to replace traditional paper processes, technology has provided the answers.
The use of contactless payments has grown exponentially and the rapid shift to e-commerce has continued with hardly any companies now operating physical only business models. Our own payment service provider platform Nordea Connect has been used in a number of cases to help companies introduce smart and innovative ways of accepting digital payments.
The events of this year have made it clear to most businesses that they need to have an online presence. We have leveraged our knowledge and experience of the digital space to support and guide our customers. Our own Offline to Online virtual conference held in November gathered some of the leading digital practitioners in the Nordics to share their experiences of digitisation and advise companies on the way ahead. We also reinforced the Offline to Online conversation by conducting new research into Nordic Treasuries and their changing business models, shining a light on the pace and ambition for change. At Nordea Transaction Banking, for a number of years our goal has been to support the digital treasurer and the crisis has undoubtedly accelerated that initiative.
Slow and steady developments
As we look towards 2021, Project 27 to create the world’s first real time cross currency payments infrastructure for the Nordics is certainly something that we can begin to become excited about. This joint bank project will have a big impact for consumers, companies and trade across the region as payments become simplified and standardised. Despite the challenges of running the project remotely this year, P27 continues to progress well and we expect to be able to test the first transactions late in 2021. We are now less than a year away before P27 begins to hit the market and we have a full agenda ahead as we clear the way for transitioning to the new infrastructure.
As we look towards 2021, Project 27 to create the world’s first real time cross currency payments infrastructure for the Nordics is certainly something that we can begin to become excited about.
Erik Zingmark, Head of Transaction Banking at Nordea
In Open Banking, we were first out in the Nordics with our developer portal and we continue to lead the way in bringing new commercial APIs such as Instant Reporting to our customers. We are expecting a gradual growth in the consumption of commercial APIs as their adoption becomes more widespread. We have a good development pipeline and we will continue to launch commercial APIs on top of PSD2 requirements throughout next year.
For Nordea and Transaction Banking in general, our 2021 focus will be on continuing to help our customers recover from the crisis. At the same time we will continue to prepare ourselves and our customers for the future by maintaining our focus on the development of digital solutions. Both recovery and future development are intertwined and we will be looking to implement the solutions that will provide the biggest impact for our customers.
In many cases, developments in cash and trade mean launching in incremental steps all of the time rather than planning for any big bangs. As the Nordic experts in Transaction Banking, we will be focusing on the things we do well and keeping the direction going. Now more than ever it’s important that we try to be a predictable and reliable partner for our customers as they get back on track. We will be standing next to them, ready to help them seize the opportunities as they arise in 2021.
TxB at the centre
Transaction Banking continues to be a very fast moving and interesting area from both a banking and technology perspective. From originally being considered a rather mundane process style activity, payments in particular has become one of the hottest topics in town. Banks, fintechs, big techs and venture capitalists are all focusing on payments and developing new ways of shaking up infrastructures that have been in place for a number of years. The strength of interest in payments can only mean we are in for some exciting new initiatives ahead.
We want to be active participants in all of the relevant ecosystems such as P27 and we.trade as we believe interconnectivity means more choice and improved options for our customers.
Erik Zingmark, Head of Transaction Banking at Nordea
As a 200 year old bank, it’s probably safe to describe Nordea as one of the incumbents in the transaction banking space. We will continue our strategy of complementing our own products and services with an active search for relevant partners. We are open to partnerships in 2021 and we have already expanded our offering to customers during the last year thanks to a collaborative approach. One example is our open solution with Cobase, the market leading multi-bank platform, which will bring real benefits to companies with accounts in more than one bank.
Ultimately, we want to provide our customers with a flexible and seamless payment experience which we will aim to do via the services we provide and the partner based solutions we choose to offer. Supporting tools that provide a clear overview and help empower decision makers is one of our key goals.
Standardisation and connectivity
We are part of all the major initiatives to provide standardisation and simplification of the payment experience. P27 is obviously a great example of this as well as the XML implementation in SWIFT and the standardisation of our file services. We are constantly looking at how to optimise the process for our customers to free up their time and make life easier.
The trend of an interconnected world of platforms and ecosystems will continue and we aim to be at the heart of a future platformisation approach. We want to be active participants in all of the relevant ecosystems such as P27 and we.trade as we believe interconnectivity means more choice and improved options for our customers.
The future is bright! Merry Christmas & Happy New Year!
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