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Digital Composite Image Of Silhouette Businessman Standing Against Illuminated Globe At Night

Technology, disruption and change – Keeping pace with Erik Zingmark

Fast paced changes driven by technology and customer demands continue to affect every area of banking. Erik Zingmark, Head of Transaction Banking at Nordea, reviews the topics that have been making the headlines and reflects on the continued digital disruption ahead.

2019 can be described as a year where we at Nordea introduced tangible solutions in the key digital areas we have been focusing on in recent years.

In Open Banking, our leading position in the Nordics was supported by the launch of new commercial API solutions both in Transaction Banking as well as in other parts of the bank. Despite additional regulatory requirements affecting the pace of the commercialisation of Open Banking, we have managed to introduce APIs that bring true value to our customers.

The take up of e-commerce has continued to grow exponentially across the Nordics. The predicted growth of around 25% for online shopping across the region in 2019, includes Sweden which is peaking with a 37% growth in e-commerce for the year. In parallel with this growth we have launched our Nordic PSP e-commerce platform Nordea Connect in all four of our home markets. Our aim is to follow our customers as they move into new business models and Nordea Connect enables us to support their journey from offline to online. A general theme that we continue to see in commercial life is that almost all of our business customers are looking at how they can leverage the online environment, whether this is in the B2C or B2B space.

Our aim is to follow our customers as they move into new business models and Nordea Connect enables us to support their journey from offline to online.

Erik Zingmark, Head of Transaction Banking at Nordea

Keeping trade moving

At the macro level, trade wars and other causes of uncertainty in the world are making trade finance as a service more important than ever. We are attempting to counter the perceived decline in trust in trading relationships by facilitating trade with our trade finance offering in general, as well as through the block chain based trading platform we.trade. Whilst we still conduct trade finance in the same way we have done before, we are also investing in the next generation of trade finance through we.trade which uses distributed ledger technology to increase trust between trade counter-parties. This will continue to be very important as global uncertainties continue.

The sudden rise in the adoption of mobile payments in the Nordics has almost reached the level of full saturation. Across the region, the market continues to consist of four mainly local national solutions. During 2020 I expect to see some consolidation or at least further collaboration between these local champions in order to allow our customers to use their mobile payment apps across borders within the Nordic region and to improve the profitability of the solutions.

Slightly related to this is the progress of Project 27, which has continued to develop according to plan. A new company called P27 Nordic Payments Platform has been established to run the platform and the Nordic Payments Council (NPC) has been formed to provide regulatory oversight. It’s obviously exciting to anticipate the benefits that will come from the establishment of a single Nordic real-time cross border payments infrastructure. 2020 will be very much an implementation year as we prepare for the first live transactions to happen in 2021.

We are also investing in the next generation of trade finance through we.trade which uses distributed ledger technology to increase trust between trade counter-parties.

Erik Zingmark, Head of Transaction Banking at Nordea

More disruption to come?

From a bank’s perspective, it’s fair to say that significant disruption has not happened so far. Some fintechs have had success whilst others have met significant challenges. PSD2 in itself has not fuelled disruption in the way that was once thought inevitable. Obviously, no-one knows what will happen in the future but we have already seen the BigTechs taking incremental steps into the financial industry.

One of the main motivations driving the BigTechs is the attempt to gain access to transaction data. If a person makes an online search for running shoes, for example, they can be met by weeks of pop-up advertisements offering the same running shoes, even after they have purchased them. With access to the relevant transaction data, the BigTech is able to adjust the advertising once the particular item has been successfully sold, enabling them to offer more targeted responsive campaigns to the ones paying for the advertisements and to improve the consumer experience.

In the coming year, obviously new fintechs will continue to grow and either partner up with banks or try to disrupt them. However, I think things are not moving as fast as we first thought and when the BigTechs start to move, the implications are much greater. The punching power of the BigTechs makes me think we will see more of them coming closer to the financial industry faster than earlier expected. By partnering with other banks, the BigTechs are able to achieve their objectives without having to carry a banking license.

One of the main motivations driving the BigTechs is the attempt to gain access to transaction data.

Erik Zingmark, Head of Transaction Banking at Nordea

Data still key in 2020

Data management will undoubtedly continue to be a main theme for 2020. We are continuing to look at smart and proactive ways to use each of our customer’s own data on an individual basis with them. We are becoming much better at seeing opportunities and challenges for our customers in bilateral conversations. Just as with the running shoes example, if banks are not providing meaningful advice why talk to the bank in the first place? More intelligent use of the data means you can be much more relevant and focused with tailored solutions for each specific customer. We can also expect to see banks commercialising data in 2020, where anonymised and aggregated data is provided to companies for a fee.

Connected to data but in a slightly different context is Artificial Intelligence (AI). I think Artificial Intelligence will definitely be a hot topic next year and we will see an increase in use cases. In particular, the area of compliance offers the greatest opportunities for introducing more AI into the screening and monitoring of activities.

Data also plays a major role in another topic I think will be making the headlines in 2020 which is Industry 4.0. Here we can expect to see banks like Nordea using industrial data from the Internet of Things to collaborate with manufacturers, for example, to support production processes capable of more or less running autonomously by themselves. 2020 promises to have a strong focus on technology, with data, AI, Industry 4.0 and more practical use cases of blockchain coming increasingly into the centre of discussions in the media and also between banks and customers.

2020 promises to have a strong focus on technology, with data, AI, Industry 4.0 and more practical use cases of blockchain coming increasingly into the centre of discussions.

Erik Zingmark, Head of Transaction Banking at Nordea

Keeping up the pace

Of course the question arises as to how to keep up in terms of our own development when all around us things are moving so fast. For our customers, I would definitely encourage them to continue reading Open Insights and participating in the events we run. We are very focused on supporting development by attempting to identify and lead the discussions around the key topics of the day.

As I always like to say, knowledge is in one sense becoming more individual and it’s up to each person to take responsibility for their own growth in competences. There are great sources of relevant information out there on the web. You can do many things to actually grow your competence on a daily basis by spending a little bit of time on what’s going on and discussing that with your colleagues, without having to go back to school or wait for a training programme. It is quite exciting and if you are following developments, then you have a good chance of staying relevant for the long-term in your job.

Staying in the centre of change

For my own part, I look forward to another exciting year of working in transaction banking, an environment that is rapidly changing and in many ways is at the centre of some of today’s key conversations. With things moving so fast it can be very rewarding since you always have to take a strategic, tactical and operational approach at the same time. Back in the old days you set the direction and then you kept it for two or three years. You can’t do that any longer since you have to keep all aspects up in the air at the same time and that’s why the future is so exciting. Every day is a “Harvard Business School day”!

For more information write to txbmarketengagement@nordea.com.

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