Scandinavia has long been a hive of disruptive technology and has developed a strong innovative startup culture and a history of early consumer adoption. Much in the manner that Skype impacted the telecom industry or Spotify forced the music industry to reassess its modus operandi, we are seeing a similar level of rapid change in the transactions and payments industry.
Convenience comes to corporate finance and finance
Initially, much of the excitement around fintechs and payments involved the household sector, with Apple Pay, iZettle, PayPal and person-to-person payment methods allowing faster and more convenient customer experiences. These developments gave rise to a new digitally empowered banking customer that is confident, well-informed and constantly connected. This customer now resides in corporate finance and treasury departments – or indeed in newly formed corporate divisions, such as e-commerce – and it is up to the banks to deliver on these new expectations through innovative solutions, an agile culture and collaboration with third parties.
It is essential that banks enter into an ongoing dialogue with customers around digitalisation to ensure that they are in tune with their needs, and to allow the customer to actively shape the future landscape of payments and financial services: the fanciest digital solution is worthless if it does not meet the needs of the customer. A recent example for us was our AutoFX solution, which was closely developed together with a small number of customers to ensure their needs were directly met.
This method of collaboration working is a definite trend we believe in and a sure-fire way for banks to deliver the right digital solutions to customers. Simply put, customers are at the treasury coalface, so if they have daily challenges that can be easily resolved or have their own ideas about how treasury can be made more efficient, then our door is open. We listen and then assess the situation before involving other relevant customers into the discussion to see if there is demand elsewhere or across the industry. If so, we begin collaborative development and pilot processes, ensuring that customers get the maximum benefit from the final outcome.
Corporate payments are becoming fully automated and self-service, real-time and completely seamless – i.e. the same information and services are available across all channels: mobile, web, ERP/TMS, and face-to-face. PSD2 will enhance these developments and we will see further improvements in the corporate payment experience, even easier management and overview of cross-border accounts, more integrated and convenient consolidated account overviews, and increased competition and innovation that will drive down costs for corporates on each payment they conduct.
In short, the next 10 years will be game changing. Increasingly, Nordea and other banks see themselves not only as financial institutions but as technology companies as well. Why? Because technology will define our future as a society, and within this, it will define the future of banking. The Nordea Startup Accelerator, for instance, focuses on ideas in new technology such as cognitive computing, artificial intelligence and blockchain technology. Yet, we are also interested in other areas, where new technology can help us offer better services to our customers, where the focus is to ensure newly developed solutions are solving real customer problems and that we use combinations of different technologies to create superior value.
Competition drives innovation
However, the biggest potential benefits for corporate customers may come from new value propositions, services and solutions that result from banks and new entrants partnering and combining their individual strengths or from banks becoming more innovative in the face of increased and agile competition. To elaborate: in general, fintechs are smaller, more agile and idea-rich with short times to market. They frequently have an innovative culture and a can-do attitude. Banks are adopting some of this culture and more agile ways of working but it is a tricky process.
What banks do have however, is experience in compliance and regulation, strength in number of customers and they are reliable creatures of habit that can protect customer information and data. Combine these advantages with the fantastic amounts of customer data that banks are sitting on and extensive financial knowledge, and you can see that collaboration between banks and fintechs can really produce exciting, customer-satisfying results. A likely future scenario is that large banks will leverage new technology by providing platforms that act as “digital banking superstores” to maximise collaboration with external providers and thirds parties and deliver a great end-user experience. Yet, banks must make significant investments in their banking and payment systems to optimise technological advances and prepare for the post-PSD2 landscape.
The original version of this article appeared in The Paypers B2B Fintech: Payments, Supply Chain Finance & E-Invoicing Guide 2017, and is reprinted by Insights with their kind permission.
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