Erik Zingmark, Head of Transaction Banking at Nordea, met Daniel Ahremark, Group Treasurer at iZettle, to discuss the benefits of Open Banking, its potential for increasing efficiency in business processes and the move towards complimentary collaborative partnerships.
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Nordea has continued to be a leader in the Nordic region in Open Banking, taking a proactive and collaborative approach to exploring the new opportunities it offers. The first commercial products from Open Banking such as Instant Reporting are now close to launch.
Founded in Stockholm in 2010, iZettle have already become one of the world’s most successful fintechs with a simple mission to ‘help small businesses succeed in a world of giants’ by supporting them with a state of the art range of devices, software and platforms.
For Daniel Ahremark, Group Treasurer at iZettle, being able to gain access directly to data via APIs (Application Programme Interfaces) is a key element of the open revolution that could fundamentally change the way company processes are structured.
Daniel Ahremark says: “If we look at the societal benefits of Open Banking, it’s really about democratising data, putting data back into the hands of the customer. For treasury specifically, it means de-risking our cash flows. So instead of sending and producing a file, someone reading that file, someone receiving that file and so on, we will be able to remove a lot of steps in the way we communicate with our bank. We can simply look straight through the APIs and see in real time what kind of balance we have, what kind of money we have, why do we have that money and be able to react and reallocate those funds fairly swiftly.”
From the beginning, Nordea has decided to embrace PSD2 (Payment Services Directive) regulations by taking an open approach to developing innovative products and services. The goal with Open Banking is to move beyond PSD2 compliance, which requires banks to open up to third parties to offer services to account holders, to develop API based products that can create real value.
Erik Zingmark says: “With the Open Banking portal in Nordea, we have had the strategy to bring as many developers as we can from all around the world to see to it that we have the competence close to us. Like most banks, our focus still is on being compliant, we have to. This is obviously a very high priority, but we also want to bring value added APIs out in the market place and the first one we are releasing for corporates like iZettle is Instant Reporting.”
In terms of the future developments the Open Banking landscape presents, Daniel expects a more fragmented value chain enabling participants to each focus on their core competencies.
Daniel explains: “What I think we are seeing now is the same fragmentation that we saw in the music industry in the 90s, where you used to have a structure where the record label hired the artist, they produced the music, they printed and distributed the CDs. The fragmentation we saw of that space was essentially the music producer doing the very same thing, but the distribution taken into the other channels, so you had entries of players such as Spotify or Apple. I think we will see new players who can focus with a completely different kind of attention on customer experience.”
In the current climate, incumbents such as Nordea are working alongside fintechs and other new entrants to pull together to develop mutually beneficial solutions.
Erik notes: “At least what I’ve seen is that there has been a maturing process, obviously there are still many fintechs out there, smart ones that are trying to kind of disrupt banking, which is all fine. But most of them have realised that you can be independent but still cooperate and try to make use of the different assets that the bank and the fintech have.”
Daniel concludes: “As I see it, we have two very different but very material strengths when it comes to how this could be set up, especially in the fintech space. Banks are the experts when it comes to regulatory requirements and infrastructure and how this actually works. While we have speed and tech and being able to leverage both of those two together I think we can build something truly great.”
To read more about iZettle, click here.
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