May 30, 2017

And the winners are…

Charlotta Wark

Head of Financial Digital Channels, Tieto

…the ones who are dedicated to Nordic banking ecosystems! The ones who are willing to invest in this way of working will be the winners. Together they will revolutionize real-time payments. The result of such a process is embraced by a broad array of payment market players as well as consumers. Here is how and why this adds value to society.

The reality of payments is changing. And the pace is quickening. We strongly believe that “real-time” is shaping the future of all payments. This is already happening in the ecosystems that we facilitate.  

Consumers have willingly adopted solutions such as Swish (in Sweden) and Siirto (in Finland). Now they expect interaction with merchants to be as easy as it is to transfer money to friends. Businesses, banks and governments understand, to an increasing extent, the benefits real-time payments create for them.

The benefits of real-time payments are immense

Banks can reduce the average end-to-end costs of payment transactions and enable innovative payment services that deliver enhanced value to consumers and businesses alike by getting involved in real-time payments.

For the small businesses, real-time payments can hugely impact liquidity in a positive way. The transaction cost will also be lower compared to the 2-4% that retailers pay today because of the lack of competitors. Legislations such as the upcoming PSD2 will also open up for other players than banks to administer transactions. For the consumer, the entire checkout experience in physical stores and online will drastically change for the better.

What about paying after a dentist appointment? Imagine just quickly passing through on your way out and having a payment request notification pop up on your phone. Or waiting in line at the hospital when seeing a doctor to settle the bill when you would rather just go home.

Each to their own or one for all, all for one?

All of the above could be made possible, faster than you think. But it won’t work without collaboration. If every payment solution company or bank would develop their own solution behind closed doors, the result would be a fractioned array of solutions that does not fulfil the different requirements expected by the different stakeholders. Thus, it won’t be widely adopted. Not agreeing on a standard could also result in leaving the door wide open for big logo companies or new start-ups to take control.

The public will seek a solution, if one is not provided, a silent revolution will happen. We can find an example of this in China, where 92% of the transactions in the big cities are taking place with the help of apps like WeChat or Alipay. Cash comes in second place (39%), while debit and credit cards come in third place. The Chinese banking system has long been criticised for the lack of efficiency and the high fees. This trend has created a disruption in the industry at a large scale.

Market synergies between third party payment providers, banks, merchants and other stakeholders must be utilised if a platform that deliver payments consistently, efficiently and securely is to be possible. We need to work together in an ecosystem to achieve standards across all parties.

Will the Nordics revolutionise Europe?

In Finland, we are running the real-time payment ecosystem around Siirto.

We do this because we believe this is the way forward, this is our way of adding value to the society at large. I suggest that we join forces with our neighbours in the Nordics, so that we can take the lead for similar work in Europe, together. The Nordic countries are already in the lead technically, so why not also do it formally? Or, as the saying goes; “it’s better to lead than to follow”.

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