The European Commission (EC) has approved the creation of a pan-Nordic payments platform, which will include the handling of payments across borders and in multiple currencies, almost instantaneously.
Known as the P27 Nordic Payments platform, it was initiated in 2018 by six of the largest banks in the Nordic region.
The collaboration project has now received merger approval from the EC, enabling it to start preparing to onboard customers in Sweden, Denmark and Finland.
In 2019, Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank all signed shareholders’ agreements and agreed on a business plan for the P27 platform. They also made financial commitments to fund the developing scheme until it could sustain itself financially.
Speaking in 2019, Martin Georgzen, chief strategy officer and head of business execution at P27, said: “When P27 is operational, it will pave the way for further innovation in the payments space. A Nordic common payment infrastructure could make it even more attractive for fintechs to select the Nordics as their home base and it will certainly increase cross-border trade by simplifying the way we do business in the Nordics.”
The merger approval also enables P27 to complete the acquisition of clearing system Bankgirot, which is owned by Swedish banks, and proceed with the transformation of the Swedish payments infrastructure and prepare for pan-Nordic payments services and products. Services planned for customers include a Nordic bill payments service, an alternative to request to pay, and direct debit systems in the Nordics.
Lars Sjögren, CEO at P27, said the merger approval was a major milestone for the banking tech collaboration. “Over the past three years, we have been building a platform that will transform the payments infrastructures in the Nordics,” he said. “Our platform will enable domestic and cross-border payments in real time, in batches and in multiple currencies throughout the Nordic region.”
The Nordic region is pioneering the payments sector with numerous successful fintechs. Traditional banks and citizens are also open to using new tech to improve and reduce the cost of financial transactions.
One reason for the Nordics’ fintech growth is that residents and citizens of the region tend to be digitally savvy, with some of the highest percentages of new technology adoption and mobile banking usage in the world.
The region boasts digital maturity, with highly digital banks and mobile banking services that have been around for years. The region’s countries also have governments that are highly digitised, with national ID schemes that can be used to log into bank accounts.
Banks are very willing collaborators in areas of tech such as payments. The big traditional banks face huge pressure from digital savvy competitors who use their tech expertise and user-friendly services to win customers.
By working together, the banks can reduce the costs associated with digital developments, which helps them keep up with fintechs with comparatively very low operational costs.
