About 100 years ago, Nordic countries shared a currency. Danske Bank A/S wants them to try again, this time on the digital front.
MobilePay, Danske’s digital-pay subsidiary, is urging Nordic banks to form a single payments platform to fend off global challengers like Apply Pay and Samsung Pay. The push comes as Apple Pay prepares to go live in Denmark, Sweden and Finland by the end of this year. (Samsung Pay recently arrived in the region, and Alipay earlier this month signed agreements to make its payment platform available in the Nordics to Chinese tourists.)
Competition from the world’s technology giants coincides with a new European payments directive, which promises to weaken the financial industry’s grip on client data.
MobilePay wants “to protect the role of banks in the future payment value chain, whatever it might look like,” said Mark Wraa-Hansen, the company’s chief executive officer. For banks, the “key concern” is that other companies will be inserting themselves “between the banks and the customers,” he said.
The revision of Europe’s Payment Services Directive, which takes effect in January, is designed to introduce more competition into the market for electronic payments. It will require banks to provide rivals with access to account information if directed to do so by clients. For banks, that means potentially losing the most tangible contact they have with customers, and their gateway to handling everything from mortgage lending to asset management.
Savvy ScandinaviansApple Pay is about to enter a market in which users are known for being more technologically sophisticated than most. Scandinavians use apps on their smartphones to pay for roughly a quarter of all retail transactions — Vipps in Norway, Swish in Sweden and MobilePay in Denmark — and that figure is projected to grow. The apps generate fees but, more important, they help bind customers to the banks that offer the service.
Denmark, Finland and Sweden rank numbers one, two and three in Europe in terms of digitization, with more than half their populations accessing the Internet through their phones, the European Commission’s Digital Economy and Society Index shows. That’s helped banks cut costs.
And it’s a market local banks are very keen to hold on to. “My concern would mostly be the new third parties: the global players, the Apples, Samsung Pay,” Wraa-Hansen said. “They’re very skilled in technology, and they’re very ambitious in being in the payment space.”
But the embrace of technology may have a dark side. Clients can more easily switch banks and then there’s the risk of cyber crime. Sweden’s central bank recently announced it’s considering developing its own e-currency amid concern digital payments are being controlled by a handful of commercial enterprises.
Meanwhile, MobilePay is doing what it can to bind customers closer, by becoming an integral part of the payments infrastructure in the Nordic region.
“We’ve been in a hurry building the biggest e-ecosystem possible, integrating to all the merchants, all the infrastructure partners, getting as many consumers as we can,” Wraa-Hansen said. “We hope that has built a stickiness.”
But ultimately, if Apple Pay and others like it prove too powerful, banks may have little choice but to negotiate a deal.
These are “very big players, so we are very humble,” Wraa-Hansen said.