CROSSBORDER: NORDICS Dag-Inge Flatraaker, Senior Vice President of Norway’s DNB Bank, and Edward Ireland, Head of Strategic Products at digital payments aggregator Bottomline, agree that we’re entering the most significant period of change yet in crossborder payments – and northern Europe is a standard bearer The Nordics include the most digitally-advanced nations on earth, so it’s no surprise that the region is on course to launch a groundbreaking real-time crossborder, cross-currency payments platform in 2021. P27 is so-called because it aims to improve payments for all 27 million inhabitants in the Nordic region, although it will initially launch in Sweden, Denmark and Finland, where all the major banks have come together to drive the initiative. Norway is likely to join later. In what can be regarded as a test bed for the world, P27 is intended to break down barriers for trade and financial interaction in the Nordics, where four
separate currencies – the Norwegian krone (NOK), the Swedish krona (SEK), the Danish krone (DKK) and the euro, adopted by Finland – operate. Migrating to a single, shared infrastructure and thereby removing the need for domestic clearing houses, promises to make real-time, batch, domestic and crossborder transactions cheaper and more efficient. The platform operators took a major step towards that in October 2020, by acquiring Bankgirot, Sweden’s only clearing house for mass payments. Of course, any seasoned banker will tell you that real-time, cross-currency, crossborder payments greatly rely on cooperation between sovereign authorities and the financial institutions that underpin them; overarching or compatible regulation; cast-iron measures to protect customer details and prevent fraud, and, of course, consumers’ and business’ willingness to use and trust in crossborder digital services, which requires an easy-touse interface, speed and transparency. But more and more examples of real-time crossborder, cross-currency projects are emerging. P27 is just one – and, if it meets its deadline, it will be the first. In fact, Dag-Inge Flatraaker, senior vice president of Norway’s DNB Bank – which has been closely involved in the P27 project by virtue of the fact that it operates across the whole region – and Edward Ireland, head of strategic
products at digital payments aggregator Bottomline, agree that the next 12 to 24 months will be the most significant period of change yet. “What we’re seeing, and what we will continue to see, is different real-time payment networks – in sterling, euros, US dollars, Hong Kong dollars, Singapore dollars, etc – starting to be integrated, so that institutions and individuals can make real-time payments crossborder,” says Ireland. “But I don’t think you’re going to have single regulators across jurisdictions, so it’s going to be a massive collaboration, through the technology companies and network providers, which can support that interoperability.“ There are other initiatives coming into play, including SWIFT gpi and Universal Confirmations, ‘which is going to give institutions and individuals a whole new level of expectation around payments’, says Ireland. “Payments, in the past, have been a little bit of a fire-and-forget concept; you initiate a payment, then you wait for the beneficiary to tell you they’ve got it. What we’re going to see, with gpi and Universal Confirmations in crossborder payments, is real-time visibility of the status of that payment. The individuals and institutions initiating the payments will be able to track them through their life cycle, and see when they hit the beneficiary account. “There’s a lot of work going on in the
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TheFintechMagazine | Issue 19
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