Simplifying cross-border

P27 chairman of the board Paula da Silva highlights that the aim of the project is to “allow customers to conduct business with new models that operate better, for the industry to take account of costs and simplify the process of launching products and for society to benefit from a cross-currency, cross-country option for payments in the Nordics.”

Lars Sjögren, P27 CEO, adds that the improvement to the clearing and settlement mechanism will “break down barriers between the Nordic countries and improve security, future proofing against some of the largest threats that the industry faces in a digitalised society. Also, building around the platform will unleash a new wave of innovation.”

Driving progress

In addition to cohesion between the Nordic countries, increased communication with banks will open the industry for new players, increasing the competition and resulting in better services for the end consumers. Fintechs will also benefit from P27 due to the real-time nature of payments across borders and the seamless user experience.

In order to drive progress with P27, the industry will need to cut down on the complexity - four currencies and eight legacy systems - and rationalise down to one common infrastructural capability across the space. However, sessions explored how this is not easy as it seems, and the objective is not about “putting lipstick on a pig.”

Risk vs. opportunity

It would be unrealistic to think that banks would be confident enough about removing legacy systems out of the equation, but many attendees believed that the momentum behind the vision would be enough to propel P27 towards success.

However, risks need to be considered as the interoperability between currencies and mobile apps that allows flexibility between countries means that fraud itself will also move and could result in catastrophic data breaches.

Big Tech threat

Threats are also emerging from technology giants, with the likes of Facebook and Google making a play for financial services. In order to keep Big Tech at bay, central banks will need to ensure that legislation changes at the same rate as transformation in technology.

Reiterating this point, all parties must ensure that it is understood that P27 is a catalyst for breaking down silos and changing infrastructure to hide complexity for consumers in a retail setting.

The evolution of payments

2021 will be an exciting year for payments. In addition to the launch of P27, industry leaders are also preparing for changes to SWIFT, TARGET2 and ISO 20022, which reiterates that there will be no end state to the evolution of payments.