NextGen Nordics: Beyond P27, there is still hope for Nordic harmonisation

Finextra’s head of research Gary Wright was joined by Anders Olofsson, head of PaaS/SaaS, Tietoevry Payments; Ted Scheiman, head of Nordics and Baltics, Swift; Beju Shah, head of Nordic Centre, BIS Innovation Hub, Bank for International Settlements; and Lars Sjögren, independent payments expert and former CEO of P27.

This session came soon after the news last week that P27 has withdrawn its second clearing licence application from Finansinspektionen, the Swedish Financial Supervisory Authority.

Wright began by asking Scheiman where we are in regard to ISO20022, another initiative where harmonisation will need to be achieved by the end of 2023. Scheiman commented: "harmonisation is not only about ISO200022, it is also about harmonisation between different payment systems, and that also includes market infrastructures."

Discussing the Nordic region specifically, he stated: “I don't think we can look at the Nordics as an isolated kind of like digital island, we need to think about the cross border aspect as well. So those systems also need to harmonise. I think one of the first things that is happening now is ‘one leg out’, which basically enables your leg for cross border transactions to settle domestically.”

Olofsson added: "I think that these industry wide projects are extremely complex. The elephant in the room is P27 and that is also extremely complex [...] these systems are extremely difficult when the industry is getting together to transform and trying to do unify and especially around performance. There are so many interested parties, we got 5000 European banks alone that need to come on to a unified standard. We cannot neglect the complexity.”

Shah offered that his “experience has been that the complexity is underestimated. Here, working in SEPA and understanding the challenges that institutions face in terms of adopting, rolling out, and that change needs to be focused on. But, there has to be greater coordination across the public private sector to do that.”

Sjögren argued: “We need to recognise that there is a fundamental need to change the way things are today. We are operating on legacy infrastructures, the banks have payment systems dated from the 1960s. The formats that we are using today are incompatible, the infrastructures are fragmented. So I think that we just need to remember why it is that we are trying to change these things. And I think it's really important that we should not give up on that. We need to continue to experiment.”

Olofssen contributed to this sentiment: “What is still lacking, honestly, is that I haven’t seen a unified visionary narrative of what we would like to become of a payments ecosystem from here.” He continued: “we've seen over the last 20 years that optionality as increased. And whilst we thought 10 years ago that we would have fewer options, but a standardised way of doing payments. I think that that is also somewhat the market dynamics where customers and fintechs and innovators are coming up with new and better ways to do business than we historically have done.”

Sjögren further stated: “I think it’s about moving the ecosystem. I think this is about agreeing on what standard are we going to follow. I think it's also about embracing the G20 roadmap. As an industry we need to decide and follow through.”

In concluding Olofssen commented, “My first observation from the P27 hiccup was that finally this may be a catalyst for an opportunity to really adopt instant payments.”