5 minute read
Thought Leadership: Nordic API Gateway
Thought Leadership: Nordic API Gateway
Breaking The MonopolyOn Payments
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About Nordic API Gateway
Launched in 2018 and headquartered in Copenhagen, Nordic API Gateway is one of the leading open banking platforms in the Nordics, enabling major financial institutions, accounting system providers, the payments industry and other fintechs to transform the future of financial services. Through one API, Nordic API Gateway has simplified access to aggregated financial data with the most extensive coverage of both personal and business bank accounts in the Nordics. Nordic API Gateway currently empowers the financial innovation of industry-leading companies, such as Danske Bank, DNB, Jyske Bank, OP Financial Group, Pleo and others.
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A recent report published by Nordic API Gateway found that over two-thirds of the decision-makers surveyed have already implemented changes into their organisation due to PSD2. At the top of the list of these changes: low-friction payment options being made available through third-party providers.
In an interview regarding PSD2 and the new opportunities the EU has helped generate due to the directive, the European Commissioner for Competition, Danish politician Margrethe Vestager, was quoted as saying:
“The opportunities for innovative companies in smaller member states would not have been so far-reaching without the EU. PSD2 brings a fragmented market back together and, as such, opens for great possibilities for all. I think it’s so exciting that the monopoly on payments has been broken. I want to see even more innovative solutions in the market.”
PSD2 - The rallying call.
As the commissioner points out, PSD2 is in the business of healing a fragmented market, while at the same time breaking monopolies and opening up for new players, new business models and new types of cooperation. This cooperation pertains to, not least, the dynamic between banks and fintechs, which is, in no small degree, what open banking revolves around today.
Since PSD2 allows all third party providers (TPPs) to initiate direct account-to-account (A2A) payments, businesses and consumers have also been empowered with the option to opt-in for lower-cost and more secure payments. This, combined with a high level of trust in the digital space has led to a boom in digital payments and online shopping in the Nordics. Findings released in March of this year predicted that in Denmark alone e-commerce would increase by 10% to €21.45 billion by the end of 2020.2 One can only surmise that this number will be significantly affected by the coronavirus pandemic, and will most likely increase even more as a result.
More than just your average bank.
Banks have also come to realise the full potential of using PSD2 to build convenient and user-driven payment solutions. Instead of focusing on the compliance part, banks are starting to become TPPs themselves in order to innovate with financial data from other banks, as well as the ability to initiate payments from one single bank. With that, banks have the opportunity to own the customer interface.
A front-runner in owning the customer interface is Norway’s largest bank, DNB, who has recently expanded its service by enabling their customers to perform instant A2A payments from any bank within DNB’s mobile bank. On the road to becoming the favoured mobile banking app for all Norwegians3, and explaining the advantage of owning the customer interface, Group Executive Vice President of Retail Banking at DNB, Ingjerd Blekeli Spiten, says:
“This is an important step in the direction of becoming the mobile bank for all Norwegians. We’re giving our customers huge flexibility as they’re now able to make payments and transfers between their own accounts across several different banks. For us, it’s all about making it easier for customers to gain a full financial overview no matter how many banks they might have.”
Low-friction mobile payments are already leading the way.
PSD2 has indeed become a disruptive force within the payments space, impacting over 300 million e-commerce shoppers in Europe alone.5 Critical advantages experienced include the ability to pay directly from a personal or business account more efficiently, protecting financial data through increased security in strong customer authentication (SCA), taking more ownership of one’s credentials, and the knowledge that login data is not stored after a payment is concluded.
Speaking ahead of Europe’s largest payment conference, Merchant Payments Ecosystem 2020, CEO of Polymath Consulting, David Parker, forecasted that:
In addition to the reduced costs associated with traditional credit card payments, one of the great benefits of A2A payments is the fact that consumers do not have to share sensitive payment information. And with the new payment landscape ripe for innovation, A2A payments can easily be built into any solution for added customer convenience.
Thanks to the arrival of PSD2, the opportunities within open banking are leading to further conveniences for businesses and consumers with a more level playing field for payment providers. Consumers are ready to adopt and welcome new payment methods, and companies have been waiting for new opportunities to emerge. It’s time to remove the astronomical cost and friction of transaction fees and deliver a fairer, more enjoyable experience for all those involved.
Want to learn more about the valuable payment opportunities available through open banking? Download Nordic API Gateway’s free report today!
Rune Mai
Rune Mai is the CEO and Co-Founder of the fast-growing open banking platform Nordic API Gateway and the leading money app, Spiir, which has more than 380,000 users in the Nordics.
With more than 10 years of experience in the fintech field, Rune is one of the most influential voices in Nordic fintech. His vision is to create frictionless financial futures for millions of European consumers and businesses with seamless access to financial data and instant payments. With a purposeful drive of making money easier for everyone, Nordic API Gateway was developed to standardise the format of financial data and payments.
