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Future of Payments from the Banking Perspective

Future of Payments from the Banking Perspective. Ossi Leikola Head of Transaction Products 17 June 2010 – Mobey Forum. Nordea in numbers. 700,000 corporate and 10 million household customers of whom 6 million are also e-customers

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Future of Payments from the Banking Perspective

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  1. Future of Payments from the Banking Perspective Ossi Leikola Head of Transaction Products 17 June 2010 – Mobey Forum

  2. Nordea in numbers 700,000 corporate and 10 million household customers of whom 6 million are also e-customers Number one or two in most Nordic markets with 1,400 branches and 33,500 employees Approximately € 30 billion market capitalisation and total income over € 9 billion Over 3 billion payments and card transactions processedper annum

  3. The future depends on the payment market you are looking at • Business to Business – tight integration into business processes • Business to Consumer – convenience and efficiency • Peer to Peer – alternatives to cash

  4. Business to Business – Linked to sales, procurement and liquidity management • Tight integration to financial and other business processes with wide range of complexity • Typical instruments: credit transfers, direct debit, D/Cs • Players: banks, business process integrators

  5. Business to Consumer – Convenience and efficiency • Consumers driven by convenience; business by efficiency • Across both single and recurring payments • Typical instruments: cash, cards, direct debits and credit transfers • Players: banks, card companies, other payment institutions e.g., e-commerce hubs

  6. The corporate and the consumer agree on using e-invoices The consumer registers to accept e-invoices to his internet bank Customer can pre-set conditions for automated approval of the invoice The corporate sends an e-invoice through Nordea to consumer’s internet bank The consumer has an option to receive information and confirm e-invoices with SMS Business to Consumer example – Confirmation of e-invoices by SMS

  7. Peer to Peer – Alternative to cash? • Advantages of cash – perceived value in itself, instant, minimal infrastructure for the consumer • Limitations of cash – physical proximity, security concerns • Alternatives to cash: cheques, credit transfers, virtual money, talk minutes • Players: banks, alternate payment institutions, online social networks, telcos

  8. Swedish banks developing mobile payment solutions • Collaborative initiative between five Swedish banks within the Swedish Bankers’ Association • Provides mobile payments between private persons • 24/7 real-time, simple service • Both payer and payee get an online confirmation on an executed payment • Open to any (local) bank to join

  9. So what is the future of payments? • Business to Business – Corporates drive innovation for efficiency. Payment services will be embedded in business processes • Business to Consumer – Companies innovate to generate both efficient and convenient solutions. Consumer technology, including mobile, will play a large role • Peer to Peer – The mobile, internet and online social networks will be the space and motivation for P2P solution innovation. Trust in payments will determine sustainability of the network

  10. The role of banks in the future of payments As long as trust is needed in a payment, banks will be involved

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