Why Danske Bank is Working with Other Nordic Banks for a Unified Payments System


EXCLUSIVE – The Nordic countries, in the northern reaches of Europe, comprise a small region with a small population (about 26 million across 7 countries), but disparate payments infrastructure prevails despite a mobile-friendly populace.

That’s why there is a need for a unified payments system in the region, Claus Bunkenborg, senior vice president of personal banking at Danske Bank told Bank Innovation.

Right now, the Copenhagen, Denmark-based Danske has joined hands with DNB, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank — all the major banks in the region.

Although no plans or timeline are in place yet, the seven major banks have agreed on “what we want to do and how we want to do it,” Bunkenborg said. At Danske Bank, Bunkenborg oversees payments infrastructure projects as well as facilitating corporation between other banks.

This corporation is particularly important for the Nordic region, he explained, pointing out that 30% to 40% of Denmark’s trade comes from these fellow Nordic countries.

When it comes to building a single payments infrastructure, he said, the focus will first be on creating a common mechanism for clearing and instant clearing of payments, whether that’s P2P or B2B. Once that’s in place, the banks can then gradually expand to more products and services.

In regards to mobile payments gateways, all the mobile payment apps (the Venmo or Zelle equivalents) in the region are backed by banks. For instance, in Norway there’s Vipps (developed by DNB Bank) and in Denmark there’s MobilePay (developed by Danske). Part of the resolve of this team effort is to facilitate seamless payments between these various rails.

But that’s a ways down the road, according to Bunkenborg. Right now, with a plan finally in place, the seven banks will spend the next three to six months working with third-party stake holders including central banks, FSA ( Financial Supervisory Authority) and competition authorities.

Only after receiving regulatory approval from authorities in all the Nordic countries can the actual work of building this ecosystem start. But that has been beneficial in this this case. The timing for this couldn’t be better, Bunkenborg said.

Not only is the regulatory atmosphere in Europe (with laws like PSD2) in place, but the payment infrastructure in Norway and Sweden is due for replacement, anyway. So from a cost efficiency perspective, this works out well for the banks.

Aside from the payments initiative, Danske is also working with other Nordic banks on smaller projects, such as cross-border cybersecurity and fraud protection.

“The Nordic countries have a long standing tradition of corporation,” he said.

To learn more about payments, join us on March 5-6, 2018 at the Parc 55 in San Francisco for Bank Innovation 2018. Click here to register.