Di Payment Infrastructure 2020: readying for real-time

P27 News offers a recap of the 2020 Di Payment Infrastructure conference, one of the most important payments events in the Nordics, including new public figures from Swish, the changing role of central banks,  and how the market is preparing for real-time payments and the expected arrival of P27.

Di Payment Infrastructure went digital in 2020, with the move online just one example of how the coronavirus pandemic has affected developments in the payments market.

But the digital version still had plenty to offer, according to P27 CEO and conference panellist Lars Sjögren.

“I think that the DI Payments Conference was full of energy this year,” he said in an interview following the event.

“It really demonstrated everything that is going on in the payments industry today.”

Preparing for P27

The first panellist was Christina Wejshammar, head of the Riksbank’s Payments Departments, who explained the pandemic has resulted in an increased focus on central bank digital currencies like the Riksbank e-krona.

She acknowledged that a new role is emerging for central banks, many of which are becoming more active when it comes to payments. She also emphasized the need to re-examine how public sector bodies and regulators can support and drive development.

Wejshammar closed by explaining that the industry should expect central banks to be active “for the foreseeable future”.

Following Wejshammar’s presentation, P27 CEO Lars Sjögren took the stage to provide an update on the progress the company has made toward realizing its vision of launching the “world’s first” real-time, cross-currency, cross-border payments platform.

He emphasized the drive to update current infrastructure is customer driven and important to securing the Nordics’ competitiveness.

LEARN MORE: Get your copy of the P27 white paper

Sjögren also cited P27’s recent signing with Bankgirot, which he dubbed a “Swedish champion”, as an important step in building a clearing infrastructure. The P27 CEO went on to explain that P27 is building data centres in the Nordics, to help ensure speed and security.

He also highlighted the importance of joint work between banks, central banks, and customers, adding that P27 has tried to be a catalyst for fostering dialogue as there isn’t a history of central banks working together on payments.

Harmonizing payments across the Nordics

Sjögren’s presentation was followed by a discussion of exactly how banks and corporates should prepare for the expected arrival of P27, led by Johnny Thiel, Head of Cash Management Sweden Wholesale with Nordea, and Johan Wennerberg, Head of Cash Management for Danske Bank Sweden.

Wennerberg first made the point that Sweden is on the leading edge of payment developments but acknowledged that expected changes have given rise to lots of questions and uncertainty. He added, however, that banks, P27, and ERP suppliers are working actively to make the potential transition as easy as possible for customers.

Thiel and Wennerberg both highlighted that a new potential platform enabling cross-border, cross-currency payments can provide an opportunity for companies to explore entirely new business models.

Both also emphasized the importance of maintaining an active dialogue between banks, their customers, and ERPs and taking a holistic approach to the expected transformation. They urged everyone to embrace and take advantage of the coming changes rather than fear them.

Jenny Winther, Secretary General of the Nordic Payments Council (NPC) then provided an overview of the new payment ecosystem emerging in the Nordics, explaining that the region’s infrastructure is good overall, but still very local and national.

NPC’s vision, she said, is to synchronize and harmonize payments across the Nordics. The organization’s main task, however, is to create the rules, while implementation will be left to clearing and settlement mechanisms such as potentially P27.

READ MORE: The Nordic Payments Council: an insider’s view

Winther admitted that it can be challenging at times for NPC members to shift their thinking to the new cross-border reality. There will be lots of compromises, she added, but the spirit of working jointly remains strong.

Real-time payments: the Dutch experience

While real-time payments were a recurring theme for Di Payment Infrastructure 2020, the next speaker was able to provide a particularly unique perspective on the topic.

Not only was Frans C. van Beers of the Dutch Payments Association the only non-Nordic speaker at Di Payments Infrastructure, he was also the only one who could speak from experience about implementing a real-time payments system, a process started in the Netherlands back in 2015.

He shared some of his learnings from the Dutch implementation, which he characterized as a successful example of a market-led approach in which banks collectively recognized that instant payments would be the “new normal”.

It took four years from design to testing to a controlled rollout in the spring of 2019. The system ensured payments of any amount could be made 24/7 and would take no more than five seconds. Agreeing to those commitments, he added, was a “step in the dark” for the banks.

A key to success, van Beers stated, was interbank coordination and good communication, which helped keep stakeholders aligned, maintain trust, and ensure transparency along the way.

The effects of Covid-19

The next speaker at Di Payment Infrastructure 2020 was Anna-Lena Wretman, CEO of GetSwish, who explained out that the Covid-19 pandemic has had tangible impact on the popular Swedish payments app Swish.

She pointed out that Swish use has surged in the wake of Covid-19, particularly among older Swedes. In addition, transactions during the popular Black Week shopping week in November were up 115% compared to last year.

While the majority of Swish payments are person-to-person transactions, Swish has seen a rise in payments involving companies, 70 percent of which are e-commerce transactions. Wretman added that Swish sees further expansion into retail and physical stores as a potential growth area.

The GetSwish CEO was followed by Margareta Lindahl, board chair of Northmill Bank, a digital-only “neo-bank” founded in Sweden in 2006. She explained that real-time payments offer an exciting opportunity to get real-time insights and offer real-time feedback to customers. 

Northmill was “born out of technology”, she explained, and remains driven to find new technological solutions. Lindahl added she hopes to one day be able to offer a solution that would make the mortgage process completely digital.

Following a break for lunch, the Di Payment Infrastructure 2020 conference resumed with a presentation by Katarina Nordin, Nordic head of marketing with Adyen, which offers electronic payment solutions to merchants around the world.

She explained that come of Adyen’s brick and mortar retail customers had been hit hard by the pandemic, prompting them to explore online options. She cited the example of Swedish bedmaker Hästens, which has traditionally relied on showrooms but had worked with Adyen to quickly launch an online storefront.

Riksbank’s e-krona ‘cliff-hanger’

The day’s final speaker was Mithra Sundberg, head of the Riksbank’s e-krona pilot project, who offered some background on the Swedish central bank’s early foray into digital central bank money.

Launched in 2017, the e-krona was envisioned as a digital complement to cash. The project is now in a pilot phase with the Accenture consultancy brought in to build a technology platform that may or may not end up being used should the project move forward.

Sundberg emphasized the project is more about learning than readying for a hard launch, adding that the e-krona timeline is highly uncertain. The next step could be testing the solution with external partners to see how it would work to integrate them with the e-krona network, she said.

While the current e-krona project is set to end in February 2021, it could continue until the end of 2026, prompting moderator Kirstine Nilsson Edström from Swedbank to characterize the fate of the e-krona as a “real cliff-hanger.”

Summing up Di Payment Infrastructure 2020

In closing remarks, Nilsson Edström and co-moderator moderator Agnetha Jönsson summed up payments in the Nordics as being in a state of rapid development marked by increased joint work between banks. They also noted that public sector bodies and central banks were also taking on a more proactive role in driving development rather than simply making sure there was a level playing field.

The pair closed by pointing out that Sweden remains on the leading edge of payments innovations and that it will be very exciting to see what happens next.

Di Payment Infrastructure 2020: readying for real-time