Mobile payments, the Scandinavian way

Mobile devices are everywhere, and people are using them to pay for nearly everything. This fact has inextricably changed the payments landscape, particularly for banks. Below, we’ll take you through a mobile payments guide for bankers that brings attention to the highly-successful Scandinavian approach to this critical payment method.

Mobile payments: a guide for bankers

  • Publishing entity: Auka
  • Author: Auka
  • Date of publication: 2018
  • Topic: the Scandinavian approach to payments

Introduction to report

This is an accessible 2018 Q1 market report on mobile payments from a banking perspective that centres the approach taken by Scandinavia. Auka, the author of the report, as a Norwegian fintech, operates in a region where, every day, more than 65% of people use mobile payments, making this a leading region for the solution.

The differing perceptions of what mobile payments are

In a survey of almost 2,000 senior European bankers about mobile payment perceptions and digital strategies in the run up to and inception of PSD2, they found that European bankers define mobile payments differently than those in Scandinavia or China, which also boats a robust mobile payments ecosystem.

European bankers define the term as any form of contactless payment using a mobile device that usually involves a third part wallet, such as Apple, Samsung, or Android.  The contrasting Scandinavian definition centres functionality: mobile payments allow people to pay with a smartphone and an app that is not proprietary to their phone or service provider, using whatever funding source they choose, and anywhere they want to pay for something.

What European bankers are doing in mobile payments

The above-named survey also revealed some noteworthy insights about the mindset of European bankers regarding where they locate both concerns and opportunities. The concerns are as follows:

  • Revenues will decline resulting from PSD2
  • Many bankers are not sure if, or do not think, their banks can survive competition form big techs like Facebook
  • Lack of faith in current digital channels

Points of opportunity include:

  • Many are actively searching for opportunities to monetise PSD2
  • Banks want to introduce new digital channels
  • Banks are considering acquiring or buying fintechs after PsD2’s inception

Thus, the changing landscape and increased competition is causing banks to recalibrate and mitigate outside threats.

Why Scandinavian banks have been successful with mobile payments

Scandinavian bank-owned solutions have been successful with the above approach because it is flexible in terms of both payment sources and payment scenarios, and its completeness.

These banks look at and solve the problems businesses and consumers are having surrounding payments, or where opportunities arise for new payment scenarios. This contrasts many European banks who want to collaborate with mobile-wallet solutions like Apple and Samsung, which do not add value for either merchants or customers because, Auka argues, consumers who have cards are still paying using a terminal and merchants have to invest in hardware that does not create new payment scenarios.

Moreover, although that Scandinavian banks have bank-owned payments solutions, they are usually available to everyone, regardless of bank, which benefits banks and customers. Other tips for bankers looking to improve their payments approach are to monetise offerings by offering merchant solutions, investing so banks can take advantage of the opportunities present by regulation, and if innovation cannot be done in-house, organisations should partner with a fintech.

You can read our report summary on Capgemini and BNP Paribas’ 2017 World Payments Report here, and our write-up of The Paypers’ 2017 Online Payments and Ecommerce Market Guide here.

By Elliot Lyons, Research Analyst 

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