Guest Blog

W.UP Guest Blog: North side story – 3 key questions about banking in the post COVID-19 world

At our last panel discussion, jointly organised with Mambu, we took a deep dive into how banking ecosystems have evolved in the wake of the coronavirus. We talked about what a truly digital banking ecosystem looks like and what others can learn from it about handling digital acceleration, shifting consumer behaviours, shrinking branch networks and the spread of contactless payments. Plus, how the global pandemic has redrawn the map of Fintechdom. Here are three questions that have stayed with me after the discussion.

Nordic banks: kings in the north?  

“Many say that the long-term legacy of COVID-19 will be an increasingly digital and an online-driven society. The question is who will thrive in such an environment and who will stay behind?” asks VC fund Rabo Frontier Ventures in a recent blog post about the effect of the coronavirus crisis on the financial services industry. In short, as our panellists agreed: those who had understood the urgency of digitalisation well before the crisis hit will move into pole position.

Many say that the long-term legacy of COVID-19 will be an increasingly digital and an online-driven society.


Case in point: the Nordics.

While incumbents in other parts of the world are still sceptical about open banking, leading Danish bank Danske Bank rolled out a banking app with account aggregation as early as in 2018. In some cases, Nordic banks have been the catalyst for innovation. It was the joint effort of a group of regional banks that created a “blueprint for digital identity success”, driving digital identity penetration well above 70% in Sweden, Norway, Finland and Denmark.

Agility: trend or means of survival?

There are so many lessons to be learned from the Wirecard scandal that it might as well be on Coursera. For the most part, it’s a story of defective regulatory oversight. As the Financial Times points out, it calls for “a reckoning by the German corporate and political establishment: of how this case happened, and why regulators and criminal authorities took no action against it for a year and a half.” On a more positive note, it’s also a story of how to survive such a scandal, as told by Wirecard’s clients.

I’m talking about the fintech companies who were left stranded following the FCA’s decision to shut down Wirecard’s UK operations. On 26 July, millions of Curve, Pockit, P.F.C. and Anna cardholders were unable to access their funds, including users who relied on the app to receive wages and benefit payments, CNBC reports. Curve and P.F.C. services resumed in a matter of days, in fact, Curve found and contracted a new payment processor and migrated all payment cards onto a new platform over a single weekend. (If you’re so inclined, read the entire saga here. It’s quite a humdinger.)

Again, there’s a lot to unpack here, but the message the incident sends about the critical importance of an agile, customer-first mindset to survive and thrive in the digital age is hard to miss. I highly recommend reading Tamas Braun’s take on the story and Áron Vitályos’ post on the dangers of clinging on to legacy systems – and legacy thinking.

How will COVID-19 redraw the fintech map?

Of course, adaptability alone is hardly enough to keep the lights on for any business, fintechs included.

Viable business models, new partnerships and access to fresh funding will be key to emerging stronger on the other side of COVID-19, the panel participants agreed. While it’s hard to tell who the winners, losers and also-rans of the post-pandemic era will be, the signs of changing power dynamics among market players are clear. According to a recent analysis by CB Insights, certain pockets of the fintech ecosystem might even benefit from the pandemic in the long run.

Payments companies serving online retailers, for instance, have seen a surge in transaction volumes during lockdown and captured market share from those behind physical merchants. Living off transaction-related fees, challenger banks were bound to be hit hard by limited spending. But, as CB Insights analysts say, those with lots of capital, a cult following of primary banking customers that link direct deposits or durable, multi-product offerings, don’t have much to worry about.

Author: Remco Veenenberg, Head of Alliances, W.UP

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