Convenience is the order of the day, especially after the onset of the pandemic, and it continues to be the key driver behind consumer action, simplifying people’s everyday lives with opportunities to do more with their finances.
In Denmark, today’s (Nov. 16) launch of ‘mit.dk’, a new platform that is set to bring open banking-powered payments to Danish citizens, is centered on that theme of convenience.
Take the example of Albert, who receives a phone alert for a speeding ticket that is due for payment. Instead of waiting to get the payment slip via mail and risking a court summons for a late payment fee, he can take immediate action by scheduling the payment with a simple swipe on his mobile device.
That ability to pay bills and invoices safely and securely in one place is one of the major benefits Denmark’s 5.8 million-plus citizens will be getting from the platform, which will also streamline and digitize all communication from public authorities.
“A lot of bills today are left unpaid, not because people are unwilling, but because the workflow of actually making the payment is very cumbersome,” said Rune Mai, CEO and founder of FinTech company Aiia, which has partnered with leading Danish IT consultancy firm Netcompany on the nationwide platform initiative.
He said the whole process of taking away “the hassle from citizens” has been the cornerstone of Aiia’s cooperation with Netcompany on the platform, which will also give citizens the ability to reschedule doctor’s appointments and communicate directly with public and private companies through an integrated chat feature.
Although the current focus is on the “huge” one-off bill payments market, Mai said that down the road, they envisage expanding the partnership to include additional features, such as the option to split up payments into different installments and initiate subscription payments which are regulated across Europe as part of the Second Payment Services Directive (PDS2).
Nordic Consumers Stuck in Their Ways
Although there are a lot of companies in Denmark that are ripe for this innovation and can adopt this, Mai said that consumers have been lagging a bit behind.
“We’ve had the Dankort [Denmark’s national debit card] as a specific payment card for years [since 1984] and Danish people have always been reluctant to use other major card providers, because the narrative has been that the Dankort was better and safer,” he explained.
However, account-to-account has been taking off within the mobile payment space, although Mai said the Netcompany deal clearly shows that adoption will take off within open banking as well. He also feels that open banking will likely be the infrastructure of the future on which payments are performed, similar to the mit.dk platform.
“I think this is a massive game changer for making payments [and] in its full potential, this will be able to hit more than hundreds of millions of yearly payments, from bills to speeding tickets to paying for insurance, [which will] then revolutionize the way we go about living our lives like moving a lot of stress and hassle from all Danish citizens,” Mai said.
The Danish firm, launched in 2011, is also very active in Finland, where established account-to-account payments have been available for years through a bilateral system that the country’s banks created.
Aiia has been exchanging those systems with their open banking infrastructure for consumers there over the last two years, Mai said, adding that they project reaching around 50 million payments in annual booked volume in Finland alone over the next year, while processing around 30% of all eCommerce payments in the country.
Mastercard’s European Boost
In September, Mastercard announced it had agreed to acquire the Danish open banking technology company to expand its open banking reach and leverage Aiia’s open banking model, which is guided by Europe’s tough data privacy laws.
Read more: Mastercard To Buy Denmark’s Open Banking Tech Firm Aiia
“[It’s] being able to accelerate our current business plans to an extent that we couldn’t see possible,” Mai said of becoming a Mastercard company, and the potential it presents to expand beyond the hundreds of FinTechs and banks they serve across Europe through access to more than 2,700 banking APIs.
See also: Mastercard’s Aiia Acquisition: Connectivity Is Critical for Open Banking’s Innovation
It also helps that both companies share the same perspective on banking, said Mai, who is convinced Mastercard will execute “more or less” along a similar path as Aiia when it comes to their focus on compliance and data privacy, as well as ensuring that consumers who share their data or use their account for payments are protected.
“These have been the cornerstones of our business and it is certainly the cornerstone of Mastercard,” Mai noted.
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