The world beat a path to Scandinavia’s door this year when it came to mobile payments. Samsung Pay was the first international competitor to plant its flag in 2017, followed by Alipay, with Apple Pay expected to make its official entry into the market before the ball drops on December 31.
And that had Danske Bank A/S — through its MobilePay digital subsidiary, its Nordic brother in banking — form a single payments platform to fend off the oncoming horde of global mobile players.
Not only are a host of international players setting up camp and trying to acquire digital payments favor in Northern Europe, regulatory change is also coming — possibly taking much of the bank’s natural advantage in the race for Nordic customers with it.
A Changing Landscape
The latest revision to the European Payment Services Directive — which officially goes online in January of next year — was created with the goal of making the mobile and digital payments landscape more competitive.
To level the playing field — and in a move widely lamented from many European banks — the European Payment Services Directive requires that banks provide rivals with access to account information if asked to do so by one of their customers.
For banks, that represents a loss of advantage in their race with FinTechs to write the future of mobile payments. Banks also bear being mediated out of the relationship with their customers — by losing the tangible contact they have with them through payments, which extends to other products like mortgages or investment accounts.
“[MobilePay] wants to protect the role of banks in the future payment value chain, whatever it might look like,” said Mark Wraa-Hansen, the company’s chief executive officer. He reiterated that banks’ “key concern” is that uncontrolled mediation “between the banks and the customers.”
The Battle for Valuable Consumers
As a whole, Scandinavians are a tech-savvy and tech-enthused society, which is already fairly ahead when it comes to digital payments usage. According to reports, consumers in Nordic nations make about 25 percent of their purchases via mobile app.
Those payments are spread across a few regional players: Vipps in Norway, Swish in Sweden and MobilePay in Denmark. The apps themselves generate some fees, but their higher value is the connection it allows the banks with their customers. Connection that those banks would rather not lose.
Denmark, Finland and Sweden rank numbers one, two and three in Europe in terms of digitization in all of Europe, and it’s a market local banks would rather not hand over.
“My concern would mostly be the new third parties: the global players, the Apples, Samsung Pay,” Wraa-Hansen admitted. “They’re very skilled in technology, and they’re very ambitious in being in the payment space.”
Wraa-Hansen conceded that fighting with Apple, Alipay, Samsung, et al, for the mobile market among Nordics will not be easy.
These are “very big players, so we are very humble,” he noted. Plus, even if those global players are not able to knock the home teams from their perch, there have been rumors that there will be an electronic payment method that is government-built and backed — on concerns that private enterprises control too much of the digital payments market.
All three platforms, the CEO noted, have been building out to compete, albeit somewhat more quietly.
“We’ve been in a hurry building the biggest eEcosystem possible, integrating to all the merchants, all the infrastructure partners, getting as many consumers as we can,” Wraa-Hansen said. “We hope that has built a stickiness.”
It looks like as of early next year, they will get a chance to find out.