In the Nordics, digital disruption is all the rage. Innovative FinTech startups are popping up among the region’s established banks, putting pressure on the latter to remain relevant to today’s tech-savy consumers. Can they keep up?
NextGen Banking Nordics 2016 brought together leaders from all walks of the industry to talk about trends like blockchain, mobile, biometrics and more. Trustly CPO Josef Darmark joined the discussion in a panel called “Technology hype versus technology reality” alongside others from BehavioSec, Accenture, MeaWallet and CustomerXPs.
Moderator Annette Brolos, an independent FinTech analyst, dove right in, asking about how competitive the Nordic countries are when it comes to banking. Rivi Varghese, CEO of CustomerXPs, was adamant about the ability of Nordic banks to skip over intermediary technologies, giving them a major advantage, but Tomas Nyström, Global Head of Emerging and Advanced Technologies at Accenture, countered saying that while they have traditionally been on the forefront, in the past five years their systems have become so complex that even a small change involves a lot of people.
Turning to payments, Brolos asked what trends we can anticipate and Trustly’s Darmark painted an optimistic view of mobile. “In all forms of payment, one of the key things is to identify who you’re dealing with and that’s why you see mobile authentication is coming, because carrying your bank’s digipass with you isn’t very convenient,” he explained. “I know that cards have had the same struggle transitioning online, so I think in that sector, biometrics and perhaps facial recognition are things that in the future, merchants, financial service providers and banks will need to offer because that’s what the customers want. And in the long run, that’s who will win: whoever can provide what the customers are looking for.”
Nyström added that he’s noticing a clear trend of convergence and omnichannel. “One of the very interesting concepts we are looking at—and it’s still probably more hype than reality, although we see it getting close to reality—is to move the identity around and to keep that identity on you,” he said. That could be an NFC-enabled ring and Bluetooth that uses your smartphone as a connectivity hub for authentication and validation, allowing you to tap your ring to pay or enter public transit, for instance.
But can security keep up with customers’ demands for convenience? “I’m sure security can keep up,” said Darmark. “Becoming convenient can essentially remove the payment transaction. You just identify yourself and and that’s it; the payment transaction will happen in the background. But, of course, to make it secure, you have to analyze everything about the person and determine if their behavior is consistent with their normal patterns.”
Thomas B. Normann, VP Products at MeaWallet, jumped in to joke that there are two types of organizations: those that know they’ve been hacked and those that don’t know they’ve been hacked. “Hopefully you are in the first category. So it’s an ongoing race and the bad guys are always ahead. That’s the name of the game,” he lamented.
CustomerXP’s Varghese said that banks are in a unique position because they know so much about their customers. “Force the hacker to play that game with you,” he dared. The bank knows where your preferred ATM is, the amounts you tend to withdraw and how often you withdraw, but hackers can’t keep up because it forces them to understand the victim as a segment of one, he said. “And who has that information? Which industry on the planet has this information? Only the bank has this information,” he concluded.
So as banking and payments shift increasingly mobile, convenience is key. But in order for the customers to get on board, both banks and FinTechs will have to ensure that security can keep up.