Why Scandinavian banks ‘lead the way in mobile payments’

“Brave banks” are a key reason why Scandinavia is leading the way when it comes to mobile payments, according to the Google Cloud hosted mobile payments provider Auka.

The group – which was set up in 2010 and launched Norway’s mobile payments platform mCASH two years ago – says that the arrival of the second Payment Services Directive (PSD2) in January 2018 will “crack open bank accounts” to allow anyone with a licence to access bank account data and initiate payments.

The world’s biggest tech companies in the world, such as Apple, Facebook and AliPay, are all among those poised to “swoop in and take advantage” of PSD2, it forecasts. Being a retail bank right now is already challenging and will only get harder, but the more proactive have the opportunity to gain a competitive edge.

Auka notes that online banks are helping to accelerate the attitudinal shift and acceptance of digital and mobile payments. Spain’s CaixaBank, through its mobile-only imaginBank already allows users to see their account balance and recent transactions through an integrated Facebook app.

Last January’s launch of Samsung Pay in Spain, the first country in Europe to launch the contactless payment service, has increased the pressure on banks without a mobile payments strategy. A survey conducted by MasterCard in February found that 10.4% of digital users in Spain use their phone to pay in-store; an increase of 4.2% since early 2015.

However, Auka comments that what might appear to be impressive growth is dwarfed by Scandinavia, where more than half the population actively use mobile payments.

“Further, in Spain the main form of mobile payment is near field communication (NFC) payments as a result of investments in NFC card issuing and new payments terminals,” the group notes. “This has been a massive investment and is limited to newer phones that have the correct NFC functionality and it has to be used with new point-of-sale (POS) terminals.

“In Scandinavia, people have skipped being limited to NFC and pay using QR or Bluetooth Low Energy (BLE) initiated payments which require minimal investment from retailers and works on all smartphones for all customers.”

Auka’s chief executive officer (CEO), Daniel Doderlein, says that there are evident reasons to explain why Scandinavia has managed to become the world leader in public mobile payment adoption and why other countries are failing to catch up. “There is a clear gap between what expert analysts are recommending and what consumers actually want,” he suggests

“Many analysts are advising banks to launch a mobile wallet whilst consumers – those who’ll end up being the deciding force when it comes to the success or failure of retail banks – are saying they don’t think they want or need this.

“A bank can only be successful when it leaves its preconceptions at the door. The whole point of PSD2 is that what used to work is just not cutting it in the innovation stakes now. The banks who’ll come through are those who are willing to accept they don’t have all the answers right now, but are willing to do what it takes to stay relevant and succeed.”

Auka suggests there are four “key learnings” from Scandinavia for European banks introducing mobile payments to a market:
• Create a new brand that allows access to anyone – not just existing customers.
• Build trust by powering the brand with a well-known bank name.
• Add a viral spread element; sending money to new customers drives enrolment, for example.
• Carry out massive, nationwide advertising that builds awareness and trust to support the viral spread.

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