Fintech can help resolve issues related to financial exclusion and make strides where the traditional financial services industry has fallen short. Wright introduced the subject and handed to Filip Versluys, business development director for B2B Connect Europe, Visa, who explored how payments, particularly cross-border payments, are still impacted by challenges, because of requirements across different jurisdictions and the quality and quantity of data.

Versluys highlighted that painpoints need to be resolved with collaboration between public and private entities and this will lend itself to improved cost and speed, as well as ensure payments are instant and access to money is efficient. Further, “with richer data and technology, we will start seeing the benefits of capabilities offered by technology.”

Mats Persson Bergius, head of lending, Lunar, added that “customer expectations are shifting and shifting rapidly. The service I expect as a treasury department or as an individual is faster speed and instant payments. The work and the cost need to come down.”

Robert Pehrson, head of product management, SEB, offered a different view and said ISO20022 is the “basic foundation for enabling change, but customers are struggling to adjust to that.” He went on to explore how with the digitalisation of societies, the core problem is that there are different national agendas that permeate, and different authorities and central banks. Collaboration is needed ultimately.

After summarising the painpoints, Bergius questioned the value of an incumbent bank and mentioned that giving challenger banks and neobanks access to rails could result in an incremental increase of risk, but could also open innovation, which, however, could also threaten the provision of the bank’s own services.

In Pehrson’s view, an efficient foundation for innovation must be built. Central banks must make it easier for smaller organisations to allow customers to open accounts, but “players must do what they’re best at. It is super important to enable reach, low cost, and simple solutions. However, it is not that simple. Bergius, who is also the chairman of the Swedish Fintech Association, stated that there are significant challenges for fintech players. “Despite licensing, there is a struggle to gain access to infrastructure.”

He also said that there is extensive AML risk for banks to take on new players because “the cost of doing business with a player like that is too high, and it is ‘not worth it’ for a bank to handle a player like that in their customer base.
Versluys questioned the definition of a fintech and the definition of a bank – they are most definitely blurring in 2023. He explored how a “newer breed of licence is required, but engagement across the ecosystem is needed. What a bank is, is starting to shift because of new policies.”

Bergius summarised the session and said that the best way to describe the relationship between banks and fintech firms is that they are “frenemies.” Innovation will continue, and he said that while the local banking sector has worked hard to keep pace, the Nordics as a region cannot get left behind.

In order to avoid this, what needs to be instant is business controls, not necessarily the movement of money. Versluys referenced the importance of predictability and ensuring an element of optionality when providing services to customers. Further, to minimise risk, he advised embedding fraud prevention as part of the optionality.

“Nothing is black and white,” Versluys concluded.