Innovation in the payment landscape was the main focus of a recent report by Nordea. Here are some of the findings.
With temperatures reaching a little over freezing during the winter in Stockholm, Erik Seifert, Head of Cash Management Sales at Nordea in Sweden jokes that it is not the best time of year to entice treasurers out of self-imposed office hibernation and into the city for a treasury seminar.
However, a talk on the future of payments piqued the interest of treasurers and saw record numbers attended the event recently held by Nordea. Backed by the banks recent ‘Navigating to the Future of Payments’ report, the session covered the latest developments in payments and what the future payment landscape might look like.
It is not a surprise that the event attracted so much interest. After all, understanding the opportunities to pay and receive cash more quickly, securely and predictably is key to building robust, flexible supply chains, leveraging new business models and boosting a firm’s competitive advantage.
But from a treasury perspective, creating a best in class payments operation is not straightforward, especially due to the lack of standardisation that exists. Indeed, in the survey, treasurers ranked a lack of standardisation in payment methods, formats and regulatory processes as their greatest concern.
The second most important challenge is the diversity of payment instruments across markets, noted by 42% of respondents.
“The increasing speed of development in the payment space has come to dominate the treasury agenda,” says Seifert. “Treasurers are now faced with a multitude of payment channels, a lack of standardisation and an increasing requirement that they become the “procurement” hub in terms of digital financial infrastructure. To be successful in these areas, they need to be completely on top of the digital agenda and have a solid vision of the future payment landscape.”
The main driver is changing consumer behaviours, where the expectation of the seamless, digital experience is moving from the high street to treasury departments. “This is forcing treasurers to recognise that payments are not just the moving of funds from A to B, but rather that they have become an integral part of the experience of their own end customers,” says Seifert. “Consequently, treasurers have been forced to look at novel ways of managing payment flows and consolidating flows from a variety of different channels into one manageable stream.”
Banking on solutions
In an effort to help its clients meet these challenges, Nordea is currently working on becoming a digital banking “superstore” or one-stop shop for customers in the future. “To arrive at this point, we are working in close collaboration with our customers from idea stage through piloting and on to launch, so that we co-develop solutions and new service methods that we know answer their needs and industry needs,” says Seifert.
This year, for example, the bank has launched an automated hedging solution, AutoFX, that came about when a customer approved Nordea with a specific need. “We then involved a small group of other customers as we developed and piloted the solution before full release,” says Seifert.
Focus on the future
Over the last 12 months Seifert notes that the bank has seen consistent and perhaps even increased interest from treasury in a range of topics such as working capital management, compliance, automation/digitisation of the treasury mid- and back-office and the new strategic demands of the treasury at C-suite level and in achieving overall business goals. “These topics, however, have been on the agenda for quite a while and will continue to be so for the foreseeable future,” he says.
Ultimately, customer demands and expectations will dictate which new services are developed and integrated into the final, user-facing solution. “Banks will most likely continue to become increasingly like tech and IT companies by turning their platforms into agile plug-and-play hubs that deliver the optimum, smart solutions in a one-stop-shop for customers,” Seifert concludes.