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Visa Navigate

April 2022

 

5 - 6 Minutes

Beyond cash – how partnerships have unlocked payment innovation in the Nordics

Charlotte Hogg, CEO for Visa’s European business, and Kjerstin Braathen, CEO of Norway’s biggest bank DNB and chair of mobile payment platform Vipps, discuss how the Norwegian market went cashless, why a culture of collaboration enabled that shift – and how DNB’s innovative partnerships helped drive that digital leap.

Charlotte: Kjerstin, can we start by talking about DNB – and why you are so unique?

Kjerstin: As one of the leading banks in Norway, DNB serves one of the most advanced digital societies in the world – and that has had a huge impact on us as a financial institution. We’ve gone in a direction that is almost completely cashless, converting close to all of our customer contact over to digital channels.

Ten years ago, we had around 100,000 visits to our mobile banking app every month; today we have up to 1,000,000 interactions every day. We've also been building cloud-native digital interaction platforms for our customers. We continue to see the value of facing them digitally, so that we can scale faster, move faster, and innovate faster.

“Ten years ago we had around 100,000 visits to our mobile banking app every month; today we have up to 1,000,000 interactions every day”

Charlotte: What does it feel like to live in a society that is almost entirely cashless?

Kjerstin: It feels very awkward to actually hold cash – I don't think I have for over three years! One of the drivers for this has been that Norwegians have a standard payments infrastructure. We have a payments infrastructure which covers both domestic and international transactions. Then, digital wallets such as Vipps – of which we are the biggest owner – have further diminished the case for cash. Even before the pandemic, many of our branches had been cashless for years (although we continue to serve those customers, often from the older generations, who still use cash). For us, that has been a very important step on the way for us to become one of the leading banks in Europe in terms of cost efficiency.

Charlotte: What's special about the Nordics that enabled them to get to this space sooner that other markets?

Kjerstin: We have a culture of being early adopters, and also a public sector that has helped drive digital development – for example, I can’t remember how many years I’ve had to do my annual tax declaration digitally.

Norway has a long tradition of cooperation within business sectors, so, even though we are competitors, the banks responded to that digital drive by joining forces to develop Bank ID which is an identification system used by all banks, public sector digital services and many businesses. Nobody realised how valuable that would be to future digitization, but of course it has been key.

Charlotte: The Nordics have really emerged as one of the global centres of fintech innovation. It’s an amazing achievement given the size of the market, isn’t it?

Kjerstin: Yes, and sometimes it's hard to know what came first: was it that tradition for businesses to cooperate, or the willingness of consumers to be early adopters? I think it might be a combination.

On the one hand, the growth in cashless payments has been enabled by the rise of digital wallets: Vipps is now the biggest fintech in Norway. In Denmark, there is MobilePay, another mobile payment app, and then you have the online shopping fintechs, such as Klarna in Sweden. But we also see “cluster development”, where these companies learn together, grow together and benefit from consumers and businesses moving in a single direction together.

“We see ‘cluster development’, where companies learn together, grow together and benefit from consumers and businesses moving in a single direction together”

Charlotte: Vipps as an example of where cooperation between traditional rivals created something so much better for everyone. Tell us about that.

Kjerstin: When we built Vipps as a peer-to-peer payment solution, we understood that its value was only unlocked once you had enough people using it. We took it quite a way on our own, and were seeing very solid growth, but then came the opportunity to think about how we could do even better.

Vipps wasn't the response to competition from other banks, Vipps was a response to competition from global big tech – what we saw as a threat to payments, something that is so core to our business, as it offers us a direct interface with our customers. We had discussions with the other banks, who also owned digital wallets and saw the same threat, and we decided that our best way forward was to join forces. (As result, in 2017, more than 100 Norwegian banks took a stake in Vipps, with DNB retaining a controlling interest.)

Of course, it was a much-debated decision, but it was the right way to go to scale and move fast. That’s what led to the really broad adoption of digital payments in the Norwegian market – and is maybe something that separates Norway from other markets where it’s more unusual to cooperate with your fiercest competitors.

Charlotte: There is courage involved in trying to figure out how to do things you’ve never done before. Given that you are already at forefront of what happens to payments globally, what do you see coming in the future?

Kjerstin: We have announced that we're merging Vipps with Pivo, the most popular wallet in Finland, and MobilePay in Denmark – the path for us to go Nordic. The challenge facing us and other so-called traditional players is to keep innovating, because we see the technology supporting digital currencies and crypto as a potential opportunity to bypass the current infrastructure, if we aren't good enough at creating better services.

Charlotte: I agree with you that digital has always promised businesses greater inclusion in the economy. I know you've also been a leader on inclusion, particularly in terms of gender. Can we talk about that?

Kjerstin: We're a small country – only 5 million people – and getting the right talent is the best possible way to develop the business. We're closing in on our 40% target in terms of female managers across the bank – I have a management team that is 50/50 of each gender, and we have a female CFO as well. Now, we're really focusing on moving more towards inclusion from a broader perspective.

There’s no one quick fix; it requires doing things in a different way. For example, our asset management business is male dominated, so we tweaked the way we write recruitment ads and more than doubled the number of female applicants. Today, they make up 25% of our portfolio managers, and they're there because they were the best. Inclusion is about what’s best for business – after all, that's what we're here for.

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All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa. Case studies, comparisons, statistics, research and recommendations are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. Visa Inc. neither makes any warranty or representation as to the completeness or accuracy of the information within this document, nor assumes any liability or responsibility that may result from reliance on such information. The Information contained herein is not intended as investment or legal advice, and readers are encouraged to seek the advice of a competent professional where such advice is required.

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