Nordic Banks Accelerate Changes Amid Market Shake-up
Banks in the Nordics are going through significant technology and business transitions, moving from legacy systems to new cloud-based platforms and products in response to new competition and changes in consumer preferences, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2022 ISG Provider Lens Digital Banking Services report for the Nordics finds that digitalization is a top priority for banks in the region, with some focusing on improving their current products and services while others also seeking growth through new offerings and adjacent businesses. As in other regions, the current shake-up in Nordic banking was caused in part by changes in consumer behavior during the COVID-19 pandemic and in part by FinTech startups introducing new kinds of products.
“Technology innovation is empowering banking customers and opening doors to new competition, business models and revenue opportunities for traditional banks,” said Owen Wheatley, lead partner, banking and financial services at ISG. “This trend is as strong in the Nordics as in any market, and in some respects even stronger.”
Consumers have become used to modern digital applications that offer quick, efficient and seamless user experiences and now expect the same in banking, the report says. This has led banks to both accelerate the digitalization of outward-facing elements, such as products and services, and simplify underlying processes. These efforts include adoption of new technologies, such as AI, blockchain, natural-language processing (NLP), intelligent automation and analytics, and the introduction of open banking frameworks that allow innovation through APIs.
Traditional banks in the Nordics, which are more profitable than most of their European counterparts, now face competition from new, digital rivals offering alternatives in areas including consumer loans, mortgages, credit cards and brokerage investments, ISG says. Payment ecosystems are also being disrupted, and major Nordic banks are working together to modernize in this area by developing P27, a system for efficient, real-time domestic and cross-border payments in the Nordics.
“Banks in the Nordics need to attract new users to their payment platforms and credit cards if they want to compete with FinTech startups,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Leading service providers are investing in innovations to make this possible.”