The next couple of years are expected to represent an important milestone in payment modernization for the Nordics. Not only is the go-live of P27, the new cross-border Nordic Payments Platform, set to take place in 2022, but the Swedish clearing system Bankgirot will also be closing down several payment types such as salaries, invoicing, and pensions. This will trigger a migration of customers away from Bankgirot towards the more efficient, real-time clearing system of P27 that makes use of modern ISO 20022 payment standards.
These infrastructure changes represent complex issues for banks, with major investment needed now to successfully transform in the run up to migration in 2022.
When interacting with the new Nordic Clearing House (ACH), banks need to ensure they have a handle on two very different, but related activities:
- The limits of legacy systems: What we are using today isn’t working. Banks need to re-define the current bank flows and processes that have been built on legacy streams for validations, enrichment, business and processing rules etc. It is likely these flows will differentiate from the original models, and this type of work is very time consuming and carries several risks if the process flows fail. Alternatively, banks may build a completely new set of products and services, for example, processing flows for salaries and invoicing. This rationale is most often preferred since that will not ruin the existing flows during the transition and pave the way for a streamlined communication between banks’ customers and the clearing (future proofing). The new infrastructure will expand into many more API’s for messaging and services, such as Request to Pay and Confirmation of Payee. I personally recommend building new flows since that will streamline and simplify the orchestration for future use.
- Connectivity: How can banks connect and make the best use of P27? In my work at Volante Technologies, I have spoken to a number of CTOs at banks who have identified many common risks of building in-house solutions. It is often the case that estimates do not consider all needed steps and requirements, particularly testing. Whilst all messages are in an ISO 20022 format, there are nevertheless numerous message flows back and forth towards P27, each with a relationship with a specific payment that is in a unique status and requires orchestration for multiple scenarios. Build or buy is naturally something that every bank needs to consider. Often it comes down to the culture or the strategy: where the bank is now, and where they want to be in the future. Other considerations include whether this should remain as part of their core banking business, or is the appetite better served by adopting an outsourced service that is maintained and always compliant?
Adapt to survive
2020 has been a sharp reminder that unprecedented events can result in abrupt, yet long-term change, and every industry must adapt to keep pace. The challenges ahead are not only to perform the daily business as usual – it is to take steps forward that reduce the friction for customers in driving new and up-to-date capabilities that are relevant for each and every one.
Having this in mind, think about the core values you offer as a bank. Think new and different in the way you address your market, and how that will be carried out.
As a leading provider of payments technology in Europe and the Americas, Volante can help you deliver technology that is real time and ISO 20022 native.