EXCLUSIVE: “A Nordic cliffhanger…what next” – Simon Pilgrim and Lisa Farmer, Bottomline in ‘The Fintech Magazine’

The Nordics’ P27 cross-border payments project has been halted, but the problems it set out to solve remain. Bottomline’s Simon Pilgrim and Lisa Farmer discuss how it can support the region’s financial sector

Despite the cultural and geographic proximity of Sweden, Norway, Denmark and Finland, and the fact that 25 per cent of all cross-border trade from Nordic countries is with other Nordic countries, the region is one of the last in Europe to operate separate currencies, moving on very different domestic payments infrastructures. This trade means that any cross-border transaction must go through a foreign exchange process, two domestic clearing systems, be formatted into at least two separate communication language formats, and be settled through the Swift network, which costs up to three or four per cent of the full transaction amount. It is a method that has historically escalated handling times, costs per transaction, and caused headaches for all parties concerned.

So, unsurprisingly, the harmonisation of the Nordic payments system had been a long-standing priority for all the countries involved. And resolving it was the definitive purpose of the P27 Nordic payments project.

NORDICS IN THE SPOTLIGHT

Founded in 2017, with a name derived from its aim of improving payments for the 27 million inhabitants in the Nordics, P27 began as a partnership between six of the region’s large banks: OP Financial Group, Nordea, Handelsbanken, Swedbank, SEB, and Danske Bank. Their aim – to create a single clearing platform that permitted real-time and multi-currency payments – was simple, yet revolutionary.

Payment instructions would no longer be routed through the domestic clearing systems, but instead exchanged directly with the originating banks, thereby facilitating faster, smoother cross-border payments, including quick batch payments. Moreover, the platform would bring transparency and take in its stride new standardisations or regulatory evolutions. P27 was on the point of going live this year when it unexpectedly withdrew its clearing licence application from the Swedish regulatory authority, Finansinspektionen, in April.

“As Swift specialists, we wanted to provide knowledge, expertise and support to SimCorp and its customers because, understandably, many don’t want to become Swift experts themselves”

Simon Pilgrim

P27 CEO Paula da Silva said at the time: “It is evident that our vision was too ambitious and complex. Hence, we need to reassess our future ambition in the Nordic payment market.”

P27 may or may not get off the drawing board. But the challenges it set out to solve – the highly fragmented clearing and settlement environment, the critical need to modernise systems to keep up with regulation, and reducing the cost of transacting – haven’t gone away. So perhaps it’s not surprising that others aren’t waiting to step in with their own designs to support the Nordic payments market.

Some of them are native fintechs, but global payments technology provider Bottomline also sees value in supporting the region’s financial players. It’s helping them extend their banking capabilities with value-add services. Bottomline is all about smoothing cross-border payments and it’s keen to get a bigger footprint here, especially as local payment methods, notably Vipps, MobilePay and Swish, are so widely used.

“Bottomline has a spotlight at the moment on the Nordic region,” confirms its head of corporate sales for EMEA, Lisa Farmer. “It is not a region we have historically worked in very often, but we feel that by partnering with key players there, we could certainly support growth.”

Among them is the Danish software-as-a-service (SaaS) company SimCorp. SimCorp’s core product, an integrated investment management system, is utilised by the majority of the largest banks, fund managers, insurance companies, and pension companies in the Nordics.Commenting on the new partnership, Simon Pilgrim, sales manager for Bottomline, said there was a lot of harmony between the two organisations.

“The genesis of the relationship started back in 2021 whilst we were working with a mutual client, but independent of each other,” he says. “It was over the course of that very successful project that we were able to observe how we were on a similar strategic direction and that we had very similar business philosophies regarding our people, culture, and ambitions.

“It helped us understand that we could work well with one another. It also became abundantly clear that replicating the project would bring strong value to Bottomline and SimCorp customers, so the move to solidify our informal relationship into a formal one was quite natural. It is now all about our joint expertise, our complementary solutions, and the wider reach.”

Together, the firms intend to combine SimCorp’s core product with Bottomline’s award-winning Swift integration expertise to offer services around data transformation, ISO 20022, and end-to-end payments and securities. Pilgrim believes that one of the client sectors to benefit the most will be asset managers.

“The asset management space is evolving rapidly: it is a competitive environment with huge cost pressures and regulatory changes brewing ahead, which obviously symbolises further costs. Where they will find a friend now is with automation tools that can streamline any back-office processes, which tend to be a little bit old or paper-based, and high-visibility tools, which could show dataflow and what’s happening so they can respond swiftly and in an informed manner.

“Part of the relationship we have with SimCorp is about being able to streamline the back-office to be a bit slicker and quicker and allow them to comply with ease while relieving those pressures to let teams focus on its core business.“As Swift specialists, we also wanted to provide this necessary knowledge, expertise and support to SimCorp and to its customers because, understandably, many of their customers don’t want to become Swift experts themselves.”

“Many banks that we speak to in the region feel like their hands are tied…The key needs we hear are cash positioning, fraud risk mitigation and new payment rails, with instant payments schemes being a really important one “

Lisa Farmer

Bottomline has also partnered with Swedish digital service provider Knowit, known for its hand in Norway’s most popular payment app Vipps. News on which services Bottomline and Knowit will bring to the market together has yet to be published.

“But it is about mutually helping one another grow scope and reach in a particular geography,” adds Farmer.

While Knowit can help Bottomline access the Nordic market, Bottomline will bolster Knowit’s existing products and solutions to reach different geographies.

“We are exploring the opportunities with Knowit, and key growth areas we have identified will be around connectivity,” says Farmer. “We are looking for powerful combinations; how we could help Knowit clients in the Nordic region reach the UK market, for example, or how we could work together on Bottomline payments and Knowit’s loan application service.”

Farmer believes there could be strong demand in the Nordics for Bottomline’s hosted SaaS solutions among regional banks.

“Many banks that we speak to in the region feel like their hands are tied. They can’t move quickly enough to bring products to market. The key needs are cash positioning, fraud risk mitigation, and new payment rails – with instant payment schemes particularly important.

“It’s a particularly busy time within the industry from an innovation and regulatory standpoint, and the winning combination is using a hosted, single, secure, SaaS-based platform to keep up,” she adds. “They instil staff confidence in the bank, they instil confidence in the bank’s customers as well; they allow customers to process transactions quickly, and allow them to meet auditing, reporting, and regulatory requirements. I cannot overstate how much can be improved with the reduction of multiple gateways to a single channel that is bank and network agnostic.”

Farmer also sees the potential in helping Nordic banks broker contemporary business models. “Banks need new revenue streams, and they need to be looking in singular areas for them, by which I mean new openings located in sectors where the markets are becoming serviced by large, agile platforms, such as in media or retail. “If one could wrap payments around those platforms, it could be very powerful. So, why not do it?”

This article was published in The Fintech Magazine Issue 29, Page 32-33