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Payments Modernization and Cross-Border Payment Corridors: How Nordics’ P27 Is Leading the Pack

But it’s also down to the region’s strong track record of innovation in payments and finance, particularly in spearheading the move to a less cash-reliant society, and encouraging consumers to embrace different ways to pay.

When many other pan-regional interests see the benefit of cross-border systems but not necessarily the path to making them a reality, interest in P27’s progress is naturally high. What can they learn when it comes to creating a modernized immediate payments infrastructure between countries, as P27 seeks to do, which makes transactions safer, faster and more cost-effective?

In many respects, the Nordic region is the most natural place in the world for such a project to be attempted. Their societies and economies are driving toward digitalization at the same time as being already heavily integrated.

But it is global trends that make the success (or failure) of this kind of initiative more widely relevant. Online commerce is removing barriers as we see increasing cross-border transactions around the world, and large corporations see opportunities in ever-closer finance relationships between nations. It’s not surprising that more and more countries are looking for ways to open payment corridors that enable payments to cross borders and currencies with minimal obstacles, especially when the fragmented clearing and settlement environment has been rationalized. While this means different things to different people, P27 aims to make this a reality with its first transactions in 2021.

The P27 opportunity affects all the parties involved in this new planned ecosystem. All banks, processors, merchants and fintechs should be up to date with the relevant payment modernization that this opportunity requires.

Payments modernization is the answer – but what’s the question?

According to the data collected by ACI in its Prime Time for Real-Time report, the four Nordic countries (Sweden, Denmark, Finland and Norway) can each expect significant growth in annual immediate payments transactions. But despite their cashless reputation, there’s also a mixed level of immediate payments maturity across the region. Denmark and Sweden are both rapidly developing markets, while Finland is still at a nascent stage of development.

This is a window into one particular challenge faced by the P27 initiative. Its participants need to have systems and architectures prepared for this growth in transaction volumes, but also need to have in mind that each country – and each organization – is on a different level of maturity, which in turn could make agreeing on a cohesive architecture development strategy problematic.

There’s no doubt that being part of a centralized payments infrastructure is going to lead to significant cost savings for all Nordic banks. Modernizing at a lower cost will allow them to direct that unlocked capital to their specific internal needs – but those needs may not always align between organizations, or with the wider interests of the P27 initiative.

Iterate to accumulate

To guard against misalignments, which could develop into lapses within the P27 project, banks in the region (and those watching around the world) need to take an iterative, agile approach to change. It will be key for these banks to find partners that can support the entire project, but in small and manageable pieces that fit together to form the entire puzzle.

The benefits of the success of P27 to the region’s banks will be the modernization and improvement of both the service and banking experiences for their customers. Two of the drivers to improve this customer experience are APIs and digital overlay services, so banks should look for partners that can also drive the implementation of these capabilities.

Overall, the common-sense approach would be to find a partner that has experience working in diverse and agile environments, experience in driving real-time payments maturity, and integrating new capabilities with legacy infrastructures.

Setting a global example

India’s development and growth of UPI has made the country a global immediate payments leader and it continues to be a model for many countries around the world. In a similar vein, the P27 initiative has not gone unnoticed. In the Nordics, every player in the payments ecosystem should see P27 as an opportunity. Meanwhile, the rest of the world looks on with interest.


For more on the task ahead for banks, processors, merchants and fintechs in the Nordics when it comes to P27 — and what other pan-regional schemes can learn – read the eBook: The P27 Opportunity

Senior Product Manager – Real-Time Payments

John Ballantyne is solution leader for digital channels, part of ACI’s real-time payments business. He brings with him over 15 years of payments experience across product strategy, consulting, partnerships and service management. John is currently responsible for the development of ACI’s strategic payments business in real-time payments, open banking cloud service offerings.