Nordea Cards and Mobile Payments. Lars Boström, Head of Nordea Cards & Mobile Payments Juha Risikko, Head of Mobile & Emerging Payments

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1 Nordea Cards and Mobile Payments Lars Boström, Head of Nordea Cards & Mobile Payments Juha Risikko, Head of Mobile & Emerging Payments

2 Agenda Nordea Cards and Mobile Payments in brief Change drivers for emerging payments 1

3 Nordea Cards and Mobile Payments in brief Nordea is both an Acquirer of merchant transactions and Issuer of Card products and is one of the largest issuers in the Nordics - the 3rd largest card market in Europe by turnover. Nordea s home markets We operates in all Nordea markets and service both Household and Corporate customers, with card products such as debit and credit cards, commercial and cobranded cards. Our products and solutions meets the needs of Nordea customers in everyday commerce activities - such as shopping, traveling, running a business and managing finances - easier, more secure and more efficient for everyone. Principle licenses with two major networks; MasterCard International and Visa Europe cardholders, merchants, Swish users. Nordea Cards & Mobile Payments is a division within Operations in Retail Banking. 2

4 2600 customer meetings every minute, 24/7 all year around CARDS 2012 Baltics 3% 35% We process 2 bn transactions per annum, where of cardholders purchases is about 1,3 bn purchases About 3 million Credit cards and more than 5,5 million Debit cards About Swish transactions Denmark 23% Norway 10% Finland 32% Sweden 32% Pag e 3

5 The 4-party Business model Send transactions Merchant Goods and receipt Service fees Interchange Acquiring bank Send transactions through clearing Purchase of goods or services Card holder Fees / interest Reimburse Issuing bank Customers account or invoice 4 Christa Aurusell 10/04/2012

6 Agenda Nordea cards in brief Change drivers for emerging payments 5

7 Future of payments is about creating Great customer experience in the customer s everyday life both for a consumer and a merchant Every single minute, we have Card transactions Netbank transactions 40 epayment transactions possibilities to learn from our customers and drive new business information the new competition would kill for Tens of cross-sales possibilities every minute for finance, insurances, factoring Nordea aims to extend focus from payments to transaction driven financial services* to maintain the daily relevance for our customers, to offer great experiences and to grow our business. 6

8 What is driving the change in the payments market? Regulation Customer Competition Technology 7

9 COMPETITION New payments battleground is crowded by the new players PayPal has 128 million active accounts and its total processed payment volume for 2012 was $145 billion of which $20billion from mobile. Apple reports 500+ million registered accounts -four times as many accounts as PayPal. Not active in payments yet outside of its own stores, Telia, Tele2, Telenor and 3 Sweden launched in 6/2012 WyWallet mobile payment service for person-to-person payments, payments for SMS services, online shopping and in-store payments. Elisa started issuing MC prepaid cards in 2012 in Finland with mobile integrated payments following in Financing and marketing as revenue drivers. DnB, and Telenor to launch Valyou in Norway in Danske launched MobilPay in May OP launched Pivo wallet for financial management, payments and merchant services in May Swedbank has test launched BART, a new mobile card payment service. These services also support the strategy to reduce cash handling by our branches. - Interim report About 20% of all e-commerce sales in Sweden goes through Klarna. 8 million customers to generate 2.3 Billion in transaction in Established in 2005 by three Swedish students. Merchants are the fifth group to emerge into mobile wallets and payments. S-group will be the most aggressive player but not the only one. 8 8

10 Highly competitive emerging payments market COMPETITION 9

11 What is driving the change in the payments market? Regulation Customer Competition Banks New players New business models Technology 10

12 80% Consumers use mobile for product comparisons but still shop mostly with computers ecom growth is very fast CUSTOMER 70% 60% 50% 40% 30% 20% 10% 0% ecom within 3 months Mobile internet within 3 months Smart phone Source: Statistics Finland In Sweden in 2Q out of 10 e-com retailers have mobile optimised their shop 6% of consumer have shopped goods with their mobile phone, 68% have sought for information In Q12013 the ecom growth was 18% while retail growth was just 1% Share of ecom is expected to grow from 5% to 13% in 5 years in retail in Finland in 2012 Source: e-barometers 11 Q22013, 11 PostNord with Sversk Detaljhander and HUI Research

13 About 10% of private consumption was online in Finland in 2012 CUSTOMER Goods EUR4,0 Bn of which retail EUR3,0 Bn Digital content EUR 97 Million Services EUR 5,5 Bn Source: TNS Gallup. ecom statistics Travelling Electronics and IT Gambling Motor vehicles (inc. supplies) Clothing (inc. sports) Finance Energy & other living expenses Tickets (e.g. movie tickets) Music and movies Home & garden Other Figures include: All consumer services, goods and digital content B2C ecom VAT and delivery charges 12 12

14 What is driving the change in the payments market? Regulation Customer Competition Growth of mobile use Growth of ecommerce Micro merchants to accept cards Banks New players New business models Technology 13 13

15 PSD2 rules on Third-party Access to Account REGULATIONS 1. 3 rd payment providers will be regulated under the Revised PSD => no unregulated overlay payment services operated as today 3 RD PA R T Y PAY M E N T P R O V I D E R S M U S T Authenticate itself towards the bank Keep the user s credentials safe Not store sensitive payment data or personalised security credentials 2. Banks will be forced to accept payments through third party payments from their accounts Access to Account (XS2A) B A N K S M U S T Respond immediately on receipt of the payment order. Not discriminate 3 rd party payments against its own payment services Accept that consumers use the bank s authentication methods for initiating 3 rd party payments Without any compensation from the 3 rd party payment providers 14 14

16 What is driving the change in the payments market? Regulation PSD2: Open access to accounts MIF Customer Competition Growth of mobile use Growth of ecommerce Micro merchants to accept cards Banks New players New business models Technology 15 15

17 Technology enables new personalised interactions between consumer and merchants TECHNOLOGY 16 16

18 TECHNOLOGY What is a wallet and who are the main stakeholders? Source: Citibank presentation: Get Smart: Winning the battle for relevance. 25 Sept,

19 What is driving the change in the payments market? Regulation PSD2: Open access to accounts MIF Customer Competition Growth of mobile use Growth of ecommerce Micro merchants to accept cards Banks New players New business models Technology Retail experience 2.0 Wallets: NFC, online, APIs Big Data 18 18

20 Four building blocks for the Nordea emerging payments Mobile in-store payments E- and m-commerce Pre- and post-payment services Person-to-person payments 20

21 Nordea the first Nordic bank to sign MasterPass agreement with MasterCard. Nordea also the first bank to introduce secure card payments with mobile authentication. 21

22 Swish is used for - Payments to friends - Within family - Second hand purchases 22

23 Swish Payment 23

24 Receiver gets notification after successful payment 24

25 Customerbase More than customers totally in the bank cooperation 25

26 Cards in Mobile 26

27 Mobile & Emerging Payments Keep and grow the transactions: 2600 per minute Be prepared to meet the new competition, regulation and technologies with advanced payment services 1. Maintain strong position in payments with strong offering 2. Advance the cashless society Emerging payments will facilitate cashless society This supports Nordea s cashless strategy, and grows payment revenues Innovative and easy to use payment services build Nordea s brand as an modern, innovative bank. 4. Build a brand of a modern innovative bank 3. Focus on pre- and post payments services to drive revenue and loyalty Differentiator that puts Nordea on top of the wallet New revenue streams 27