Unjustifiably gloomy representation of Norwegian Fintech
Also: EPSI – a new low and new winner, Rival banks unite to take on Big Tech and The best interface is no interface
Unjustifiably gloomy representation of Norwegian Fintech
Last issue we wrote about Finansforbundet and Ontogeny Group report, "Fintech 2023 - status of the Norwegian fintech sector.". It painted a dark picture of the current state of the Norwegian Fintech market. The CEO of Finance Innovation, Bent Gjendem, believes that the situation for Norwegian Fintech is brighter than what the recent debate may give an impression of and that the study bears the mark of "filtering out" some of the enormous success stories we have within Fintech to paint an unnecessarily gloomy picture.
Bent presents three perspectives that make the picture of Norwegian Fintech a little brighter and more nuanced:
The decline does not only affect Fintech. It is something the whole tech industry sees at the moment. According to KPMG global analysis Pulse of Fintech H1'23, Fintech funding worldwide was significantly subdued in the first half of 2023 due to various market challenges, including high interest rates, macroeconomic challenges, geopolitical tensions, and lower valuations.
It takes time to build an industry (and needs to be invested in politically). In Norway, Fintech is relatively new, and many companies in the report are still in the scale-up phase. Norway has all the prerequisites to take a clear position in this market, but it requires us to set a clear direction and invest politically in Fintech as a future export and growth industry.
Rune Garborg, CEO of VippsMobilepay, holds a similar outlook. He's urging politicians to hasten the Financial Authority of Norway's process for reviewing applications. He is confident that accelerating this procedure could immensely impact the industry, facilitating progress in approving new financial technology solutions. "It takes longer to acquire licenses and approvals than to develop products," Garborg notes. He expresses concern that if the sluggish pace continues, Norway's payment services may lose ground to their American counterparts.
Forgotten banking successes. Bent also questions the exclusion of successful digital banks like Bank Norwegian, Morrow Bank, Lea Bank, and Instabank from the Fintech report due to their dominant presence. When they earn 48% of all the revenue in the industry, it is questionable to exclude them from a report and paint a dark picture of the rest of the companies. (And as I pointed out last issue, it is also questionable to drop 1/3 of the data (69 companies) due to timing of annual results.)
EPSI – a new low and new winner
Every year, EPSI does a survey examining customer satisfaction within Norwegian banks. The primary finding from 6,000 interviews with private customers and businesses in 2023 is that they are more dissatisfied than ever – matching the record low from their 2004 survey.
According to EPSI, there is no clear evidence that the quality of banking services has deteriorated. However, customers feel they are getting significantly less' bank for their buck' compared to the past, possibly because of rising interest rates and because banks are quicker to raise lending rates than deposit rates.
The most surprising (or less surprising?) difference this year is that Sbanken, after 20 years of continuous victories in the private market, has lost its throne to Bulder by Sparebanken Vest.
This year's survey also reveals a notable increase in the use of contactless payment solutions such as Apple Pay, Garmin Pay, and Google Pay. The proportion of customers using these solutions has risen from 19% to 30% over the past year. EPSI also observes that these customers perceive their banking relationships as simpler and express higher satisfaction and loyalty than customers who do not use these solutions. Providing this type of payment solution could be a critical factor in attracting new customers and creating a more straightforward and better banking experience for customers - especially in the younger and urban customer segments.
Below is a comparison of last year's EPSI rating compared to this year. For comparison, we've also annotated which banks support ApplePay:
Source EPSI last year and this year
Rival banks unite to take on Big Tech
It isn't just VippsMobilePay trying to take on Apple and Google in their fight for mobile wallet domination.
The leading banks in America are bracing to launch the newest countermove in their ongoing struggle to protect their domain from Big Tech conglomerates. JPMorgan Chase, Bank of America, Wells Fargo, and several others have outlined plans to initiate a venture called Paze next year. Paze is a mobile wallet designed to directly sync with the credit and debit card accounts of 150 million customers. Early Warning Services, a consortium of banks that already operates the payment app Zelle, will be responsible for managing the app.
The best interface is no interface
Image: Fast Company
Sometimes, the best interface is no interface at all... This was the result when Capital One designed its new ATMs to be cardless. Instead of working on the interface of the ATMs, they looked elsewhere. Customers can now pre-stage their transactions via an app, indicating the desired withdrawal amount. Upon reaching the ATM, they merely have to scan a QR code to receive their cash, eliminating the need for a card or direct contact with the machine.
Since introducing this system, Capital One observed a significant reduction in the time customers take to withdraw cash, transforming the experience into a fluid, secure, and entirely digital process, and winning the Fast Company's 2023 Innovation by Design Award in the Finance category.