☁️ Rising from the cloud

For challenger banks and other Fintechs, cloud hosting has long been the only way to compete with traditional banks. More and more of the conventional banks are moving in this direction as well. This summer HSBC stroke a global cloud banking deal with AWS, and Deutsche Bank has agreed to use Google Cloud. In Norway, Microsoft Azure has been the preferred cloud banking solution for the financial industry because of its Norwegian data centers, but this seems to have opened a bit. Bulder Bank from Sparebanken Vest is running on Google Cloud, claiming that this gives them more opportunities.

🧐 Will Vipps strategy fail?

As we've talked about before, Norway is among the top countries in the world on cashless payments. But when it comes to paying with our phones, we're at the bottom with just 0,7%. The main reason? Vipps, which most of the largest banks in Norway are co-owners of, has long been working on a competing solution to Apple Pay and Google Pay. In June, they launched Vipps mobile payment in stores. This means that in Norway we now have two competing mobile payment standards: You can either pay with Apple/Google Pay with the NFC-chip on your phone or by scanning a QR code with your Vipps app. Simple enough, right? Not that fast! Only DNB, Sparebank1, and the Eika Alliance has decided to support Vipps mobile payments in stores. All other banks are still sitting on the sidelines, and awaiting consumer demand. Which means we need to create complex tables like this to understand which bank support which mobile payment solution:

We're not talking about putting the user first when you see a table like this. Customers won't care why banks won't support Apple/Google Pay. They can't beat the simplicity of paying without launching a separate app. This two-year-old article from Lucas Weldeghebriel from Shifter still accurately explains Vipps impossible Apple-situation, and why the Vipps-alliance banks have taken the wrong strategic choice. 

Another noteworthy strategic choice for Vipps is the launch of «sign in with Vipps.» This is a natural next step considering the merger with BankID, and the fragmented login-solutions we all experience daily. Eie Eiendomsmegling has implemented this when signing up for a showing of an apartment and experienced that over 80% chose to register with «sign in with Vipps» compared to manual input. We can always discuss if this was because of «Sign in with Vipps» was the default choice, or because people preferred it, but that's another discussion. It will, none the less, be interesting to see how this pans out, in the long run, considering that Vipps also own BankID. You now need BankID to authenticate yourself in Vipps, and then you use Vipps to authenticate from thereon. Will customers be confused by Vipps being payments as well as authentication, or will they accept Vipps as a one-stop-shop for everything finance and authentication-related? 

As a side note, I'm also waiting for the first bank to withdraw from the Vipps cooperation once they experience Vipps cannibalizing their channels.

🤯 Are savings banks the new neobanks?

Norwegian savings banks have been a hot topic this summer. Fana Sparebank launched a national "mortgage machine", competing with solutions from Bulder Bank (Sparebanken Vest), Din Bank (Sparebanken Øst), and similar sub-brands from the savings banks. Stefan Astroza, analysis manager in Cicero Consulting finds it particularly interesting following these sub-brands considering what they are providing of added value to the customers beyond low prices. Do we see a trend here where the new neobanks in Norway are coming from savings banks? Per Kristian Næss-Fladseth, responsible for Open Banking in DNB, thinks that the banks have accelerated their work so much that they are starting to become a real fintech competitor to themselves. (🔒)

Alf Gunnar Andersen, CEO in Horde, however, does not believe in future of the savings banks: «Over 100 banks operate in Norway. That each of them believe that they will "win" the battle for the customer touchpoint in a digital world is naive, to say the least.» Horde tried to cooperate with a few savings banks, but experienced that they mostly wanted to do everything inhouse, and experienced the decision-processes as slow. Christoffer Hernæs, CDO in Sbanken, argues that cooperation between banks and Fintechs takes time because of risk-assessments and security, etc. Banks have plenty of time, as they have the capital to be patient. In contrast, startups do not have the same funds, and that's where the culture crash comes in.

David Baum, former founder of Monner and Finstart Nordic, believes that the banks that don't have control over their tech-stack are facing an existential threat. He thinks we will see a consolidation within the savings banks and then a consolidation among the larger banks.

😎 UX-interaction of the week

We read this report from Built for Mars, of how UK banks are doing customer support with interest. What got the most attention from us was, however, how Monzo is using push notifications to redirect you to specific pages of their app, while you're on the phone with their customer service. This is something that has a huge potential for customer service in banks to f.ex. Prove your identity with biometrics (no more safety-questions), to diagnose problems, and more.

🙏 Don’t keep it a secret!

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Marius Hauken, partner Stacc X