Nordic Winners: Trail Blazers

One of the key trends changing the treasury and cash management landscape in the Nordic region is the swift rise of fintechs, which are entering a space that was previously dominated by the banks. Those banks that want to survive, and indeed thrive, have embraced this trend and are partnering with their fintech peers to provide best-of-breed solutions to clients.

“Fintech disruption, digitization, the blockchain, payment systems—these developments are certain to affect corporates and the role played by treasury,” notes Erik Zingmark, co-head of transaction banking at Nordea. “Three of the main disruptive factors we see are technology and digitally-driven future payments, the morphing of treasury ecosystems—including skills development and new solutions—and connectivity within organizations across different banking partners and borders.”

As with the rest of Europe, countries in the Nordic region see the Payment Services Directive 2 (PSD2) as a game changer for their payments business models. The new directive applies to countries in the EU (Denmark, Finland and Sweden) and in the European Economic Area (Norway and Iceland). “Banks are under attack due to changes driven by PSD2,” says Zingmark. “In short, banks and banking will change fundamentally. Fintechs won’t take over, but this is the starting point of new ways of working and new ways of collaborating with partners.”

Treasury needs to drive this change, alongside banks and third parties, says Zingmark, by creating and pushing their own digital agenda and forming a solid strategy for all commercial, financial and intercompany flows. Another key area of focus for corporate treasurers in the Nordics is the efficient handling and easy access to cash and liquidity. Zingmark says centralization goes hand in hand with treasurers’ desire to better manage their working capital. “[Centralization] is particularly appealing to corporations that have expanded quickly and found their finance arrangements have become more complex and fragmented,” he explains. “It can offer greater transparency for regulatory purposes, as well as cost efficiencies through simplifying banking relationships and reducing the cost of previously idle cash.”

Broader market and geopolitical trends are also of prime importance to Nordic companies, especially as they look to grow globally. Zingmark notes, “We will see Nordic companies continue to expand overseas, especially in Asia and other emerging markets, as they search for higher growth markets.”

Zingmark says we are entering a major turning point in payments and how banking fundamentally functions. “A new landscape is taking form and we need to reshape our business.” He says banks need to ask themselves how they need to respond to this new environment. “If they want to survive, they need to deliver the benefits of these developments to their customers,” says Zingmark. 

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