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Nordic Banking 2023: Challenge And Opportunity In Changing Times

Leverage new, digital-first services to uncover abundant opportunities to create competitive edge and gain customer loyalty.

Jarkko Turunen / January 23, 2023

As banks look to transform their business for a digital future, high inflation and low economic growth are making investment decisions difficult. Nonetheless, opportunities exist to deliver customer value and create competitive edge for those banks bold enough to see them.

A new year dawns, and it seems everyone in financial services is looking to the future. One certainty for 2023 is the continued digitalisation of banking services: last year, e-commerce grew at 17% worldwide to reach almost one dollar in five spent in some advanced economies, according to Shopify[1]. Within this lies the enormous power of the mobile platform – Insider Intelligence say that last year, some 40% of new revenue in the digital channel came through consumers using cellphones and tablets[2].

At Tietoevry, we expect new services to emerge that respond to the trend towards mobile powered by Open Banking. Five years after PSD2 enabled Open Banking, advanced markets such as the UK are now seeing millions of Open Banking payments every month, with more than one in ten consumers using at least one Open Banking service in that country last year[3]. From retail banking to SMEs, clients are looking for banks to deliver faster, cheaper and easier-to-use mobile services – especially in product areas seen as expensive and slow, such as cross-border e-commerce or money transfers.

New standards and an opportunity

With the development of Open Banking and more cross-border business, new standards are emerging, from the launch of data standard ISO 20022 in March this year through to Open APIs that enable easier, faster service integrations at lower cost. Although fintechs have been able to move more rapidly than traditional banks to adopt these standards given their more modern systems and less cumbersome processes, many of these fintechs have been hit by a “funding cliff” that has seen investment and deal numbers drop by 15% in the US over the last six months, according to KPMG[4]. This creates breathing room for banks to update their tech platforms and introduce services that are less expensive to maintain, lower risk and more efficient to operate while fintech competitors search for funding.

Jarkko Turunen, Head of Payment Product & Services, at Tietoevry Banking said: “In 2022, banks spent 70% of their IT budgets maintaining legacy systems and just 5% on innovation.” Furthermore, continued increases in the cost of maintaining legacy systems will, in the medium term, bring their continued viability into question. In a recent report[5], McKinsey & Co make clear that the 70% of IT budgets banks apportion to legacy system maintenance is blocking innovation. McKinsey says that banks currently spend just one dollar in twenty on new services, with most of the rest dedicated to keeping decades-old systems operating. Statistics like these show just how fast the need to update legacy systems is moving from a priority to a matter of urgency for banks.

What to expect in 2023

“We expect further growth in instant payments, plus new services linked to Open Banking such as Request to Pay. These new services have implications for existing bank IT infrastructure,” predicts J. Turunen. The drive to faster, cheaper payment services in the mobile channel will see instant payments (IP) take off. In our region, this will likely happen through new EU regulations enabling instant payments and the launch of P27, slated for the second quarter of this year, while other markets such as the UK (Faster Payments) and the Netherlands (iDEAL) are making great headway. Likewise, we expect instant Account-to-Account (A2A) payments to continue to make inroads as consumers appreciate their speed and convenience, while new services such as Request to Pay and services linked to Open Banking), payee confirmation via AISP and Variable Recurring Payment patterns will all make their mark, enabling new opportunities related to e-commerce. These developments will also bring their own challenges, not least in terms of AML and KYC for instant and A2A payments.

Elsewhere, the EU’s proposed mandate for banks to use SCT-Inst in cross-border transactions will also, if approved, necessitate further integrations and adaptation for those 40% of banks which do not currently use the system. Given such wholesale changes, pressure is building on banks to identify, build and integrate new services so that they can gain first-mover advantage in areas like instant payments and payee confirmation services via Open API requests.

Fate favours the brave

The current high inflation and low growth environment coupled with a high inflow of new regulations and changing market dynamics may look daunting for Nordic banks. However, those firms smart enough to make the right investments in new, digital-first services will find abundant opportunities to create competitive advantage and gain customer loyalty. Replacing legacy tech infrastructures should now be at the heart of any bank’s future strategy – and they should be looking to work with trusted, experienced partners to make this happen rapidly and effectively.


For a discussion about how you can deliver superior value and revenue growth through modern banking technologies, contact: Jarkko Turunen, Head of Payment Product & Services, Tietoevry Banking, Jarkko.Turunen[at]



[1] See Shopify, 24 November 2022: “e-commerce stats and trends to watch in 23”:

[2] See Tidio, 19 December 2022: “Mobile Commerce statistics for 2023:

[3] See OBIE UK, July 2022, “Insights report June 2022”:

[4] See KPMG, September 2022, “Pulse of Fintech”:

[5] See McKinsey & Co, September 8, 2022: “How to win in Digital Banking”:

Jarkko Turunen
Head of Payment Products & Services, Tietoevry Banking
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