As showcased by Finextra Research and Volante’s 2024 Payments Modernization Survey, Nordic banks continue to prioritize the deployment of new technologies and boast unparalleled confidence in real-time payment capabilities, upholding the region’s reputation as a hub for financial services innovation.

In this blog, we’ll examine what makes the Nordic banks stand out in today’s global financial landscape. This includes the growing deployment of hybrid cloud infrastructure models, ISO 20022 messaging as a top customer pain point, and a uniquely collaborative and innovative culture of payments modernization.

Cloud deployment

Known for strategically utilizing advancing technologies, Nordic banks continue to be leaders in the adoption of cloud-based payment solutions and infrastructure. In particular, the survey revealed that 53% of banks in the region are now predominantly using hybrid cloud models.

In addition to providing a balance between security and rapid service deployment, hybrid cloud models offer the flexibility banks need to better manage and scale their payment systems. Such capabilities are increasingly crucial across the global financial landscape, as banks must be able to efficiently respond to and adapt to constantly evolving market demands and regulatory requirements.

Customer pain points

In most regions, greater efficiency and speed of cross-border payments rank among the top customer pain points. However, this was not the case for Nordic banks, whose respondents listed these capabilities as the least important concern, and whose early adoption of advanced payment technologies has clearly provided significant operational benefits.

Instead, the top customer pain point among Nordic respondents was the ISO 20022 messaging transformation to synchronize messaging formats, while the cost of payment processing ranked second. While this focus on ISO 20022 is in stark contrast to North America, where it ranked it last, it is also hardly surprising given that migration to the new standard is much further along in Europe, and therefore the task of achieving full compliance is considerably more urgent.

Satisfaction with capabilities

As expected, the survey shows that Nordic banks today are more confident than any other region in meeting compliance demands for instant payments. This makes sense given that advanced real-time capabilities have become a hallmark in the Nordics, where the use of instant payment services has become increasingly ubiquitous. This includes Sweden’s premier real-time payments application, Swish, which was used by roughly 85% of the country’s population in 2023.

On the other hand, Nordic banks express the lowest confidence in their ability to straight-through integrate with corporate treasuries. This can likely be traced back to ISO 20022 transformation being the region’s top customer pain point, as compliance with the standard represents a major component of straight-through integration.

Innovation and collaboration

Overall, the survey confirms that innovation remains a primary focus for Nordic banks, with respondents listing the deployment of new technologies as their main spending priority. Interestingly, however, 58% of respondents also said they were currently spending less than $500K on payments modernization. In addition to Nordic banks having already made bigger strides in this area compared to banks in Southern Europe, this lower allocation could be due to ongoing adjustments after the recent cancellation of P27, a bank-wide initiative that was meant to install a new payments infrastructure across the region.

Importantly, modernization efforts in the Nordics have benefitted greatly over the years by an eagerness among banks to collaborate with the fintech sector. This collaborative ecosystem has proved pivotal to fostering innovation and the development of cutting-edge services. Moreover, efforts are further supported by one of the world’s most regulatory-comprehensive and encouraging environments for tech development, which should allow Nordic banks to maintain their position as leaders in payment modernization for years to come.

For more detailed insights on payment modernization in the Nordic region, download the full report.