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TREND SPOTTING IN ISSUING SERVICES AND SOLUTIONS

5th November 2015, Nets Day Sweden

Sakari Olli, Head of issuing customer deliveries and solutions

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To remain competitive – banks need to address

some key market forces

Future

payments

ALTERNATIVE

PAYMENTS

NEW

CONSUMERS

CLOUD/APIs MOBILE

PAYMENTS

RACE FOR

POSITIONING ANALYTICS

INTERNET OF

THINGS

REGULATION TOKENISATION

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New digital customers have

different expectations

NEW

CONSUMERS

MILLENNIALS

1980-2000

DIGITAL NATIVES

POST 2000

Exponential increase of payment

methods

Physical Online Mobile

2003 2009

2000

2007

2003

2005

1950 1960 1980 2020 1970 1990 2000

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26

76

54

23

37

5

19

26

28

11

13

34

5 4 12

5

4 4 12

0 %

50 %

100 %

SWEDEN DENMARK NORWAY FINLAND

CARDS

INVOICE

DIRECT VIA BANK

PAYPAL OR SIMILAR

OTHER

Source: Nets Research Q2 2014

Preferred payment

methods when

paying for online

purchases

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Crypto-currencies are growing, but the

underlying blockchain platform is more relevant

2.4

00

23

.00

0 6

6.0

00

10

0.0

00

jan. 13 jan. 14 jul. 14 Dec. 2014

BITCOIN MERCHANT GROWTH

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from the selected Nets colours New aggressive players in payments

domain

*) Source: Fast Company in 2013, 2014, 2015 **) Source: The Reputation Institute annual reports in 2012, 2013, 2014

Paypal, Amazon and Google dominate e-commerce

Western Union, MoneyGram, Xoom (PayPal), Vodafone, Orange dominate

global remittance

Top 50 Innovators’ list does not show a single bank*

Top 50 reputed companies’ list does not show a single bank**

Player managing max. number of payment accounts is not a bank

>70% of PE investments in European payments are going to non-bankers

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Mobile is catching up the digital

volumes

Mobile transactions growing:

90% every year

1,000 new users / day

Manual transactions decreased by

19%

Source: Annual report of Nordea Bank 2014

In 2014, the amount of mobile logons

was 263 millions, quickly catching up

the mature Netbank logons (352

millions)

Transactions

Branches vs mobile

millions/quarter

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Mobile payments will make up to 60%

of total transaction volume in 2020

SOURCE: Bain & Nets

4

5

6

7

8

9

10

TR

AN

SA

CT

ION

S,

BIL

LIO

N

MOBILE

TRADITIONAL TRX.

AT LEAST 3.7BN TRANSACTIONS OUT OF

PROJECTED 9.3BN TRANSACTIONS

IN 2020 WILL BE MOBILE

-Vipps

-MobilePay

-mCash

-MeaWallet

- iZettle

-Klarna

-Payex

Mobile

-Pivo

-Elisa Payments

-DNA Payments

- iZettle

-Klarna

-MobilePay

-Swish

-WyWallet

- ICA Contactless

-Klarna

- iZettle

-SeQR

-MasterPass

online wallet

-PayAir

-PayPal NFC

trials

-MobilePay

-Swipp/Paii

- iZettle

-Klarna

-Beeptify

-MeeWallet

-EMT wallet

- ”E-stonia”

- Id

-Voting

-Etc.

Lots of mobile initiatives on the market

Disruptors will continue

to transform the

payment landscape

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colours Opportunity or Threat?

TOKENISATION

SUPPORT FOR NEW

CHANNELS

NEW

ROLES

REDUCES

FRAUD

DATA

SECURITY

ADDRESS

MERCHANT PAINS

BOOST

E-COMMERCE

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New regulations are driving innovations

– Compliance view is not enough

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9 24

48 61

82

159

2007 2008 2009 2010 2011 2012 2013

3 4

8

2012 2013 2014

APIs as the key drivers of innovations

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Open APIs in financial services and

individual customer experience

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Using data to ….

move from payments to advice

Analytics report Each payment transaction leaves

a footprint

Trends/ predictive analytics, anti-fraud, segment-spend trend, advisory …

are some examples that the market is ready to pay

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Using data to ….

offer value-added services for issuers

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Internet of Things Emergence of a new payment segment

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Top-down view

Consolidation to six key trends

• Agile technologies, partnerships and alliances allow banks/non-bank

attackers to lower cost base and more flexible (e.g. time to market)

• Standardisation and lower market entry barriers

• Transaction margin compression

• Battle to secure liquidity

• Digitisation of commerce and alternative payments (e.g. mobile)

• Increased role of digital ecosystems

• Influence of advanced analytics

• Digital attackers, some with business models beyond payments

• Banks moving fast to defend position

• Consumers expect fast, convenient, safe and personalised solutions

• Merchants explore new ways of commerce

• Combination of infrastructure services with data and other services

creates new revenue potential

• Continuous upgrade of security features (e.g. tokenisation)

Growing

regulatory

intervention

New technological

innovations

Increased

competition

Changing

customer

expectations

Growing role of

secure

infrastructures

New cost

paradigm

A

B

C

D

F

G

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Impact and relevance to

our Nets Business Units…

Merchant

Services

Card

Services

Payments

Services

Domestic

card

scheme

Services

Clearing

Services

eSecurity

Services

Digitis. &

Inform.

Services

Growing

regulatory

intervention

New technological

innovations

Increased

competition

Changing

customer

expectations

Growing role of

infrastructures

New cost

paradigm

Highly relevant Partially relevant

A

B

C

D

E

F

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colours So what is Nets doing?

TOKENISATION

MULTI-CHANNEL

E-COMMERCE

PLATFORMS

BUSINESS

ANALYTICS

OPEN APIs FOR

ISSUING SERVICES

MOBILE WALLETS

Major investments to support our customers success

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Sakari Olli Card Services +358 50 363 66 38 solli@nets.eu

Thank you!

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