Nordic KYC infrastructure moves closer

A group of Nordic based banks have agreed to consider the establishment of joint infrastructure to deal with Know Your Customer (KYC) requirements, which they are calling Nordic KYC Utility.

The banks include DNB Bank, Danske Bank, Nordea Bank, Svenska Handelsbanken and Skandinaviska Enskilda Banken. The exploratory phase of the KYC infrastructure development will focus on large and midsized Nordic corporate clients.

Requlatory requirements around KYC have become increasingly stringent and complex in recent years, for example, to assist in the fight against financial crimes. But the complexities are posing challenges not only to banks and their reporting requirements, but also for customers who are dealing with different forms and formats of KYC when they deal with different banks.

The coalition of banks pushing for joint infrastructure state that these problems are causing transactions to slow down while increasing administration and risk. Looking ahead, they also expect “more regulations and requirements related to KYC processes”, according to a statement from Handelsbanken.

Nordic KYC Utility will be owned and controlled by the founding banks, but the new company will also be set up to deliver services to third parties. Full establishment and operational startup still requires regulatory approval, however, with the European Commission set to consider its view under the EU Merger Regulation. The participating banks expect the company to be established in the second half of 2018.

Joint ventures

The Nordic KYC Utility follows other previous joint ventures involving Nordic banks to develop technology to support increasing demand for digital banking services.

In Sweden, the ‘Swish’ mobile payment service was founded by some six financial institutions – Danske Bank, Handelsbanken, Länsförsäkringar, Nordea, SEB and Swedbank and the Sparbank group – who together own Getswish, the privately held company behind the service. Since launch in 2012, the Swish service has grown to the extent that an estimated 50% of the Swedish population uses the application to make cashless payments of smaller amounts, such as at kiosks or in coffee shops. More recently the service has expanded to also facilitate online purchases.

At the recent InvestmentEurope Pan-European Summit Lausanne 2018, keynote speaker Andreas Ekström noted that the development of Swish could be seen as a rearguard action by local banks to defend their market share in the face of digital disruptors – newer competitors seeking to make inroads into what they see as an entrenched and uncompetitive market.

preloader
Close Window
View the Magazine





You need to fill all required fields!