Hardtalk : What could be the role of banks?

Check out our interview with Bo Harald, Independent Advisor, Entrepreneur, ex Executive Vice-President of Nordea and Head of Executive Advisors Tieto, Helsinki Finland

Some see a bleak future for banks if they do not become a central player in the digital economy. They should orchestrate sharing of data, become a provider of identity and leverage their position as centre of trust. 

Others think that banks should stick to what they are best at: namely banking ! (and issuing loans, managing risks, providing reliable/trusted payment services) and that they will lose any fight to compete with digital natives and GAFA/BATX. 

Should banks embrace and shape the digital economy or will they inevitably become just dumb data pipes for others or should they stick to what they do best and build on that? 

Watch this Hard Talk to find out!

 

Michael Salmony:
Hello, this is Michael Salmony. I’m from the Global Expert Council of the Asia Payments Connect, and welcome you to another Hard Talk, where we try to discuss controversial issues very briefly. And today we have as our guest, my good friend Bo Harold, who comes from the Nordics. And of course, we know that the Nordics have best in everything; in digital, in identity invoicing where Bo and I were actually advising the European Commission together. E- tax, cashlessness. Everything, the Nordics are always leading the way. And Bo is one of the best in the Nordics. So we’re very glad to have him here. And the controversial topic we wanted to discuss: “What could be the role of banks”. So welcome, Bo. Maybe you could tell us a little bit about your thoughts on what role banks could play in this new digital world?

Bo Harold:
Well, we are of course, now on stepping into the data driven economy and banks for sure have a pole position here. There are so many reasons why banks should actually be very interested in this new space. And also society at large should actually understand why banks are so important and drive them into it, maybe even almost forced them into it because banks have the economy of trust, the economy of repetition, the economy of reuse, the economy of scope, the economic scale, huge leavers for society at large.

Michael Salmony:
I hear that Bo. But some say banks should stay what they’re best at, mainly banking, to risk management, to loans, because any attempt to sort of compete with the gaffers, with the digital natives, with the FinTechs, they’re bound to lose. What do you think that?

Bo Harold:
I don’t think the banks should do everything on their own, actually form networks. But if you are experts on payments, and an expert on ecosystems that banks are, and we are talking about ecosystems now for all data, I think it would be more or less a miracle if banks could not contribute more than other sectors to this. We have seen the startups who have nothing to stand on, they fail invariably. And that’s, of course, a dirty little shame. But if they can join the ecosystems with the help of the banks, and the plus for society at large, and the banks will be bigger.

Michael Salmony:
I mean, I like your model of the corporation, because that complements the strengths, right? Banks have a huge customer base, they have capital, and FinTech have the innovation. And so if we get together, then that can be a success. But what about making any business out of it, you know, if the FinTechs make all the money, and you know, it’s been so hard to show how to make money out of identity, for example, even with identity, banks might take on liability if something goes wrong, and those big risks and big costs for banks with very little revenue?

Bo Harold:
Yes, if you talk about identity, of course the risk should be capped. Otherwise, it doesn’t make sense for society at large. And that has been understood in the Nordics. I mean, it’s a no brainer. If you make it too expensive from a risk point of view, it won’t fly. He says that. But then the risks otherwise, are that if you don’t get to the table, you will be on the menu. And you will be the sub supplier of sub suppliers, and we all know what that will lead to when it comes to actually making money.

Michael Salmony:
That’s a very strong point, right? If they don’t take part in this economy, there’s a danger of being relegated to being a dumb pipe. And that’s the worst place to be, right?

Bo Harold:
Exactly, and as people have run out of time, they’re certainly looking for packages for solutions, whether it’s more than three things sort or there might be even double that. And banks are amply placed to do that, you have seen that in the idea. Of course, you don’t make that much money out of it. But that’s not the point. It is actually the point of making better customer service. And I think that is the mission. The mission is really never to make money it is to make value and then you make more money,

Michael Salmony:
You become the central point of trust for your customer. And there’s nobody better than banks to do that to maybe right?

Bo Harold:
So it is.

Michael Salmony:
But can you name examples? I mean, I totally get your theory. And of course, I’m a huge fan of banks becoming active in this space too. But can you name some examples, maybe outside the Nordics, where banks are actually taking up the digital mantle?

Bo Harold:
This game a little bit too suddenly, I have would have to go through my memory. I don’t have that many good examples outside the Nordics for one or the other reasons maybe the best point with the Nordics, why they are head of the game is that the countries are big enough and small enough so that they can actually get everybody around a table that you need to make the ecosystems. And the banks can cooperate around standardizations and about all rulebooks and then compete. So if you have that tradition, then it is easy to do it. If you don’t, then you have to work harder. And that’s why I cannot say it off hand.

Michael Salmony:
Well, I mean, you’ve certainly shown that the Nordics are way ahead of the game. But I think to be fair, there are some in Europe, I would cite IMG and BBVA as some examples, and there are a few more there are some in Asia who are also going that way. So I think the future what, as you described with the banks at the center of trust in this new digital ecosystem, are probably suitable. Thank you so much for that insight. That’s terrific. You’ve shown how the Nordics are ahead of the game. And I hope anybody watching this will also join with Bo and others in future webinars and events that we’re doing at APC, please have a look at the website.

Bo Harold:
Thank you very much. Thank you.

Michael Salmony:
Thank you.