Unified systems

The migration to online and mobile banking has been driven by Sweden’s impressive digital infrastructure – its smartphone and internet penetration is among the highest in the world – but

Key among them is “BankID”. Established in 2003, it is a secure electronic identification system used on the internet and was brought to mobile in 2010.

BankID was originally developed by a consortium of large banks and is used by government authorities, businesses, banks and individuals across the country as the principal system for digital identification, including signing transactions and agreements. Out of 9.6 million Swedes, around 6.5 million use the system for online and mobile banking to online shopping and tax declaration.

“It is pretty unique for all the banks to get together in conjunction with the government, to have a single security system to be used across all your financial services – but also to submit tax returns,” said Ross Methven, director of client services at digital banking focused Mapa Research.

“That is unique to the Swedish market and it reduces the barriers for people to adopt mobile banking. The biggest barrier to adoption in most other markets is security concerns, such as when different banks have different security models.”

Another example of successful banking collaboration in Sweden is the Swish mobile payment app, launched in late 2012 by Danske Bank, Handelsbanken, Länsförsäkringar Bank, Nordea, SEB and Swedbank. The app – which uses Mobile BankID for authentication – offers real-time payments between bank accounts using mobile phone numbers.

How does this work? Let’s say you run into a friend on the street and remember you need to pay back a debt. Open Swish, type in the amount and your friend’s mobile phone number (if they are a Swish user) and the payment from your bank account reaches your friend’s account in 10 seconds.

Swish has quickly gathered a strong following. Around 3 million people have enrolled for the service since its launch, with over 6 million transactions performed every month. In 2014, the app was expanded to cover consumer-to-business payments, including retail. According to Nordea, the service will be extended to e- and m-commerce payments by the end of 2016.

“Swish shows there is collaboration in Sweden and banks can work together to develop innovative systems,” said Teigland. “For example, in Denmark they couldn’t get the banks together to do something like this. So they ended up with only one bank doing it.”