# Why the Nordic Banks Outsource Card Processing
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-06-18
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: How Nordic Banks Are Leading the Cashless Revolution
Meta Description: Learn how Nordic banks are leveraging outsourced card processing services to enhance agility and customer experience in the rapidly evolving digital payments
URL: https://financedigest.com/why-the-nordic-banks-outsource-card-processinghtml

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_Increasingly around the world, banks are starting to outsource core business operations to specialist third parties. Rune Sørensen, Product Manager, Card Processing Services, Nets, explains how the Nordics are a case study in how this process can lead to increased agility._

> The Nordic countries constitute the most advanced and digitally ready payment market in Europe, and one of the most advanced in the world [\[1\]](https://mail.google.com/mail/u/1/#m_-987061925572905575__ftn1).

The penetration of card, contactless card and mobile payments is high, and the race to be the world’s first cashless country is essentially a competition between Norway, Sweden, Finland and Denmark. One of the ruling parties in Norway’s coalition government has suggested that this will be achieved in Norway by 2030 [\[2\]](https://mail.google.com/mail/u/1/#m_-987061925572905575__ftn2), and the Swedish Retail and Wholesale Council (Handelsrådet) estimates that Swedish merchants will stop accepting cash payments as early as 2023 [\[3\]](https://mail.google.com/mail/u/1/#m_-987061925572905575__ftn3).

One reason for the advanced [digital readiness](https://www.financedigest.com/an-analysis-of-vc-investment-in-the-defence-sector-and-the-mods-readiness-to-exploit-digital-opportunities.html "An analysis of VC investment in the Defence sector and the MOD’s readiness to exploit digital opportunities") of consumers in the region is Nordic issuers’ determination to be customer oriented and forward-thinking. They understand that the battle for present and future [market share will be won by adding convenience and value](https://www.financedigest.com/rare-neurodegenerative-disease-treatment-market-value-share-supply-demand-share-and-value-chain-2021-2031.html "Rare Neurodegenerative Disease Treatment Market Value Share, Supply Demand, share and Value Chain 2021-2031") to consumer’s daily lives, especially as competition has intensified further with the second Payment Service Directive (PSD2), which is opening up the marketplace to new players. All of this requires issuers to retain a laser-like [focus on innovation](https://www.financedigest.com/maximising-the-opportunities-available-from-marketing-technology-and-innovation-focused-thinking.html "Maximising the opportunities available from marketing technology and innovation focused thinking") and the user experience.

**So, why are the Nordics different?**

50 years ago, [banks across the Nordics began to realise that they could significantly reduce their costs through collaboration](https://www.financedigest.com/why-open-banking-heralds-a-new-era-of-ecommerce-merchant-and-bank-collaboration.html "Why Open Banking Heralds a New Era of eCommerce Merchant and Bank Collaboration"). Danish banks were the first to act on this opportunity by developing a shared payments infrastructure, and over the [next few years](https://www.financedigest.com/uaes-adnoc-to-open-swiss-trading-office-next-year.html "UAE’s ADNOC to open Swiss trading office next year") Norway and Finland also adopted this model. Together, they then took a further step, creating an independent organisation that would form the backbone of the [payments ecosystem](https://www.financedigest.com/the-future-of-payments-biometrics-within-the-financial-ecosystem.html "The Future of Payments: Biometrics Within the Financial Ecosystem") across the Nordics.

This greatly simplified and reduced the cost of daily operations for the many Nordic banks [issuing international](https://www.financedigest.com/a-taxing-issue-ten-tax-invoicing-pitfalls-that-international-businesses-must-avoid.html "A taxing issue: Ten tax invoicing pitfalls that international businesses must avoid") and domestic card schemes, from Visa and MasterCard to Dankort in Denmark and BankAxept in Norway. Instead of having to [invest heavily in building](https://www.financedigest.com/increase-in-investments-in-building-refurbishment-and-new-construction-activities-to-propel-demand-of-construction-safety-net-market-fact-mr-report.html "Increase in Investments in Building Refurbishment and New Construction Activities to Propel Demand of Construction Safety Net Market: Fact.MR Report") in-house systems and competences, Nordic issuers tap into an existing feature and service-rich infrastructure which includes card processing services. This enables them to take advantage of both greater efficiency and more [revenue opportunity](https://www.financedigest.com/the-potential-impact-of-coronavirus-covid-19-for-riveting-tools-market-revenue-opportunity-forecast-and-value-chain-2021-2028.html "The Potential Impact Of Coronavirus (Covid-19) For Riveting Tools Market Revenue, Opportunity, Forecast And Value Chain 2021-2028"), without the capital investment or operational expenditures conventionally required.

**That was 50 years ago – what about now?**

The rapid evolution of the card [payments industry](https://www.financedigest.com/end-of-year-overview-of-the-payments-industry.html "End of year overview of the payments industry") has only increased the value of outsourcing core business processes. As new technologies impacting banking and financial services are developed, the only certainty is that [consumers’ expectations](https://www.financedigest.com/keeping-up-with-heightened-consumer-expectations-in-financial-services.html "Keeping up with heightened consumer expectations in financial services") of their banks will continue to get higher. By enabling issuers to plug into outsourced [digital and mobile payment](https://www.financedigest.com/why-anti-spoofing-fingerprint-technology-is-essential-for-the-continued-growth-of-digital-payments.html "Why anti-spoofing fingerprint technology is essential for the continued growth of digital payments") services, this independent infrastructure gives them the means to respond quickly to changing customer expectations, launch innovative new products and services, defend against disintermediation from new players and strengthen customer relationships. This enables issuers to create new end-to-end [digital customer](https://www.financedigest.com/the-cervical-total-disc-replacement-market-to-grow-based-on-customized-digitization.html "The Cervical Total Disc Replacement Market to grow based on customized digitization") experiences faster and more efficiently than they could achieve alone.

The independent card processing outsourcer is also the most widely integrated issuing [service provider in the Nordic markets](https://www.financedigest.com/sleep-service-providers-market-report.html "Sleep Service Providers Market Report"), which enables issuers to build cross-country partnerships in the Nordic and Baltic markets by connecting directly to all leading acquirers. This capability opens the door to the rapid development of new, innovative and revenue generating issuing services that can be quickly brought to [market and improve consumers’ banking](https://www.financedigest.com/improving-reputation-in-the-banking-sector-through-marketing-communications.html "IMPROVING REPUTATION IN THE BANKING SECTOR THROUGH MARKETING COMMUNICATIONS") and payment experiences.

**Could this be replicated internationally?**

In short, yes. Despite the unique historical circumstances, the Nordics are a success story for what [banks can achieve through outsourcing](https://www.financedigest.com/in-a-rising-market-are-banking-outsourcers-pulling-their-weight.html "In a rising market, are banking outsourcers pulling their weight?") not just secondary functions, but core business operations such as card processing. Issuers need easy, stable and [secure services](https://www.financedigest.com/facilitating-open-finance-through-secure-services.html "Facilitating open finance through secure services") every time a cardholder makes a payment, while at the same time being able to concentrate on innovating to benefit their customers. This has been realised in the Nordics, leading to faster time-to-market for banking products and services and, as such, a digitally ready population en-route to [leaving cash behind](https://www.financedigest.com/new-research-reveals-the-countries-leaving-cash-behind.html "New research reveals the countries leaving cash behind") forever.

The [demand for specialised capabilities will continue to grow as technologies](https://www.financedigest.com/computer-assisted-anesthesia-systems-market-industry-analysis-opportunities-technology-demand-top-players-and-growth-forecast-2027.html "Computer Assisted Anesthesia Systems Market Industry Analysis, Opportunities, Technology, Demand, Top Players and Growth Forecast 2027") such as AI, biometrics and VR flood the financial services market. By outsourcing core functions, issuers across the world can become increasingly agile and empowered to focus on their [customers’ journey](https://www.financedigest.com/how-to-navigate-a-seamless-journey-from-cio-to-chief-customer-officer.html "How to navigate a seamless journey from CIO to Chief Customer Officer").

For more information on Nets Card Processing services please visit our website [www.nets.eu/solutions/card-processing/](http://www.nets.eu/solutions/card-processing/).


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