E Payment System

The e Payment infrastructure in Finland has contributed to their position as leading global economies. Paper payments are less than 10% of electronic payment volumes in Finland, while cash circulation as percentage of GDP is one of the lowest, globally and in Europe. This is because the industry invested heavily in developing an ubiquitous multi-channel e-payment infrastructure over a long period of time, in loose and largely informal coordination with Government policy. The level of technology sophistication of the Finnish economy and the prevalence of e-payment usage have been two mutually beneficial and complementary aspects of their economic development. Finnish banks have been able to significantly improve their cost efficiency and at the same time, the e-payment environment has contributed to the growth of software companies focused on payment solutions.

E Payment Drivers of Evolution in Finland

∙ The Finnish market has been evolutionary in its development - there has been no single breakthrough. The drivers for change have been a mix of economic, technological, competitive and consumer demand factors. The role of Government in the market development has been supportive but not a very active/direct one. The market structure, ownership model and regulatory framework in Finland is similar to Ireland.

∙ The Finnish payment market structure has several important collaboration points between banks - In the area of ATM network, ePurse and payment card system development. At the same time, banks have competed against each other in areas like GIRO payments, internet and mobile banking application development and telebanking. This has led to a more robust market model that has driven consumer and business adoption of electronic payments.

∙ There has been significant consolidation of the Finnish banking market but this has not reduced the level of competition or investment in innovative products and services. This has been partly because of potential competitive threat from telecom operators and retail chains. Another important reason is the perceived need of Finnish banks to stay abreast or ahead of their peers in other Nordic geographies because of trend towards regional bank consolidation.

∙ The biggest cost efficiency gains for the Finnish banks have been from relatively simpler electronic initiatives (telebanking, GIRO ATMs etc.). However, they continue to invest in more sophisticated channels to provide further migration paths to consumers and businesses that will help maintain the momentum to continually improve cost to serve and service quality.