Begging for alms won’t work in Norway

Norway is at the leading edge of digital transaction technologies, and it is common for Norwegians, and even visiting tourists, to carry little but spare change in their pockets.

As a sign of Norway’s attraction to the digital world, Apple Pay has targeted Norway as part of the early roll-out of its near field communications (NFC) technology for contactless payments, perhaps surprisingly as it’s a small market of only five million people.

That surprise dissipates when you consider how adeptly Norwegians embrace new technologies.

Norway dives into digital

In 2009 Norway became the first country to launch a LTE (long term evolution) network, and in January 2017 it will be the first to ditch FM radio and switch over to digital-only transmissions.

And while globally there are a plethora of experts that warn of the dangers of digital fraud, over 75 per cent of Norwegians use a legally binding digital ID system, BankID, as proof of identity. And the take-up of mobile BankID is over 600,000 and growing strongly.

Last year a Norwegian start-up with backing from industry heavyweights like Mastercard, introduced the world’s first contactless payment card with embedded fingerprint reader in Norway. A three-month trial period looked promising.

Being smart and wealthy helps

It certainly helps that Norway is a modern, sophisticated society, with the world’s second highest gross domestic product, built up largely on the back of its large petroleum and natural gas riches.

And its compact population means compatibility issues with technologies are easier to integrate.

And yet like modern countries, Norway’s payments system still carries the millstone of its legacy banking infrastructure, which hampers an even more robust pace of digital change.

Legacy infrastructure digital drag

It’s a global issue, and in the case of Norway it’s the Kjernebank IT platform developed by Evry, and used by all big Norwegian banks.

Although incumbent banks across the planet have been resistant to the cost of dismantling legacy systems, it has been the introduction of a host of disruptors right along the IT chain, which is driving change.

Evry’s stranglehold on Norway’s banking IT is being broken apart by the introduction of systems by relative newcomers to the market, like Green Mountain.

Norway’s biggest bank, DNB, has placed all its critical intelligence with Green Mountain, which achieved Uptime Institute’s Tier lll certification just two years after commencing operations. It is Scandinavia’s first co-location data centre to achieve the rating, and it also uses a Fjord at its former NATO underground ammunition facility to keep its data banks cool.

DNB has also picked Indian firm HCL technologies as its new strategic IT partner, while another bank, Sparebank1, publicly called for the overthrow of the Evry dominated IT banking platform in 2011, following a disastrous system glitch over an Easter weekend that affected over 200,000 transactions.

Evry is still the main contender in the Norwegian banking IT space, but it faces increasing competition to maintain its dominance. Detractors of the system say it was good while Norway built its domestic banking system, but does not have the flexibility for a global payments delivery model.

Newcomer advantage

It’s a debate being played out in many economies, including Australia. Newcomers to the banking and payments systems are not weighed down by legacy systems, including bank branches.

Not surprisingly many global banks now talk of digital technology being the path to growth in the future, and those that do not embrace the change will find little sympathy from a new generation of app-savvy consumers, who view their smartphones, amongst other things, as a mobile bank branch.

Norway’s ability to integrate new technologies quickly, and relative ease of maintaining regulatory and compliance oversight in a compact market, means it will likely remain at the forefront of new digital advances, providing a looking glass into what’s to come, and if it works.


This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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