Logging into one bank account only to be presented with the transaction and balance details of a completely different account would once have been cause for concern. However, in Norway, it’s becoming an everyday occurrence designed to simplify users’ banking experiences.
Since 2018 Norway’s DNB, the country’s largest financial services group, has been collaborating with Nordic API Gateway, an open banking platform that enables aggregation of financial data in the Nordic countries. Using this platform, DNB has allowed its customers to view the balance of their accounts in other banks, as well as their DNB accounts, all from within the DNB Mobile Bank app.
This change has been made possible thanks to the EU’s Payment Services Directive part two (PSD2), which is designed to improve competition in the banking industry. The directive obliges banks to make it possible for secure third-party applications to access their customers’ accounts, albeit in carefully managed and restricted ways. Crucially, the owner of the bank account has to give express permission for such access to be granted and shared.
As convenient as multi-account balance viewing may sound, until recently, DNB customers have still had to log into their other banking apps to make payments from non-DNB accounts. However, as last month (February 2020) that has begun to change. A new feature has been introduced, allowing customers to make payments from non-DNB bank accounts from within the DNB app.
For everyday banking, this means that the DNB Mobile Bank app can be used as an aggregation portal for all of a user’s bank accounts. The goal from DNB’s perspective is to make it possible for payments to be made from any of the Nordic banks in the open banking initiative, all through the Mobile Bank app/portal.
It’s a big step to go from providing account data to allowing customers to access other banks’ accounts from within the DNB app. Because it’s such a big step, this new feature isn’t being rolled out to all DNB customers at once. “We are focusing on rolling out support for the banks most DNB customers use,” said Per Kristian Næss-Flatset, DNB’s head of open banking. “Around 100 Norwegian banks are included in our service now, and we’re continuing to open up for more banks going forward.”
It’s a gradual, ongoing process, for this and for other open banking changes. New functionality is rolled out to only a few customers and users first. Depending on the results of the small-scale trial, the new features are then rolled out to all users, but still at a cautious pace. “This allows us to test out new functionality earlier and adjust it if needed before we make it available to all,” said Næss-Flatset.
Such a transition also takes time to permeate the mindset of users. It’s worth considering that in the past, banks have jealously guarded their customers’ account data and made it hard if not impossible to access accounts from outside their own proprietary apps and portals. Although the technical and legal barriers to such access have now fallen, barriers in the minds of users may still be present.
“It’s still early days, but so far the feedback on the functionality is good. It is a big step going from checking your account balance and being able to make actual payments or transfer money from other banks’ accounts in our own channel, but the usage is increasing,” said Næss-Flatset. “Making banking easy, accessible, useful and relevant is what personal finance management is all about.”
It’s easy to imagine that connecting banks together in this way could potentially increase the risk of fraud or account transaction mistakes, but Næss-Flatset doesn’t agree. “Open banking is as secure as normal online banking. The potential for fraud will always be there, but we do not depart from our high standards and security level in the transition into open banking.”
Part of the reason for this confidence in the security of open banking is that, unlike in some other regions of the world, Nordic financial institutions already have close ties to each other. For example, Norwegian banks work together in a variety of joint ventures and shared security programmes, including BankID, NorSis, Nets/Teller, Bankaccess, Vipps and Invidem. “[These] are good examples of how Norwegian banks are working together to make banking easier and more secure,” said Næss-Flatset. In addition, banking enjoys a high level of trust in Nordic countries, more so than in many other regions of the world.
Yet if it becomes possible for any bank to provide access to other banks’ accounts, how do those banks differentiate themselves? What criteria are new customers likely to use when choosing a bank? Per Kristian Næss-Flatset said this comes down to innovation, usability and reliability. “Being first to launch a product is great, but it is more important to provide the customers with tools they need and want,” he said.
PSD2 extends throughout Europe, not just in the Nordic markets. As such, Norwegian banks such as DNB are in competition not just with other Nordic banks, but with those in the rest of Europe – as Næss-Flatset is well aware. “In terms of our customer base, Norway will be our main target. But of course we are looking into how we can make banking easier for our customers and how to remove border barriers,” he said.
From Nordic API Gateway’s perspective, CEO and founder Rune Mai said the company is seeing the next-level open banking and a strong move towards owning the relationship with the customers. “DNB has become a financial institution trailblazer both by aggregating data from all Norwegian banks and now empowering customers to pay bills and transfer money between non-DNB accounts.”