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Denmark’s major innovation? Digital identities!

I'm just on my way back from a banking conference in Copenhagen, and it surprised me.

It surprised me because, as I said to the audience, the Nordic and especially Danish banks had always led innovations in Europe and yet I hadn't spotted a single major innovation in recent years.

I had in Poland (Alior and mBank), and Turkey (Deniz and Akbank), and Spain (BBVA, Caja Navarro, la Caixa, Banco Sabadell) … but Denmark? I would be hard pressed to think of anything, apart from e-identity.

They agreed.

When I asked the audience whether Nordic banking was leading or following innovations, they voted about 6:1 in favour of following.

What's gone wrong?

Nothing, they said.

Just that Internet banking became so dominant in this country – used by 80% of the population, double of the average in the EU – that there wasn't much more innovation they could do.

I'm not sure I agree, as mobile is a hotbed of change and yet one of the banks presented a case study of mobile and made clear that it was precisely the e-id that was holding them back.

This is because e-id is based upon a public/private partnership of development between government and finance.

NemID, the public/private encrypted identification system, needs to Javafied if the banks are to offer native tablet and smartphone apps.  But the government won't offer a Java NemID until mid-2014.

As a result, the banks have had to use HTML4 websites in apps, because they cannot offer in-app ID checks.

Now that all got a bit technical – don't even mention Hadoop – but the bottom-line is that banks can only innovate as fast (or slow) as governments in the Nordic markets.

So there's a double-edged sword.

On the one hand, I admire the Nordic countries for creating a digital identity program that is used and shared by both government and banking.

This means that welfare, healthcare, benefits and banking are all harmonised and standardised, and that is a dream for all.

On the other, a government and bank co-development program can only move at the speed of the slowest member and by Gawd, the government can be slow.

Anyways, my walkaway is that we can all learn lessons from what the Nordic markets are doing with e-identities and, in this respect, they are leading the world.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • Tobias Thygesen

    Isn’t this also a case of “the curse of the London Underground”: if you are early adopters and you have something that was once state of the art but now sort of works fine for all parties – and you even have some embedded infrastructure which to some extent hinders innovation, then the pressure to innovate is less. No-one would argue that the Tube today is cutting edge – but it works and it is probably quite expensive and difficult to update. If you started from scratch – as Copenhagen has actually done – you would go straight to something more open, airy, fully automated – and even with daylight reaching most metro stations… Add to that the complete success of the Dankort (our national debit card scheme) which Danes use anywhere for any amount and which they trust completely, you are perhaps not in a very innovation-friendly environment (but the Danish banks do innovate, I probably have to add… Not the least in the digitalization of processes based on the eID you mention).

  • It’s a fairly crazy world where a supermarket (Coop) becomes a bank and a bank becomes a media empire (Jyske Bank, see http://www.linkedin.com/today/post/article/20130904113652-5853751-three-videos-changing-media-as-we-know-it ), but that’s what’s happening today in Denmark.
    Beyond this blurring of traditional business lines, Jyske Bank is taking some bold steps to revamp their sales model by getting rid of tellers and charging customers (yes, customers) up to $25 US for cash and other transactions that could be performed online. One headline in the Danish press on this recent move noted that “the coffee is still free”!