In 1956, then US President Eisenhower signed the Federal Aid Highway Act, which created the Interstate Highway System. The Dwight D. Eisenhower National System of Interstate and Defense Highways, to give it its full name, is a network of controlled-access highways that extend throughout the continuous United States. Having served as the Supreme Commander of the Allied Expeditionary Force in Europe during World War II, Eisenhower realised that the continental US lacked a continuous highway system that would allow the military to transport trucks, tanks and supplies quickly and efficiently across the country. Having just come back from a Europe, ravaged from years of war, updating the national highways infrastructure became a matter of national security for the president in 1950s America.
While the initial impetus of the highway project was national security – the resulting improvement in motoring infrastructure has had a long-lasting impact on supply chains, transportation, tourism, and migration in the United States over the past 65 years. The infrastructure itself became the platform, for not just tanks and armies, but for refrigerated trucks, students traveling to universities and families on vacations in camper vans.
A few years ago, a banker caused a bit of a kerfuffle on an event stage in Luxemburg. He said: “All we talk about is Sepa. Sepa direct debits, Sepa credit transfers, Sepa working groups. Sepa is not innovative. It is what we will do, once Sepa is implemented that will be innovative.”
It seems silly that this got under the collar of a few of the euro bankers in the audience that day, but you can see where their irritation came from. These same bankers had been sitting in those working groups, creating policy and frameworks around what would become the Single Euro Payments Area. Who was this guy to sneer at all their hard work from a semi-comfortable chair in a conference room?
But the fact of the matter is – both are right.
For those of you who are not payments nerds, the Single Euro Payments Area (SEPA) harmonises the way cashless euro payments are made across Europe. It allows European consumers, businesses and public administrations to make and receive credit transfers, direct debit payments and card payments under the same basic conditions. This makes all cross-border electronic payments in euro as easy as domestic payments.
Sepa is an infrastructure, a platform, and a framework for payments. Building that takes care, time and consideration. Innovation, true innovation that creates better products and services for businesses and consumers, is also hard. However, true innovation can not be built on a platform that is fragmented, disjointed and non-continuous.
Beautiful, well designed houses that last are built on solid foundations. Those that are built on sand, collapse, and fall. It seems ridiculous that many in our industry need to be reminded of this. Whether you are a startup founder building a FinTech app or a banker who is chairing yet another policy working group – both hold an inter-connected place in this ecosystem we call FinTech. Rails, frameworks, and infrastructure need to be in place before all the ‘cool’ stuff gets built.
Jenny Winther, Secretary General at the Nordic Payments Council (NPC) describes what she is doing as ‘building a payments railroad’. The Nordic Payments Council plays a critical role in the ongoing development of a new cross-border payments system in the Nordics. Now in 2020, long after the discussions and the launch of Sepa, Winther is working to build that payments framework, but her heart is where is with that irritating banker on a stage in Luxemburg ten years ago.
“The magical thing about Infrastructure is what it enables going forward,” she explains.
Jenny will be joining FTT Virtual Nordics this October 14th for a special Showcase Discussion where we look at the journey towards P27 in the Nordics.
Once completed, P27 will provide a single payments infrastructure for almost 27 million people living in the Nordics region. The project is ambitious, wide in scope and involves the banks and payments ecosystem of Denmark, Sweden, Norway and Finland. What has been the journey so far, what else needs to be done and how will this pan-Nordic payment platform pave the way for additional innovation in the region?
The following Rockstar speakers will be answering these question at FTT Virtual Nordics.
- Jenny Winther, Secretary General at the Nordic Payments Council (NPC)
- Martin Georgzén, Director of Strategy at P27
- Michael Busk-Jepsen. Executive Director of Digitisation, Finans Denmark
FinTech is a wide, sprawling, living ecosystem full of new entrants, emerging technologies, creeky legacy systems and ambitious new frameworks. To truly understand how we make our financial services industry better, we need to learn from and understand every aspect of it.