P27’s roll-out plan is designed as a set of building blocks that will bring all payment types into a single, centralized clearing and settlement mechanism (CSM). The initial phase will focus on Swedish Kronor batch payments. Which means you have to be a financial institution in Sweden, sending and receiving SEK, in order to participate. On the face of it, this seems counterintuitive to the pan-Nordic, real-time aspirations of the P27 initiative. However, when we examine the plans more carefully, we understand that this is a region that understands how building blocks can come together into something much bigger. You just have to follow the instructions in the order provided.
P27 has published a program with quarterly deliverables, spread over an 18-month timeframe. In the payments world, that is a very rapid delivery schedule. In order to achieve this, P27 is looking to embrace the agile principle of breaking the build down into bitesize chunks. Much like building a giant Lego model, the final product is packaged into mini-builds that can be worked on simultaneously, before being snapped together to allow creativity to take over.
The reality is that the biggest uplift in terms of enabling for P27 sits with the incumbent banks. For banks to keep pace with this gruelling delivery schedule, they need to prioritize their existing workloads against their agile methodology; and they should pick the capabilities that bring greatest value to their customers—the mini-builds that make the most business sense. It’s critical that banks understand the economics of P27 so they retire existing infrastructure, move away from costly correspondent banking relationships, and reallocate resources to deliver against the initiative’s timelines. The P27 journey starts with cost savings, which create the ability to drive new revenues.
The P27 initiative has itself outlined a great strategic approach to prioritizing the transformation of Nordic payments. It’s interesting that it focuses on mindset, a key component of an agile methodology. The mindset in question is architectural and divided into three levels.
Level 1 – The foundations
This is a focus on the core infrastructure overhaul needed to deliver cross-border payments in the Nordics. This is front and center of the P27 initiative, and the piece that banks ‘have’ to complete.
Level 2 – The overlays
Digital overlay services will be how banks create value in their P27 investment and transition. Even though it’s a later phase to bring these to market, banks should be thinking about how they are going to spin out customer benefit from the foundational changes. Customers don’t see the foundations, and without digital overlay services, they don’t see the benefit of them either. Banks need to focus on a select number of overlay services they can build into their level one plans, to accelerate their journey to level two, and their journey to revenue growth.
Level 3 – The Future
P27 doesn’t stop at Pan-Nordic payments. The end game is global ubiquitous payments. As regional players solidify their new revenue streams, they should look to interoperability with other existing pan-regional schemes, such as TIPS, as well as growing into new, innovative markets. Imagine if P27 was interoperable with the pan-Asia real-time payment scheme. That truly would be any payment, every possibility!
But how do banks achieve level one? To do this effectively, banks have to understand how quickly their own organization can realistically move. Agile transformation is not an overnight process, and if banks are not already operating in this way, it will hinder their ability to deliver multiple projects against the P27 quarterly milestones. Even banks comfortable with agile will need to be honest with themselves. The Nordic region has an innovative reputation, but P27 is about digging down into payments infrastructure and really simplifying it. It can be difficult to see our own flaws, so even front-runner banks should look to work with trusted partners and analyze their existing infrastructure, warts and all.
Learn more about how you can most effectively address real-time payments modernization in your business. Download “The P27 Opportunity: The task for banks, processors, merchants and fintechs in the Nordics – and what other pan-regional schemes can learn.”
ACI Low Value Real-Time Payments 
