Norway

98% of houses in Norway have internet access, and 95% of Norwegian mobile phones are smartphones. The proportion of 14–76-year-olds using digital banking is 95% in Norway. 

Norway falls under the PSD2 legislation and has adopted Berlin Group’s NextGenPSD2 standard. PSD2 is a European Directive that regulates electronic payment services and was implemented in all EEA countries in 2016 and went live in September 2019. The Financial Supervisory Authority is the financial authority in Norway.

In their European Open Banking league, Yapily ranked Norway 14 out of 18 due to good regulatory supervision with some guidance provided around Open Banking implementation. Norway’s Open Banking ecosystem follows a similar trend to the rest of the Nordic countries, with a healthy consumer appetite for technology and a strong domestic payment scheme creating fertile soil for Open Banking.

However, Yapily states that there is no independent implementation body, such as OBIE (The Open Banking Implementation Entity) in the UK, to help centralise standardisation and drive technical standards. Most large Norwegian banks have integrated Open Banking, although functionality can be limited when viewing accounts and transaction information. Norway’s absence from the P27 initiative also means it hasn’t attracted the same levels of TPPs as its neighbours. However, its participation in the future is very likely.

There is already robust culture of interoperability between the authentication solutions in the Nordic Countries, which consist of Denmark, Finland, Iceland, Norway and Sweden. The P27 initiative is expected to increase interoperability, efficiency and save processing time of cross-border payments. 

Denmark, Finland and Sweden are working together towards the Nordic collaborative models and P27 initiative, which include Open Banking to deliver a cross-country system and to establish a common clearing platform for payments in DKK, EUR and SEK. While Norway had been a driving force behind P27 in its first year, it stepped back from its involvement in layer one services, consisting of interbank debit transfers, cross-border payments, requests to pay, real-time payments and batch payments  (see Figure 1). However, Norway is expected to join the initiative again soon, as the P27 banks have a large market share in the country. The P27 initiative started in 2017 as a joint Nordic bank project. In May 2019, an interim company was established to implement the initiative. In June 2019, an agreement was signed with Mastercard to operate the payments platform. The aim of the initiative is to create one common state of the art payment platform for the Nordic countries. 

The next step for P27 is to obtain the necessary clearing licence and merger filing approvals, as well as continue to develop the clearing platform together with Mastercard. The ambition for the company is to go live with the first transactions in 2022.

According to The Global Findex Database, 99% of Norwegian adults had bank accounts in 2021. Norwegian consumers are particularly interested in the benefits Open Banking payment initiation services can provide. In a recent study researching the Open Banking adoption among consumers, 30% of Norwegian consumers were interested in receiving intelligent assistance to manage payments, while 29.5% were interested in having their data used to develop convenient new payment methods. In addition, 29% were interested in their financial data to be used to offer a better range or better quality of services.

In 2019, Norway’s Ministry of Finance launched a regulatory sandbox to support the growth of Fintechs in Norway. The aim of the sandbox is to close the existing innovation gap between Norway and its neighbouring Nordic countries. The initiative will also benefit Finanstilsynet, Norway’s financial services authority (FSA), by providing it with knowledge transfer and giving it access to evolving IT, digital and AI technologies that will create the next generation of innovations. These innovations have the potential to radically change and reshape how financial services are delivered to consumers.

Norway has good regulatory supervision with some guidance provided around Open Banking implementation. However, according to Yapily, an OBIE-like body would help centralise standardisation and drive technical standards, while adding a lot of value to the ecosystem as it would help clarify any remaining issues around the implementation of Open Banking and how the industry could address more use cases.

The increase in digital banking has resulted in large productivity gains and lower costs for the Norwegian banking sector. In 2019, the cost/income ratio of Norwegian banks was, on average, 44%. The cost to income ratio (CIR) is an important financial metric in determining the profitability of banks. The measure looks at the cost of running operations as to a bank’s operating income.

In 2019, Norway’s Ministry of Finance launched a regulatory sandbox to support the growth of Fintechs in Norway and boost the adoption of their products and service. The aim of the sandbox is to close the existing innovation gap between Norway and its neighbouring Nordic countries. Furthermore, the sandbox offers a low-cost and risk-free environment to test technologies and services, driving innovation that could reshape financial services.

Denmark, Finland and Sweden are working together towards the Nordic collaborative models and P27 initiative, which include Open Banking to deliver a cross-country system and to establish a common clearing platform for payments in DKK, EUR and SEK. While Norway had been a driving force behind P27 in its first year, it stepped back from its involvement in layer one services. However, Norway is expected to join the initiative soon again, as the P27 banks have a large market share in the country. The P27 initiative started in 2017 as a joint Nordic bank project. In May 2019, an interim company was established to implement the initiative. In June 2019, an agreement was signed with Mastercard to operate the payments platform. The aim of the initiative is to create one common state of the art payment platform for the Nordic countries. The next step for P27 is to obtain the necessary clearing licence and merger filing approvals, as well as continue to develop the clearing platform together with Mastercard. The ambition for the company is to go live with the first transactions in 2022.

The primary objective of the state-private partnership is to increase the pipeline of specialised talent for fast-growing IT companies, many of whom are struggling to recruit key technical personnel in sufficient numbers to support expansion. Skills in demand include product innovation, digitisation, robotics and network security.

Hiring IT security experts and skilled professionals rank as one of the highest priorities for companies in Norway. The gap between supply and demand for IT skills is currently widening. 

A government report in 2018 estimated that Norway could face a shortfall of more than 4,000 experts in the niche area of IT security alone by 2030 unless measures are taken to reverse the risk of a contracting talent pool. 

Norway’s Ministry of Finance (MoF) launched a regulatory sandbox in 2019 to support the growth of Fintechs and boost the adoption of their products and service.

The primary objective is to use the sandbox as a test lab for tech firms and Fintechs to trial products, technologies and services. It will also support the regulator’s efforts to regulate an industry rapidly adopting disruptive technologies, such as digital and artificial intelligence (AI), within the IT and Fintech industry. Regulators and Fintech firms can test ideas without having to first go through a costly and lengthy authorisation process.

The regulatory sandbox initiative is aimed at narrowing the existing innovation gap between Norway and neighbouring Nordic states Denmark and Sweden. The project offers a low-cost and largely risk-free environment to test digital AI products, technologies and services on a limited number of customers under the supervision of Finanstilsynet, Norway’s financial services authority (FSA).

Norway has adopted the Berlin Group’s NextGenPSD2 technical standard.