Transforming psd2 from a threat into an opportunity for Nordea

Abstract

The revised payment services directive (PSD2) is a disruptive piece of legislation set to remove incumbent banks monopoly on customer account information and payment services. Along with the EU’s General Data Protection Regulation, PSD2 compels banks to make much of their valuable data shareable with designated third parties, allowing new players to enter the market. The main objective of this papers is to shed light on how the directive affects Nordea Bank from a strategic perspective. The specific research questions the study addresses are what the implications of PSD2 are for Nordea, and what strategy Nordea should pursue to maintain a sustainable competitive advantage. In our largely qualitative research, we gathered primary source information from legislative drafts, an interview with a Nordea-spokesperson, and from official statements by Nordea. Secondary sources like industry white-papers and strategic management literature were also extensively used. To tackle the research questions the study considers the implications of PSD2 for Nordea, conducts an external and internal analysis of the company regarding PSD2, and explores strategic options Nordea can pursue to respond to the new directive. The analysis results in three strategic options; Defensive, Opportunistic and Transformative. The key differentiating point between these is the degree of commitment to Open Banking, Defensive being full rejection and Transformative being full commitment, Opportunistic falling somewhere in the middle. These strategic options are in turn evaluated based on certain criteria. We dismiss the Defensive approach, as we believe a full rejection of Open Banking would cause Nordea to quickly fall behind its present and incoming competitors. Taking into consideration long-term sustainability, a changing competitive landscape, and the companies capabilities and resource