Payment Services Directive 2 (PSD2) and Open Banking opened a few years ago a whole new world for handling payments. Now at the cash register you can just flash your smartwatch and pay online shopping with just a few clicks. Open Banking brought new players alongside with the banks, focusing on handling payment transactions. The eagerness to jump specifically into this opportunity is easily understandable when considering that for example in 2021 Finnish pay cards were used 1,9 billion times. Already a small slice of these transactions offers a decent revenue.

For the financial market, PSD2 was the prelude for sharing information more openly than before. Now same topic is discussed also in insurance industry as “Open Insurance” seeks its’ form. But what does Open Insurance mean and what is it aiming at? There isn’t yet a uniform definition. European Insurance and Occupational Pension Authority (EIOPA) published in 2021 a Discussion Paper ”Open Insurance: Accessing and sharing insurance related data”, which is based on a very broad definition: “Covering accessing and sharing insurance-related personal and non-personal data usually via APIs”. EIOPA states increased innovation, competition, and efficiency as main goals.

What would sharing of insurance information enable?

When considering how information dense insurances are and how information generally today can be utilized for various use cases, it’s clear that open sharing of insurance information would enable many kinds of product and service innovation. Still, it should be noted that insurers cannot freely share information. In PSD2 the customer manages their information and decides what and with whom to share. This should push innovation to be highly customer centric and is a starting point for new competitive factors.

When the customer holds insurances in several companies, sharing would enable collecting the scattered information in one place. The customer would get an overall view of their coverage making it easier to get insurance guidance based on correct information and make it easier to ask for offers. Especially In Finland, collecting information of occupational pension and other pension saving in one place could be a very useful use case, Swedish minPension service being an excellent example of this idea.

Claims management is a critical point in client relationship and there are certainly many use cases for making that smoother. For example, what if my flight is delayed more than 4 hours, which is the threshold entitling me to a compensation from my travel insurance? Could the information about the delay go directly from the airline to my insurer and the compensation be automatically paid to my bank account?

Interfaces in key position

Interfaces are a prerequisite for sharing and receiving information, but they might also turn out to be road blockers. This was experienced with PDS2, different standards for interfaces and APIs complicate the development of fluent ecosystem. Let’s hope this experience is taken into consideration when the Open Insurance directive is taking its form.

Additionally, the aging IT infrastructure of the insurers will set its own obstacles. When interfaces and APIs play a central role in digitalization, influencing many processes already today, many insurers are pondering about the best solution in the long run. Continue building upon an aging technology, or has the time come to renew core systems and start capitalizing on the benefits of digitalization?

The future of information sharing

Will Open Insurance cause a same kind of revolution as PSD2 did for mobile payment? Probably not, as within insurance there is not one, even closely, similarly frequented transaction. Also, the Open Insurance directive seems to proceed rather slowly with EU.

There are still many question marks attached to Open Insurance. Even so, the directive will come to force at some point. Therefore, it’s good to start evaluating how and with what kind of solutions to prepare oneself for the possibilities Open Insurance offers.

Kestävä rahoitus on aihe, jonka merkitys ilmastonmuutoksen kiihtymisen myötä on entisestään lisääntynyt. Kestävän rahoituksen määritelmä on toki laajempikin, ympäristötekijöiden lisäksi siinä tarkastellaan myös yhteiskuntaan ja hallintotapaan liittyviä näkökulmia, eli ns. ESG-tekijöitä (lyhenne sanoista Environmental, Social ja Governance) ja kuinka nämä huomioidaan sijoittamista koskevassa päätöksenteossa.

Vaikuttamisen mahdollisuus on kenellä tahansa sijoitustoimintaa harrastavalla, yhtä lailla institutionaalisella sijoittajalla kuin yksittäisellä rahastosäästäjälläkin. Mutta voidakseen tehdä vastuullisia valintoja, tarvitsee sijoittaja luotettavaa tietoa sijoituskohteiden kestävyydestä. Kohteiden tulisi myös olla keskenään vertailukelpoisia, jolloin tarvitaan yhteneväisiä mittareita ja käytäntöjä. EU:ssa tähän on haettu ratkaisua kahden eri asetuksen kautta. Tiedonantovelvoiteasetuksen (SFDR, Sustainable Finance Disclosure Regulation) tavoitteena on lisätä läpinäkyvyyttä sijoitustuotteiden kestävyystekijöistä. Taksonomia-asetus (TR, Taxonomy Regulation) puolestaan määrittelee milloin taloudellista toimintaa voi kutsua kestäviksi kuuden ympäristökestävyyttä mittaavan tavoitteen kautta.

Asetukset ovat sinällään jo tulleet voimaan, mutta niissä säädettyjen velvoitteiden soveltaminen jalkautuu asteittain. Molemmissa asetuksissa on artikloja, joiden yhteneväiseen tulkintaan ja soveltamiseen Euroopan komissio on pyytänyt finanssialan Euroopan valvontaviranomaisia (ESA, European Supervisory Authorities) määrittelemään tekniset standardit (RTS, Regulatory Technical Standards). Nämä eivät ole vielä kaikilta osin valmiita tai lopullisesti hyväksyttyjä, mutta oletuksena on, että niitä tulisi porrastetusti alkaa noudattaa tämän ja ensi vuoden aikana.

Finanssiala on yhteisen haasteen edessä

Asioiden keskeneräisyydestä huolimatta, valvontaviranomaiset ovat nyt kehottaneet toimijoita aloittamaan valmistelut asetusten soveltamiseen. Ja hyvä niin, sillä urakka on huomattavan suuri, vaikka toimijoille tilanne on hieman epäkiitollinen, kun ne joutuvat tähtäämään liikkuvaan kohteeseen. Niinpä kaikki sijoituspalveluja tuottavat ja tarjoavat tahot, kuten rahastoyhtiöt, pankit ja henkivakuutusyhtiöt ovat kovan urakan edessä.
Mutta mikä tekee tämän niin haastavaksi?

Pähkinänkuoressa: valtava tietomäärä kerättäväksi ja analysoitavaksi sekä pitkä välitysketju, jonka varrella on useita toimijoita.

Teknisestä näkökulmasta urakka kiteytyy tiedon sujuvaan välittämiseen ja tehokkaaseen käsittelyyn:

• • kuinka sijoituspalvelun tuottaja kerää ja analysoi sijoituskohteiden kestävyyteen liittyvää tietoa ja muokkaa tiedon sopivaan muotoon seuraavan vaiheen tarpeet huomioiden
  • kuinka sijoituspalvelun tuottaja välittää tämän tiedon sijoituspalvelua tarjoavalle taholle, tiedon kaikissa eri muodoissa, raportteina, avaintietoesitteinä ja SFDR:n määrittelyn mukaisen, sijoituskohteen kestävyyttä indikoivana värikoodina
  • kuinka sijoituspalveluntarjoaja välittää tiedon loppuasiakkaalle eri ajankohtina ja eri palvelukanavissa kuten verkkosivuilla, portaaleissa ja ehkäpä jopa tulosteina.

Pitkä ja monivaiheinen ketju, mutta modernien järjestelmien tuella ja tiedonvälityksen rajapintoja hyödyntämällä hyvinkin tehtävissä. Finanssiala on uuden edessä ja yhteisellä ponnistuksella rakennamme edellytykset kestävälle rahoitukselle.

Pensions seem to be a hot potato in the EU.

Last Autumn during the European Retirement Week Insurance Europe published the results of a survey on how EU citizens are preparing for their livelihood during retirement. The comparison between the 16 countries participating in the survey, revealed that only 40 % of Finns are privately saving for retirement. The overall average was 62 %, leaving Finns far behind. On the other hand, the Finnish national occupational pension system has been ranked as one of the best in the world in many studies, but will the base pension be enough for future pensioneers? A good question anybody should occasionally ponder on.

The same question has been raised in EU in larger scale. Within EU there are several undertakings aiming at encouraging citizens to private pension saving. PEPP (Pan-European Personal Pension) aims at lowering the barrier for starting pension saving, in addition to which EIOPA (European Insurance and Occupational Pension Association) recently commented EC’s proposal on how to increase EU citizens knowledge of their future retirement income level.

The proposed Pension Tracking System (PTS) would combine all pension saving, both statutory and private. This would give a realistic and up-to date view of the overall retirement income. Seven EU countries already have this implemented, amongst others Sweden and Denmark. The Finnish Pension record is a good start but as it collects only the information of the statutory pension, it should be extended to also compile the information of private pension savings. And although the many law changes regulating pension saving have practically halted the sales of pension insurance, many Finns still have such agreements from earlier days. These savers would certainly benefit of being able to follow-up on the overall situation.

PTS emphasizes on clarity and compressing the information to the most essential parts. Nothing odd, just basic information that can be found in a pension insurance administration system and which is easily transmitted from a modern system. Evitec’s Evitec Life policy administration solution is already equipped with numerous digital interfaces to various external parties, so adding one more is no big task.

But who in Finland would take the lead in developing a PTS? The occupational pension carriers and the Finnish Centre for Pensions administers the current Pension record, but private pension insurances are sold by life insurers. In Sweden the public and private sector have combined their efforts to develop the local PTS, i.e. the Minpension portal. Could similar willingness be found in Finland to promote a common cause?

In Finland Digital and population data services agency (DVV), which is the agency administering the registry of citizens, has already some time ago acknowledged the fact that the current method of forming the personal identification number (PIN) codes identifying individuals, isn’t sustainable in the long run. In addition, the structure of the PIN doesn’t comply with modern privacy protection.  

DVV regularly issues new PINs to individuals born for example in the 20th century. Usually it’s the case of a foreigner in need of a Finnish PIN. As some countries mark in passports all citizens birthdate as 1.1. or 31.12., the need for PINs especially for these dates is higher than average. This in turn means that the variations are running out for the 3 digit long individualising number. This needs to be resolved – very soon. 

In addition to this most acute challenge, there are also some personal privacy issues with the current method of forming a PIN. A PIN, which should solely be a data individualizing a person, reveals in its’ current form the persons birthdate and gender. These should be faded out to make the PIN unambiguously an individualizing data.  

Ministry of Finance initiated in 2017 a pre-study about the PIN renewal. The final report was published in Spring 2020. This has served as a base for the PIN renewal project, which the Ministry of Finance kicked-off in late 2020. But, already in Spring 2021 it was apparent that the time schedule outlined in the final report wasn’t realistic. 

The magnitude of the change is rather evident. PIN tentacles are far reached, and they have often touchpoints with society critical functions, implying that the change will require actions from numerous instances, both officials and the private sector. As many instances are also inter-connected, this will require a good amount of coordination. This, and on the other hand the DVV’s more pressing need to find a solution for the individual number series, is not a straightforward quick fix. Therefore, the full-scale transformation of the PIN will be implemented in phases and in the first phase only the sufficiency of PINs will be resolved.  

For organisations faced with the changes, introducing the changes in phases is slightly annoying. Although a change process is often more controlled when performed in phases, it unfortunately usually also comes with a price tag. Therefore, already while planning for the first phase, it would be beneficial to grasp the final goal and strive to anticipate the following changes right from the beginning. For the PIN change at least three changing factors are already known, middle mark (indicating the birth century), birthdate and gender. When these change, also the method for checking the PIN changes. How well you hit the bulls’ eye with these (assumptions), remains to be seen.  

At Evitec we’re waiting for decisions, as the flexibility of Evitec Life system can in this situation again be demonstrated. None of the currently identified changes are critical for Evitec Life, as PIN is already used as only one dataset identifying a person. Take for instance the birthdate, which often is meaningful in an insurance policy, in Evitec Life it is a separate data field. But, as Evitec Life has extensive integrations and REST services to surrounding instances, dependencies between these will need to be carefully monitored to ensure a smooth change transition.  

Finanssivalvonta* julkaisi syyskuun puolivälissä tiedotteen, jossa se kertoi toteuttaneensa teema-arvion koskien sijoituspalveluntarjoajien soveltuvuuden arviointia. Yhtenä havaintona oli, että MiFID II:n tuomia uudempia vaatimuksia oli selkeästi noudatettu heikommin kuin aiemman sääntelyn asettamia vakiintuneita vaatimuksia.

Soveltuvuusarvio liittyy sijoitusneuvonnan menettelytapoihin, mikä käytännössä tarkoittaa, että ennen kuin asiakkaalle pystytään tarjoamaan soveltuvia sijoituspalveluita ja rahoitusvälineitä, tulee pankin tai sijoituspalveluyrityksen selvittää asiakkaan tietämys ja kokemus palveluun liittyen – ja tähän tietämykseen perustuen tarjota soveltuvaa ratkaisua.

Asiakaspalvelun moninaiset järjestelmät eivät välttämättä tue sijoitusneuvojan pyrkimystä asiakkaan tilanteen kartoittamiseksi. Asia on kuitenkin syytä ottaa tosissaan: pahimmillaan pankki tai sijoituspalveluyritys voi saada laiminlyönnistä seuraamusmaksun. Toisena äärimmäisyytenä on se, että asiakaskohtaaminen muuttuu kuulusteluksi, jotta viranomaismääräykset varmasti täyttyisivät.

Asiakaskohtaamisen ratkaisumme tarjoaa hallitun ja yhdenmukaisen rakenteen asiakastapaamiseen. Se mahdollistaa asiantuntijalle keskittymisen asiakkaaseen ja asiakaspalvelun laatuun aina taustatietojen kartoituksesta asiakkaan jatkuvaan tukemiseen saakka.

Hyödyt, joita ratkaisumme tarjoaa:
• Saat asiakkaan sijoittamisen ja säästämisen tavoitteista paremman ymmärryksen, mikä puolestaan helpottaa asiakkaalle sopivan ratkaisun esittelyä
• Tiedot ovat keskitetyssä järjestelmässä
• Asiakastapaamisesta voidaan kerätä selkeästi mitattavaa dataa
• Prosessi on selkeästi auditoitavissa, mikä auttaa noudattamaan finanssilaitoksen linjauksia ja viranomaisvaatimuksia
• Järjestelmä on mukautettavissa finanssilaitoksen omaan asiakkuuksien hoitomalliin

Ratkaisu voidaan toteuttaa on-premise tai pilvipohjaisena. Ennen toteutusta käymme läpi asiakkaan tilanteen ja valitsemme yhteistyössä parhaan mahdollisen teknisen toteutustavan ja sen, miten ratkaisu saadaan integroitumaan saumattomasti asiakkaan prosesseihin.

Kiinnostuitko? Ole yhteydessä:

Tino Silfver, Director, International Business Development, tino.silfver@evitec.com

*) Sijoituspalvelujen ja rahoitusvälineiden soveltuvuuden arvioinnissa kehitettävää

Written by Annika Karppinen

Who still remembers the time when a money transfer between two parties took several days? Even between two banks operating in the same country, money transfer was by no means a straight highway but rather a local train, stopping several times during the process. In Finland this was put to history over 10 years ago, when euro countries moved to SEPA payments and ISO20022 standard enabled faster money transfers. Since then, also Evitec’s Evitec Life Payments has supported the ISO20022 format. 

As Nordic countries form a unique market area, there is on a daily basis a significant number of money transfers within the region but the speed of those resemble that of a local train. Within the region there are several payment systems in use, many built on outdated technology, which slows down the money transfer process. In addition, there are several providers for clearing services which all use different standards. Goes without saying, this isn’t cost effective, neither for the service providers nor for the users. 

P27 Nordic Payments Platform was established to deal with this challenge. Six Nordic banks are behind the project: Danske Bank, Handelsbanken, Nordea, OP, SEB and Swedbank. The goal is to create a payment platform which enables cross-border real time money transfers in multiple currencies. As ISO20022 is fast becoming a global standard, it’s self-evident the project is based on the same. 

P27 got in July 2021 EU approval for merger with the Swedish Bankgirot. By this, P27 can start actual work and as a first step batch payments in Swedish Kronas will be renewed. The fact that all Swedish mass transfers are handled by Bankgirot gives a good understanding of the scope of the renewal.

Evitec Life Payments is prepared for the new era for Nordic payments 

Evitec Life Payments supports P27 Nordic Payments. Extending the PLP Payments solution based on existing SEPA and ISO20022 support was a straightforward process. In Sweden Länsförsäkringar is using PLP Payments for outpayments of pensions and insurance benefits, making the operational reliability of the system critical. It’s great to see P27 taking hold in Sweden and gradually taking over the market. 

Do you remember those, sometimes hilarious, examples from school classes, where teachers tried to bestow on us the importance of using the correct punctuation marks? For example, how the meaning of a sentence is completely transformed with the cannibalistic difference in “Let’s eat, grandma” and “Let’s eat grandma”?  Or whether you have “thirty five-euro bills” or “thirty-five euro bills”.

Our everyday work is filled with information from many different sources. It comes especially apparent in the insurance and banking business, where we need to consider the business needs, the customer experience side, all the technical aspects, and not the least, the legislative demands. It’s not just punctuation we need to be attentive of, but all kinds of terms and terminology we use when we talk about our customers business, likewise internally as with the customers. And sometimes it gets complicated. It might feel like splitting hairs, but it all matters and makes a real difference, a bit like all the rules with commas and such.

Customer identification vs. identity verification

Take for example one of our recent realization, when we were faced with the difference between customer identification (FIN: asiakkaan tunnistaminen) and identity verification (FIN: henkilöllisyyden todentaminen). Especially in Finnish as the words, tunnistaminen vs. todentaminen, sound and feel so alike, it leaves you wondering where’s the difference. Still, the former is less rigid a procedure than the latter, and the difference in the process is significant. These come from the Anti-Money Laundering Act (AML Act) and when one word in the legislation was changed to the other, it had major impact on the outpayment process for savings and life insurance benefits. And while figuring out the system solution to support this, quite a few of us, including myself, came to realize rather concretely what a difference one word can make.

The impact of getting even the small details right, it isn’t just a legislation driven task dictating what our customers need to get done and how our systems must facilitate those needs. It’s much more than that.

The ability to speak our customers language is an important factor when building credibility and the customers trust. It’s also about showing respect to the customer and their business. But even more importantly it’s vital when making sure that things are understood in the same way and everybody is thereby aiming at the same outcome. At Profit Software we are proud of our eagerness to closely listen to our customers, to understand their business, the needs, the challenges… and occasionally tackle the comical or infuriating consequences occurring when talking about “man-eating chicken” instead of “man eating chicken”.

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