Sector Agricultura

Company description:

DNB is Norway‟s largest bank and one of the largest financial institutions in the Nordic countries, measures in market value. DNB are currently involved in an ongoing project related to NFC mobile payments. As a large financial institution they can be considered a potential key stakeholder as a financial service provider (FSP) in the NFC ecosystem. In addition, DNB are also involved in a joint venture with Telenor to develop a trusted service manager (TSM) for the NFC ecosystem (DNB, 2013).

Interviewed:

Bjørn Skjelbred is program manager for mobile payments in DNB, board member of TSM Nordic, and manager of Doorstep AS. He has extensive knowledge about mobile payment and several years of experience with RFID technology. I met with Skjelbred on the 17 of April at DNB headquarters at Bjørvika, Oslo. The interview lasted for one hour.

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A short insight of DNB’s involvement in NFC based contactless payment

DNB entered into a joint venture with Telenor formed the company Doorstep. Doorstep intends business development at the interface between banking and telecommunication. The joint venture also established TSM Nordic AS, a daughter company of Doorstep, intended to serve as an independent trusted service manager (TSM) for contactless technology like NFC. . The TSM will be an open platform under the name VALYOU – which is a mobile wallet software. As an open platform mobile wallet other financial institutions will be able to provide their services through the same platform. This means VALYOU will be mobile wallet with a solution for multiple financial service providers (FSP).

DNB intends to be one of the FSP‟s through the VALYOU platform. This means DNB actually takes part in both the TSM and as a FSP.

Key outcomes from interview

I started the conversation with Skjelbred by asking about the progress in the NFC network, and how different stakeholders contribute to the adoption of the technology. “The customer in the NFC ecosystem needs relate to a reliable TSM. This can be provided by TSM Nordic”. He explained that the mobile network operator (MNO) will provide secure element (SE) SIM cards, and that financial service providers (FSP) will provide access to user accounts. “There is still a lot of progress needed amongst the cooperating companies in order to get a well- functioning ecosystem. In that sense, it is not yet a real NFC ecosystem. An ecosystem represent to some extent represent a well-balanced system. We are not quite there yet.”

Skjelbred pointed out that DNB has the funds to invest in NFC technology, but they were also dependent on other stakeholders to take part in the NFC ecosystem. When more players participate in the development, the adaptation of the NFC technology will speed up.

“We plan to launch VALYOU during the summer of 2013. Hopefully the market will endorse the service” In terms of adoption the aim was to reach “the chasm” between Q3 -2013 and Q2 -2014.

I further asked questions related to consumer choice and demand. Skjelbred underlined the importance of continuing the progress with NFC mobile payment technology. “A big

challenge would be if we were to stop the development, and wait for the market to grow.” The development in NFC technology is happening today, and it is important to be prepared for the demand with a solution that works. A solution tailored for the Norwegian market. He further mentioned that one of the essentials in the NFC ecosystem is to have a set of standardized

- 70 - rules or terms that counts for every stakeholder participating, or who wants to participate. There are several important stakeholders in the ecosystem. “If a stakeholder chooses to raise their price, it can affect the whole ecosystem”. In the worst case scenario, price increase could potentially ruin the whole NFC ecosystem. The focus should be on a sustainable ecosystem with established ground rules for all participants. “An ecosystem, not ego-system”.

Skjelbred pointed out an important movement in terms of switching cost. “The current development shows us that NFC enabled payment terminals are being deployed all over the country.We see a new trend of smartphones with an embedded chip solutions, which might affect both the market development and the business models. But as it seems right now, the SIM based NFC solutions are the most mature ones. However, the development is going fast, and we need to be agile and take the required actions” This is an important evolvement in terms of NFC infrastructure. If the customer already have the technology, it becomes easier to use it. A challenge is the transaction price which can be considered expensive. “In Norway we have a domestic payment scheme BankAxept which is almost free in terms of transaction cost. Merchants are somewhat spoiled in terms of paying little in transaction fees, due to

BankAxept.”

In relation to complementary goods, Skjelbred explained that over time mobile payment can become a substitute product for both cash and traditional payment cards. “If you think about the typical payment card itself, it is not a good reason for why we should need a plastic card to perform a payment transaction”. Technology makes it possible to use the mobile phone instead of a plastic card. The goal is not only small transaction, but every payment

transaction. “Low value purchases are too small of a market. We want mobile payment to be possible for all payment transactions”.

On questions related to network externalities, Skjelbred pointed out the development of NFC enabled phones that are entering the market, and the deployment of NFC payment terminals as two steps in the right direction. He also pointed out that other actors who are working to develop the NFC technology contribute to the widespread of knowledge and usage of the technology. “I think competition in the market is a good thing. It can help spread knowledge about the service, as well as stimulate service providers to improve their products.”

- 71 - In terms of business ecosystem, Skjelbred pointed out that collaboration amongst key

stakeholders are essential in order to create a sustainable NFC ecosystem. That was one of the reasons why DNB entered into a joint venture with Telenor.