DIGITAL CZECH REPUBLIC Impact of Digital Revolution on the Czech Republic 16. 1. 2017 Prague 1

DIGITAL FINNISH REPUBLIC Like Czech Republic, Finland is a member of the European Union. Finland joined 1995 with Austria and Sweden. Finland is the only Nordic EU member state in the Eurosystem. Finland today is already quite digitized: Very large percentage of payments of bills paid online through computers or by smart phone bank apps developed by the traditional banks. Internet bank systems introduced already in 1980s. Breakthrough in 1990s. Today 91% of Finnish Internet users uses online banks. Debit and Credit cards are the dominating payment system in stores and in services. No minimum limit, no fees (for consumers). Transactions per capita by cards in Finland, 450 per year (2013). Smart phone penetration high, however phone real time payments still in an early stage due to the high convenience already offered by cards. 2017 will probably be a year of change with a increased uptake. 2

DIGITAL FINNISH REPUBLIC EVOLVING TO FACE THE NEEDS OF TOMORROW Three new laws into force 1.1.2017 in line with EU directives (i.e. Payment Accounts Directive PAD). Universal access to a bank account. No big change, but banks can't refuse the right for a consumer to open an account. Underpinning consumers rights to receive bank login systems and security codes from banks. New rules making it easier for a consumer to change payment provider. The security codes and identification system for banking are also used for other forms of identification. Bank codes are widely used for identification for public service (for example changing official address in the registry or accessing your tax data). This system is fairly old, but its success and convenience was a in de facto hurdle for a successful introduction of a national electronic ID. No fingerprint technology still used in this system, and one still needs a physical code.

DIGITAL FINNISH REPUBLIC EVOLVING TO FACE THE NEEDS OF TOMORROW – PSD2 PSD2 - the directive that will change banking as we know it? When implemented, banks will no longer have monopoly based access to their customers information. The directive open doors for companies to use banks information. That means consumers and companies can use three party providers to carry out financial services for them which is a possibility for the Fintech industry, especially start ups. Banks need to give access to their application programming interfaces (API) making it possible for third party providers to use the banks infrastructure as platform. Banks will no longer compete only with other banks, but with everyone that provides financial services. New financial actors: providers of payment identification services and providers of account information services. PSD2 can be quite disruptive.

IMPLEMENTATION OF PSD2 IN FINLAND A possibility for consumers. If a consumer uses several banks, PSD2 will make it possible for someone to create a single platform to access this information – will Google take care of your banking in the future? Tink is already offering this in Sweden. PSD2 will entry into force next year. Finance Ministry and Justice Ministry in Finland prepares the legislation that will be out for public consultation this spring before handed over as a proposal to the parliament in the summer. Concern among banks. Will they in the future have any direct contact with the end consumer? Will the bank be able to take out a fee for the usage of their infrastructure? Who will pay that eventual fee, the consumer or the third party provider? Another question is how the new payment providers will be able to earn money and on what?

Swish, Mobilepay and Siirto - Mobile phone payment systems Makes real time payments possible and to split bills (in a restaurant for example). Over 5 million Swish users in Sweden. Swishing money to other users by their mobile phone numbers. 500 000 Finns uses Mobilepay, a quite newly launched product of Danske Bank. Only real time payment service in Finland at the moment. New platform Siirto will be ready in Finland in spring 2017. It is developed by Automatia, which is owned by the biggest banks in Finland. Siirto is not a service itself, but will be a platform for real time payment services. Siirto will be the first platform that already is compatible with the PSD2 directive and should strengthen Finlands position as a early adapter in mobile payment solutions. It is believed this platform will change consumer behavior dramatically. Is cash still king? Some bank branches don’t accept cash any longer. The discussion of a cash free society will gain momentum after those services. Finance Ministry although still thinks there is a long need for cash, especially in the countryside and until 4G and 5G, or even 2G, reaches all remote places.