1. Efficient e-Government Through Mass Solutions Provided by Banks - Nordic lessions Erkki Poutiainen 14 September 2006

2. 13 September 2006Efficient e-government solutions supported by banks 2 Vision – Efficiency in The Networked Economy 1. The framework – the transition in the economy to networked operation model (companies, public sector, citizens). 2. New "Business Models (and Processes) for the Networked Economy" 3. More than two partners - Standards instead of proprietory models – lead to more economic software to parties 4. Mass market is the only acceptable goal – timely and economic implementation not possible to achieve without re-using existing infrastructures. 5. Bank created mass market services offer well tested platform to be re- used in the networked business 1. E-Identification 2. Real time payments 3. Document messaging (e-invoices, orders, salary slips etc...)

3. 13 September 2006Efficient e-government solutions supported by banks 3 Public Sector Analogies to Industry Consolidation Produce the same value with less people or more value with same number of people –> automation & cost efficiency Need to re-define core services – focus on essential Re-think procurement Re-think distribution Etc... Does this sound familiar? How to make this happen? HAVE A LOOK ON A STORY IN THE FINANCIAL INDUSTRY

4. 13 September 2006Efficient e-government solutions supported by banks 4 Finland – National banking market features Bank market consolidation from 1980s: – resulting to 3 main players and a group of smaller banks (incl. other Nordic banks) => 10 members in Finnish Bankers’Association 2006 Banking crisis in 90’s resulted to very heavy consolidation and cost cutting process: – Bank staff cut down to 45 % between 1990 and 1999 Electronic self services have been one of the most important enablers of the change and also the cost- efficiency driver

5. 13 September 2006Efficient e-government solutions supported by banks 5 The base: electronic banking Public sector Business Entreprenaurs Service Private Banks 2006: Nordea: > 4m e-customers in Nordics Finland: > 3 m e-customers in total 2006: Nordea: > 300m e-instructions in Nordics All this frees human labour to other areas like advisory services

6. 13 September 2006Efficient e-government solutions supported by banks 6 The age of omnipresent electronic value chains Public sector Business Entrepreneurs Service Private Business Service Entrepreneurs Private Public sector Banks

7. 13 September 2006Efficient e-government solutions supported by banks 7 Building e-Business in Financial Services Electronic banking - the ground E-ID Online Messaging Online Messaging File Transfers The bank This is the basis - the e-habit. For further progress we need more elements: - Open solutions, standards and cooperation - and innovation by re-use of infrastructure

8. 13 September 2006Efficient e-government solutions supported by banks 8 Building E-Business in 3rd Party Services Electronic banking - the ground E-ID Online Messaging Online Messaging File Transfers The bank Public sector 3rd Party authentication services (E-ID) Exploit the opportunity of service distribution over the internet - Reach millions of authenticated customers from day one

9. 13 September 2006Efficient e-government solutions supported by banks 9 Building E-Business in 3rd Party Services Electronic banking - the ground E-ID Online Messaging Online Messaging File Transfers The bank Public sector 3rd Party authentication services (E-ID) Web order & pay - e-payments (Online mess.) Exploit the opportunity of service distribution over the internet - And collect charges real-time

10. 13 September 2006Efficient e-government solutions supported by banks 10 Building E-Business in 3rd Party Services Electronic banking - the ground E-ID Online Messaging Online Messaging File Transfers The bank Public sector 3rd Party authentication services (E-ID) Web order & pay - e-payments (Online mess.) Exchange of documents- order, e-invoice, status... (File transfers, messages) Exchange of documents- order, e-invoice, status... (File transfers, messages) Get rid of paper, traditional mailing and automate document processing Electronic Invoicing

11. 13 September 2006Efficient e-government solutions supported by banks 11 European Central Bank Support: "For benchmarks we only need to look at the Nordic countries, where the e-readiness is most developed in Europe and where e-invoicing is being implemented with the support of public authorities. Your SEPA project will make you fit for the future if your vision incorporates this kind of ambitious benchmarks to introduce new competitive services." Gertrude Tumpel-Gugerel, Member of Executive Board,in speech to European Payment Council Electronic Invoicing

12. 13 September 2006Efficient e-government solutions supported by banks 12 Example of the Nordic e-invoice model – Sending invoices House bank E-INVOICE Other bank Operator Invoicing Payments Operator Netbank customer File service customer Non- E-customer

13. 13 September 2006Efficient e-government solutions supported by banks 13 Re-using the payment channel offers e-invoicing, presentment, automation and invoice finance Seller Buyer Bank ABank B Order Interbank networks E-bank Order confirmation Payment infrastructure Invoice/&DD Automated payment order single/bulk Automated payment order single/bulk Invoice/ Invoice alarm/ Payment proposal Invoice/ Invoice alarm/ Payment proposal Payment Advice /Receipt Reconciliation Payment Advice /Receipt Reconciliation DD mandate Invoice finance Joint Nordic e-Invoice project and European interest (EU Commission, CAST, EBA) bring this on to international level

14. 13 September 2006Efficient e-government solutions supported by banks 14 Banks can make transition to e-invoicing: 1. Easier - C ustomers use the same interfaces as in traditional payment traffic - B uild on established e-banking habit and trust. 2. Cheaper - R eusing existing infrastructure for payments, identification, signature, file service communication etc 3. Secure - B anks have invested in strong security and are part of defense against money laundering and fake invoicing 4. Faster - E xisting customer base - S ales power to recruite corporate massmarket to e-invoicing

15. 13 September 2006Efficient e-government solutions supported by banks 15 TOP 500 SendersReceivers Entrepreneurs SME Entrepreneurs Banking network

16. 13 September 2006Efficient e-government solutions supported by banks 16 Nordic e-invoice Planned deliveries 2005 - 2006 Scheme rulebook Roles and responsibilities Scheme rulebook Roles and responsibilities Common e-invoice format and implementation guidelines Common e-invoice format and implementation guidelines Governance structure Cross-border pilots

17. 13 September 2006Efficient e-government solutions supported by banks 17 Savings Senders €25.000m ?? Receivers €140 000m ??? Savings Senders €25.000m ?? Receivers €140 000m ??? What can we do for Europe? 2005-6: Joint Nordic Electronic Invoicing Initiative - Just like payments 8% of EU GDP……. Savings Senders €2.500m ?? Receivers €14.000m ? Savings Senders €2.500m ?? Receivers €14.000m ? Total EU GDP

18. 13 September 2006Efficient e-government solutions supported by banks 18 Nordic approaches... Plans and actions taken in all four Nordic countries Danish government outlawed paper invoices from March 2005 Swedish public sector promotes electronic invoicing – both munipalities and central government offices – regulation under concideration Norwegian public sector plans to utilize country–wide BankID Finnish government building on open standards adopted in the private sector and takes the volontary approach. E-channel is elementary part of designing procurement and service processes

19. 13 September 2006Efficient e-government solutions supported by banks 19 Thank you! erkki.poutiainen@nordea.com