Danske Bank's MobilePay service, Finnish OP Financial Group's Pivo system and the Vipps payment service provided by a consortium of Norwegian banks have agreed a merger in the face of growing global competition. Vipps will own 65 percent of the new entity, which will create a common technology platform on the basis of the current Vipps system. Rune Garborg, the CEO of Vipps, will become CEO of the merged business.
The merger will create a digital wallet serving 11 million users and over 330,000 physical and online shops. It will be one of the largest bank-owned mobile payment providers in Europe. The parties aim to strengthen product development and innovation while providing the best features of each of their existing systems. They plan to invest heavily in e-commerce, which has been growing rapidly in recent years, and ensure access to mobile cross-border payments.
The banks behind Vipps will own 65 percent of new parent company Vipps AS. Danske Bank will own 25 percent and the OP Financial Group will own 10 percent. The reason for the high Norwegian share is that the banks behind Vipps cover almost the entire Norwegian banking sector.
Glenn Soderholm, head of personal and business customers at Danske Bank, said MobilePay has been successful but it is very expensive to compete with global rivals in the sector. MobilePay needs to become part of something bigger to gain scale and pool investments for innovation, he added. He said Vipps is the "perfect match" for MobilePay, and the Pivo service from Finland’s largest bank, OP, will add strength. Danske Bank will continue to be a dedicated co-owner of the new business.
The merger is expected to result in a one-off gain for Danske Bank of approximately DKK 400-500 million. The merger is conditional on approval by the relevant authorities, including the European Commission. Final approval is expected in the second half of 2021 or in early 2022.
The MobilePay brand will continue in its current markets. Most personal users and businesses will therefore not notice any changes to their use of MobilePay, but will see new services become available at a faster pace.
Claus Bunkenborg, CEO of MobilePay, said the partners are open to dialogue with other leading banks and platforms. The potential participation of other banks may underpin the ambition to create a strong European player in the payment area, he added.
The merged business will create its common technology platform on the basis of the Vipps system, which is independent from the owner banks, and runs fully in the public cloud. The shared technical platform and strengthened development capabilities will make it easier and faster to bring new products and to market.
Rune Garborg, the current CEO of Vipps, will become the CEO of the merged business. Bunkenborg will become a member of the executive board. Kjerstin Braathen, current chairwoman of Vipps and CEO of the bank DNB will chair the board of directors of the new company. There will be no redundancies as a result of the merger of Vipps, MobilePay and Pivo. MobilePay’s locations in Helsinki, Copenhagen, Brabrand and Vilnius will continue unchanged.
