How to kill financial self-determination?:

“Überlassen wir den Techgrößen der Finanzwelt die Macht”

Why it is necessary to think about the significance of European payment autonomy! 

In this episode of our podcast series „How to kill a great organisation“ Elisabeth Leyser spoke with Petia Niederländer, Director Payments, Risk Monitoring and Financial Literacy at the Austrian National Bank. She has her roots in banking and technology and joined the National Bank after several years of experience in finance. In her career, the desire to see the big picture and change things in a positive way has always been paramount.

Dutch is concerned with how international payment systems are changing and what power relations are emerging, especially how they influence our daily and economic lives.

Payments are one of the most discussed areas in banking, driven by technological developments, Web2.0 , changing consumer behaviour and geopolitical developments. For example, the introduction of the euro has been instrumental in establishing electronic payments as an integral part of economic life.

Online interactions have become more and more over the years, but at the same time we have always built our economic life on relationships that have developed over the years. Originally, these relationships were very modest, bilateral or dual. With technological development, we have more diverse, much faster and digital relationships with each other.

Regulation and innovation: How does Europe secure its place against existing monopoly structures?

On the one hand, Niederländer sees this as a positive development, but notes that it has also created monopoly structures through large market players:

„…because these interactions are often dominated by the best or by those who can afford to innovate the most or who are fast enough to keep up with these developments.“

For Niederländer, it’s always about the balance between regulation and innovation: „how do we foster collaboration and networks in Europe so that existing companies can come together and gain market position to compete against large market players and existing power structures?“

Transparency and simplicity in handling convince consumers

What each individual can do is to promote transparency and demand transparency.

„We all have the right to know what we are paying with, where our data is and how it is being used“.

And this is where institutions like the Austrian National Bank play a very important role, because they can act as translators, but also as facilitators.

Niederländer names transparency as the most important prerequisite for successful change processes:

„Large social systems can be persuaded when you take the change processes back to the individual and that transparency, control and ease of use are restored.“

The full-length interview:

Elisabeth Leyser: Welcome to the MetaShift Transformation Podcast. In our podcast we look at what determines the long-term success of change projects. In doing so, we consider aspects inside and outside organisations. And we hear from experienced leaders, experts and entrepreneurs about what they think is most important for sustainable development and how they came to these insights. Today we are joined by Petia Niederländer, Director Payments Risk, Monitoring, Financial Literacy at the Austrian National Bank. After several years of experience in the financial sector, she joined the Austrian National Bank because she can make a difference there. Dear Ms. Niederländer, welcome. May I ask you to introduce yourself briefly right away?

Petia Niederländer: Thank you very much for the invitation. It is true that I changed to the National Bank in February last year and I am a career changer. However, my roots are in banking and technology. I studied investment banking and at the beginning of my career I was involved in IT and technology. Then my career led me via consulting to Erste Group, where I led Payments and Operations in the group for many years. At the same time, I was on the board of EBA Clearing, which is one of the largest payment infrastructures in Europe, and in recent years I have chaired the board. In my career, I have always been driven by the desire to see the big picture and to change things positively or to bring about change.

Elisabeth Leyser: Yes, that was obviously also a motive why you changed to an institution like the National Bank. Because there you can make a difference on a large scale. Where are you particularly moving to now with your job? What particularly occupies you there?

Petia Niederländer: I am particularly interested in how international payment systems are developing and what power relations are emerging. Or rather, how they influence our daily lives and our economic life. For years, payment transactions have been one of the most discussed areas in banking and there are good reasons for this. So the development of technology, keyword Web 1.0, 2.0 and others. As well as changing consumer behaviour and geopolitical developments, such as the introduction of the euro, have established electronic means of payment as an integral part of economic life. We have innovations that help us to lead simple lives or to act economically more simply and efficiently with each other. And these innovations also help Europe on the path of growth and stability. That is why the European Union has created laws to promote and develop these innovations, which have brought, among other things, the possibility for non-bank so-called payment service providers to offer payment services, but also to provide access to account data or simplified identification procedures. This is all very exciting and has led to billions of dollars of investment in fintechs and start-ups in the field of payments. However, these developments have not always changed market conditions; in some cases, they have even consolidated existing structures. And I am particularly interested in: What does autonomy in payment transactions mean for Europe and how can we achieve this in order to promote more social innovations and gain more benefits from them?

Elisabeth Leyser: That means that when you do your work now and make your decisions, what you are ultimately concerned with is that you can offer people a good basis for their payments on the internet in most cases. And that these payments and I find that particularly interesting, yes, actually one/ They have an impact on our lives. If you say that the billions invested in fintechs, the existing power relations rather in the innovation of fintechs, consolidate the existing power relations rather than create new opportunities and democratise the market, I say now, then it is actually particularly important to look there. How can there be a fair distribution in this context on the one hand, and on the other hand, broad access and access that is as barrier-free as possible for people to these technical possibilities. If you think about it now. When did you realise that these are actually critical issues? What do we pay with? How do the payment systems work? And also in whose hands are these payment systems?

Petia Niederländer: In recent years we have more and more online interactions. We have always built our economic life on relationships and they have developed over the years. Originally, these relationships were very bilateral or dual. People stood opposite each other and always had very clear relationships, both in economic terms and in terms of payment through cash and so on. Through technological development, we have more diverse, much faster and digital relationships with each other. Just as an example: If you look at social media we have at least a pandemic, the feeling that we are online all the time and we can keep in touch with friends and relatives easier and faster because of that. We can look at things, gather information, like, like, hide things. And so on. And that happens very, very quickly. And when you look at this development, you realise that, on the one hand, it’s a very good development, because it’s all much more practical and you have access to much more information. But at the same time, when you look at payment transactions, you understand that you are actually building a kind of monopoly structure, because these interactions are often dominated by the best or by those who can afford the most innovations or who are fast enough to keep up with these developments. In this case, these are Big Techs or companies that are located with technology. So classically Apple, Facebook, Google are mentioned, so the fibre optics of this world. But also there are big payment processes that enable this whole very fast, very user-friendly interaction in the background and the number of investments and the number of iterations that are necessary to keep these processes running are so high that often small companies don’t even have the possibility to compete or to stay in the market in the long term. And that has led me to look more and more into the topic and to see whether these investments or incentives that we are providing are actually producing the right output and whether we can do something to actually make innovation in Europe better and with more benefits for us as a region and for us as a society.

Elisabeth Leyser: Okay, that was very interesting and quite a lot. I’ll try to summarise it a bit for our listeners, but also for me. The one thing I understood is that the development is actually going there, which is in many cases on the internet anyway, that you can say: „The winner takes it all“. That means that those who are already very strong and well-positioned also manage to innovate the fastest and to retain the most people. The people, by that I mean payers, but also of course providers, who as merchants depend on the payment systems being made available. And the second thing you said is that we might be applying the wrong incentives in Europe to enable innovation in Europe as well. Did I understand you correctly, with these two focal points that I have now tried to work out?

Petia Niederländer: Yes, that is how it is in Europe. We have a lot of incentives to promote innovation. However, these innovations do not scale, but often end up with the companies that are founded then being bought up by existing participants or even the companies are founded in such a way in order to be bought up. They take their cue from these Big Techs and the market position they have.

Elisabeth Leyser: That means that they experience that start-ups are founded with a view to finding a big tech that wants to buy them and that the founders already have, how shall I put it, the business model.

Petia Niederländer: That’s exactly how it is. That is a very common starting point for such start-ups.

Elisabeth Leyser: But that actually means that the system, as it is now, if you just let it run, will perpetuate itself. In other words, nothing will change because the payment flows that arise will simply reinforce what is already strongly established. And that means that this is actually a development where a form of dependency is created. And we are currently experiencing in everyday political life how easy it is to overlook a dependency and how unpleasant or dangerous it can be. And I think it’s a bit worrying that the market works like that. What do you think? Or what possibilities and levers do you see for exerting influence and perhaps interrupting this automatism and controlling it better?

Petia Niederländer: From my point of view, it is always about the balance between regulation and innovation. So far, we in Europe have focused on creating regulation to promote innovation, at least in the start-up phase. I think it is necessary to think about the value of so-called European payment autonomy. And how do we create collaboration and networks in Europe so that existing companies can join forces and gain market position or market size to be able to compete with big techs or with existing power structures? Because, as a comparison, the two biggest payment methods are card methods, Visa and Mastercard. They have a market capitalisation of about 740 billion US dollars. So Visa is number 13 in the world with 420 billion and Mastercard is number 23 with 320 billion US dollars. In comparison, a very big European bank, like Deutsche Bank for example has a market capitalisation of only 20 billion. And if you want to look in Austria, one of the biggest Austrian banks, Erste Group, has a market capitalisation of 11.5 billion. So the orders of magnitude are quite different, quite distorted. And from my point of view, incentives should be created so that companies in Europe work together to create innovations. Of course, competition is important. You don’t want to promote monopoly structures. But you would have to make it possible for the companies in Europe to join forces on strategic issues and actually raise enough capital and investment volume. And the second thing that every individual can do is to promote transparency and demand transparency. We all have the right to know what we are paying with, where our data is and how it is being used.

Elisabeth Leyser: Okay. That means that change is actually necessary on two levels. One is the behaviour of the financial institutions in the finance of the companies in Europe, that a willingness and ability to cooperate is developed. And here, Europe could possibly intervene in a controlling way, as you said, through appropriate incentives, in order to create a balance with non-European providers in the area of payment transactions. And the second thing is, and I find this very interesting, because I think this is even more challenging. Change is actually particularly challenging when you can’t even address people personally, as in the case of your own payment behaviour or the payment behaviour of people, so it’s even more challenging than, for example, within an organisation. And what you said transparency promotes and demands. That means that on the one hand, from my point of view, it is awareness-raising work among people. I must honestly say that I have never given much thought to the payment channels I use to pay for something on the internet. I took it for granted to use my credit card, for example. And on the other hand, to say that it is my right to know how or through which channels my money flows. Did I understand you correctly?

Petia Niederländer: Yes, that’s right. Yes, we should raise people’s awareness that they are in control of their own finances. So financial education is very important, but also that they pay attention to their payment behaviour or also the data that you give away with it – really care about what happens and have that under control. People deserve to feel that they are in control of their finances and their data. And this is where institutions like the Austrian National Bank play a very important role, because we can act as translators on the one hand, but also as facilitators. We can show data about existing structures, we can convey information without giving the feeling that you are being influenced from the inside. We are a neutral institution and we can use our position here very well. And on the other hand, we can of course create transparency through our data and through our position by analysing the market participants, comparing them with each other and making this data available for the economy so that the economic participants also make the right decisions about which means of payment to use.

Elisabeth Leyser: Yes, I think it is very much about information, but also about what you call financial education. I sometimes have the impression that it is very difficult for many of us to understand how the system works. The moment we enter these algorithmic environments, there are also very rapid exponential developments, such as how a shift in power develops, for example. And I believe that these things simply have to be made better known. How can the National Bank or you in your function at the National Bank support this? In the area of financial education and digital education.

Petia Niederländer: We definitely want to create awareness that everyone is interested in their finances, that everyone has the feeling that they can and will get information when they need it. And then we also want to create a central place, let’s say a repository, where if someone has a question, they can then enquire and find answers. This is part of the national financial education strategy, which was developed together with the Federal Ministry of Finance and where we are looking to create such a repository or portal, a central place where people can get information about different financial education or financial topics, not only education. On the other hand, if we stay specifically with payment transactions. We definitely want to show this whole structure and system that you mentioned in a simplified way and really illustrate it. Although all of us pay by card or transfer our electricity bill. There are now so many different means of payment or electronic means of payment that we often don’t even know in the background what is happening and why certain transactions are rejected, why certain transactions take as long as they do. What happens to my money when I press the OK button? And this is where we see our role, that we present this information in a more transparent way so that customers or people can actually stay in control and decide. Does she want to use a certain payment transfer or payment method in certain situation or maybe she prefers something else? So the choice has to come back to the consumer, so to speak, and not just be suggested yes or not just be pre-determined, so to speak.

Elisabeth Leyser: Okay, I think this is something that is actually emerging as a necessary change in several topics right now. That we have to communicate and interact with the people, the citizens, the users more at eye level. And in this context I would like to ask you. We actually come from the field where we shape change within organisations, accompany transformations and have of course already come up with various mechanisms. If you were to give our listeners a recommendation from your very, very broad perspective, what should one pay particular attention to if one wants to implement changes in a larger environment, but also in a company, and really bring about success?

Petia Niederländer: I think it is very important to have transparency. What is actually happening and where do I want to go? What do I want to achieve? In payments, it’s about this power relationship between the big masses versus the individual. To bring about change there, you would really have to convince the big masses and show the transparency so that it is credible for every individual. But I believe that even in large companies it is about this transparency and about the self-conviction of each individual. That they know where they are going, that they know that this process of change is not random, but conscious and, so to speak, „I’m in control of it“. And that one feels that individual actions have an effect. This self-effect is particularly important and I trust that even large social systems can be convinced if the processes of change are led back to the individual and this transparency, control and simple handling are restored.

Elisabeth Leyser: Thank you very much. That was a very, very nice conclusion for me. I heard you say it’s about self-efficacy. And you believe that large and small social systems can be changed by first creating transparency and then also giving people the choice and allowing them to be convinced that the path is the right one. And now we have already reached the end of our podcast. Thank you again for a particularly interesting conversation on a very special and challenging topic. And to you, dear listeners, thank you for listening. If you enjoyed the episode, we would of course be delighted if you recommend us to others or perhaps subscribe to our series. And a five-star rating makes us happy too. We’re always bringing new, exciting interviewees onto our podcast and hope you’ll join us again next time to hear even more about the topic of transformation change change. I look forward to hearing you again. Goodbye!