Managing Innovation of Payments : A Study of Regulatory Compliance Within Swedish Banking

Sammanfattning: This study investigates challenges that emerge for Swedish incumbent banks when pursuing compliance with IT security regulations, while simultaneously striving towards innovation in order to maintain market competitiveness in terms of digital payment service offerings. As competition increases within the payment service industry, developing innovative services becomes increasingly important. At the same time, it is essential that these solutions maintain a high level of IT security, both in terms of the preservation of customer trust as well as in terms of compliance with financial regulations. Consequently, the aim of this study was to contribute to research from an incumbent banking perspective, where theory together with a qualitative case study has revolved around the topics of technology, compliance, and innovation in the pursuit of identifying key challenges. The study included a series of interviews with respondents within banking, IT security, and compliance management. This resulted in three principal challenges regarding compliance and innovation within payment services at incumbent banks, along with proposed actions to be taken. Firstly, the necessity of incrementally transitioning from legacy infrastructure towards modernized platforms was established. Secondly, banks are encouraged to make trade-offs between regulations and deploying new products and services. Finally, for banks to engage in communication and collaboration within the organization as well as with regulators can facilitate compliance as well as promoting harmonization of regulations.