Nordic banks are grappling with the twin burden of ageing core infrastructure and spiralling compliance costs, with spending on card scheme mandates and PCI compliance often costing millions per banking group annually.
As customer expectations rise and investors demand stronger performance, the pressure to modernise has never been greater — yet the path forward is far from straightforward.
Tieto recently explored why Nordic banks must modernise at pace.
Consolidation looms as competition intensifies
The scale of the challenge is illustrated by projections for Denmark’s banking sector, where some industry observers estimate the number of banks could fall to as few as 25 by 2035 — roughly a third of today’s total. Ongoing consolidation through mergers signals just how difficult the operating environment has become for institutions of all sizes.
Most banks are already on the modernisation journey
Research published eighteen months ago by Tieto found that eight in ten European banks are at some stage of a modernisation programme, with Nordic institutions firmly among them. However, Tieto Banktech director of sales for Denmark Nikolai Kjaersgaard Andersen cautions that the approach taken matters enormously. Relying on too many vendors raises the risk of systemic friction and inefficiency, while moving too slowly risks being left behind entirely.
Modular card platforms offer a way forward
According to Andersen, the answer lies in modular card issuing platforms capable of enabling modernisation without adding complexity. These systems allow banks to bring new card products to market quickly without dependence on legacy technology, accelerating innovation while keeping risk and cost in check. Tieto Banktech’s Cards-as-a-Service (CaaS) platform is currently being deployed by Nordic banks of varying sizes to overhaul how they deliver card programmes — opening up products and services that were previously out of reach for smaller institutions.
What CaaS delivers in practice
The CaaS model involves partnering with a single specialist provider to manage all aspects of payment card issuance, from card production and transaction processing to network integration and regulatory compliance. Banks can offer customers physical and digital debit, credit, and prepaid cards, alongside features such as instant issuance and mobile wallet integration — all through one streamlined solution.
Tieto Banktech points to a recent example in which it reissued more than 300,000 cards within twelve weeks following the acquisition of one Nordic bank’s card portfolio by another, achieving a near-zero error rate throughout. Tieto Banktech director of sales for Denmark Nikolai Kjaersgaard Andersen cited the client’s own assessment of the project: “the process was carried out without friction, thanks to the trust we placed in your decades of experience to guide us.” The firm also manages a portfolio of around 5 million cards processing 200 million transactions monthly for a Tier 1 Nordic bank via the same platform.
Compliance, scalability and competitive edge
Beyond speed to market, the CaaS model reduces the need for in-house infrastructure and specialist staff, helping banks control operational costs. It also provides access to expertise in transaction security and regulatory guidance, lowering the cost of compliance with frameworks such as PCI DSS and the forthcoming third Payment Services Directive (PSD3).
Crucially, the platform allows banks to scale their card programmes as they grow and to customise products for different market segments, whilst maintaining consistent branding. New features — including real-time in-app card controls, mobile wallet integration, and data analytics — can be added quickly to keep institutions competitive as customer preferences evolve.
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