Successful mobile payment platforms, which meet demand for non-cash peer-to-peer transfers, show that Nordic banks' strategy for resisting competition from new fintech entrants by collaborating and innovating themselves is indeed working, according to Moody's

In a recent report compiled for its clients, the ratings agency noted that the Nordic banks' early large-scale adoption of digital banking channels has also improved cost efficiency.

The sector had an average cost-to-income ratio of 45% in 2016, compared to a European average of 67%, and lower cost-to-asset ratios than European peers.

The payments market is set for further transformation as a result of the EU's updated Payment Services Directive (PSD2), which will force European banks to provide third-party access to customers' online accounts and will lead to the creation of new payment service providers.

Norway's DNB Bank ASA (DNB), for example, launched the 'Vipps' mobile payment app in May 2015 to protect its payment business from potential competition from rival Nordic platforms.

It spun it off early this year, with 106 Norwegian banks taking an aggregate 48% stake in the entity.

It now has almost 2.6 milllion individual users in Norway, about half the country's population, and more than 30,000 corporate customers.

'Swish', launched in 2012, was developed jointly by six banks: Danske Bank, Svenska Handelsbanken, Länsförsäkringar Bank, Nordea Bank, SEB and Swedbank AB. As of May 2017, Swish had 5.5 million users, just over half the Swedish population, and handled transfers of SEK11.6bn (£1.09bn, €1.22bn).

"Nordic banks have joined forces to create a shared digital ecosystem and promote adoption, sidelining potential disruptors," says Niclas Boheman, Assistant Vice President and Analyst at Moody's.

"While Vipps and Swish may indirectly erode banks' traditional revenues, such as card fees, they keep customers within the "walled garden" of a single digital ecosystem, creating opportunities to sell other products."

"With such wide adoption of Vipps and Swish across the Nordics, merchants have a strong incentive to sign up to the platforms, creating opportunities for the two entities to sell them targeted services, such as payment processing and invoicing," says Alexios Philippides, Assistant Vice President and Analyst at Moody's. "This can allow the banks to offset lost card-related revenue."