Tom Holgersson, a senior fintech advisor based in Enterprise Ireland’s Stockholm Office, describes why Irish fintech is thriving in the Nordic region.
“Similar to the Irish approach, the Nordic financial services industry is quite innovative. They are willing to both leverage and embrace new technologies to drive revenue and reduce cost,” says Stephen Florence, Account Director at Fenergo.
Irish fintechs have been active in the Nordics for years, with an increasing number targeting growth in the region. Success has been built on shared attitudes to innovation and the potential of both markets to develop as globally significant fintech hubs.
Both benefit from thriving tech scenes. Sweden is second only to Silicon Valley in terms of the number of unicorns – multi-billion-dollar tech companies – produced per capita. According to data from OECD, Sweden has 20 start-ups per 1,000 employees, compared to five in the US. Companies like Spotify, King and Skype are household names.
Impressive growth of Irish fintech
Over the past few years, the Irish fintech sector has grown impressively. Since 2014, Enterprise Ireland has invested in more than 80 fintech start-ups. That portfolio generated more than €1 billion in revenue in 2016.
In the Nordics’ rapidly growing sector, Sweden stands out. According to Nordic Tech List, Swedish companies attracted over 75pc of total fintech capital invested in the region in 2017. Well-known fintechs include Klarna, iZettle, Trustly and Tink.
Established Irish players, including Fenergo, Monex, Rockall Technologies and Corvil are known to many in the Nordics. Meanwhile, a new breed of companies is emerging, which includes Ammeon, Boxever, Cambrist, Leveris, AQMetrics and Know Your Customer.
Innovative solutions for global issues
Innovative fintechs have focused on solving problems across the global financial services industry. The mix of companies blending finance and tech has supported disruption, advancing new ways to understand, test and prove adherence to compliance regulations.
Solutions span a range of applications across regulatory reporting, risk management, Know Your Customer (KYC) compliance, anti-money laundering, secure messaging and transaction monitoring. The biggest opportunities stem from banking and finance regulations that apply globally.
Fenergo’s ability to solve challenges for global banks is proving an advantage in the Nordics. Stephen says, “The Nordic region has multiple regulatory jurisdictions, languages and currencies. Some form part of the European Union – Finland adopted the euro, Denmark and Sweden did not and neither Norway nor Iceland are members of the EU. This poses complex compliance challenges for financial institutions that are operating across the region. As we have a rules-based engine, we can support multiple regulatory demands with one instance of the solution. If we look at our current client base, most are global institutions who have experienced and solved the same challenges that financial institutions in the Nordics are currently facing.”
Beyond regtech, developments in big data, payments and cybersecurity are compelling.
Like other industries, banking faces the opportunity and challenge of leveraging real-time data and becoming more customer centric. Analysing large volumes of data will enable banks to better predict and tailor solutions for individual customers.
The area of payments is also creating challenges, with the landscape facing disruption due to changes in the value chain. Payments regulations are putting banks’ revenue under pressure and removing barriers to entry, as changes in customer behavior and increasing digitalization opens the field to new local and international players. Innovative fintech solutions are driving banks to offer customers more engaging and interactive services, with most exploring options in mobile wallets, loyalty cards, blockchain, account aggregation across multiple banks and foreign exchange services.
Regtech & Cybersecurity
The importance of cybersecurity continues to rise, as threats become more sophisticated. Most banks face challenges in malware, phishing attacks and fraud, complicated by the growing importance of customer centricity – providers must strike a balance between ease of use and security. Innovative products are emerging in biometric security, customer identification tools, malware detection and pattern recognition.
Enterprise Ireland has published a regtech white paper, which explores solutions beyond the customary compliance and regulatory requirements. It shows how regtech enables transformation across business functions by better utilising data and insights.
Download the white paper here.
This article was originally published in the Sunday Independent.