3 Reasons the Nordics are a powerful test bed for fintech innovation

By Sarah Gill | 4 April 2016

With the first Money2020 Europe kicking off in Copenhagen it is unsurprising that speakers at the fintech conference are talking up the credentials of the region for nurturing startups and fintech companies. But it is notable that the founders of the Las Vegas conference picked a city in the Nordics for the inaugural Money2020 Europe show, rather than the more obvious choice of London. It points not just to the fact that European fintech is bigger than the UK, but to the Nordics’ proven strength in nurturing businesses in this space.

Read our Payments R(E)volution magazine with more content from Money2020 Europe here.

From established players like Tradeshift in Denmark that handles business processes including payments for enterprise or iZettle (mobile payments) and Klarna (e-commerce check-out) in Sweden to budding startups across the region, the Nordics are a key source of fintech innovation in Europe. What's more, the vertical appears to be growing on investors' radars: according to research by the Nordic Web, fintech attracted more venture capital investments than any other vertical in the Nordics last year, suggesting that VCs expect there’s plenty more to follow.

With an estimated 3,750 attendees assempled in Copenhagen to hear what's next for European fintech, here’s three reasons why the Nordics are a good testing bed for innovation in finance.

1. Tech savvy populations

First off, the dream of cashless society is well and truly alive in the Nordic cities, as anyone that’s gone to Stockholm or Oslo recently can attest. In Sweden, the shift away from cash is happening so fast that its central bank recently stepped in to make sure remote communities and certain demographics don’t get left behind in fact. Adoption of P2P transfer and payments services like Swish in Sweden or MobilePay in Denmark is strong and growing fast as consumers pick fast, mobile solutions over familar options. This all means that consumers especially are open to digital finance tools and innovation around the way money moves, which is good news for early-stage startups testing products.

Speaking on the Nordic Power panel, the deputy CEO at Nordea bank talked about the rapid pace of change in Nordic payment habits: “We’ve seen one wave of change – the first is retail oriented one, which is happening as speak among our Nordic customers, who are moving at a speed never seen before from branch to mobile,” sais Torsten hagen Jorgensen. “Advisory sessions are moving with same speed from branches. We are in the midst of major change.”

2. Small populations drive collaborative climate

Then there's the tiny population. In total, the Nordic population is less than 30m. Speaking on the same panel, the CEO at Nordic payments and card company Nets said this actually drives closer collaboration in business and between financial institutions across the region. He cites co-ordination around the shift to mobile finance and more recently to contactless as examples of ingrained collaboration in the region’s financial system. That has galvanised the shift to digital finance and created a market that is increasingly receptive to new payment technologies.  

“This is one of the most digital societies in world and that also relates to the finance industry. That’s exciting of course, but we need to understand why that is," said Nilsson. "In the Nordics we see some of the highest users of non-cash payments, as well as a very vibrant e-commerce and mobile payments market. That’s because since 1960s there has been a clear co-operation between market players. We have common interest in coming to together to build future solutions of payments.

“It’s one of key reasons the Nordics is a great market opportunity and place to come together to discuss future of payments and finance.”

Another advantage for Nordic fintech companies is that, coming from small populations, the need to "think global" from day is baked in from the early stages.

3. History of building tech companies

Finally, the Nordics have a powerful history of building global brands. Carlsberg, Lego, IKEA for example are just three examples of companies built in Nordic companies that are household global names. That's also true in technology of course with Nordic companies changing the way we communicate (Skype), play (Rovio, Supercell, King) and listen to music (Spotify). Home to one of Europe's most highly valued companies (Klarna), Stockholm and the wider region is proving its also a force to be reckoned with in fintech. 

Like many other cities, Copenhagen is keen to build its profile as a place to build fintech companies. In his opening remarks at the conference, the city’s mayor Frank Jenson described the decision of the Money2020 founders to base its first European conference in Copenhagen as a “huge” opportunity for Denmark, citing the success of Danish tech companies like Zendesk, Trust Pilot, Just-Eat and Skype (though many cities claim kudos for that one). 

“Copenhagen has a vibrant and growing digital startup scene, we want to do even better to secure the best conditions for startups, foreign investment and businesses,” said Jenson. “We have great framework for testing payments and other financial technologies. Danes have a high degree of readiness to new technology – just look at the widespread adoption of mobile payments.”

Starting out in Las Vegas four years ago, the US show attracted more than 10,000 attendees last October. This is the first year the conference is running in Europe, pointing to growth of the region’s fintech ecosystem over the past few years. It’s a coup for Denmark, but also the wider Nordic startup scene, pointing a spotlight at the region’s history of producing paradigm-shifting technology companies.  

Read our Payments R(E)volution magazine with more content from Money2020 Europe here.

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