The Fintech industry is no stranger to global crises. From the 2008 financial crisis to the COVID-19 pandemic, Fintech has been a saving grace for the relationship between people, their money and consumer markets. Across venture capital, private equity, and mergers and acquisitions, the global Fintech industry is said to be around 105 billion USD.
While some may turn their sights to Silicon Valley or Singapore when thinking about disruptive Fintech technology, the next star in this show is actually Scandinavia. Being a nearly complete cashless society and home to some of the world’s most educated and digitally adoptive populations, the Nordic nations are a breeding ground for Fintech solutions that work.
From consumer-led lending to open banking, Fintech is answering the call of a need unearthed by the pandemic for more connected and seamless financing. Below we look at five of the biggest names in Scandinavian Fintech, expected to make their mark on the global finance market.
Norway-based Axo Finans is a leading digital broker for personal lending. Through a single application, Axo Finans enables you to apply to several banks simultaneously for a loan and then receive multiple offers, allowing you to select the loan with the best rate.
The success of Axo Finans is in part due to its contribution to the consumer-led trend gathering speed in the Fintech and banking industry. Through disaggregating the services and products that legacy banks have traditionally offered, Fintechs like Axo Finans put the consumers in the driving seat of their relationship with money. When a customer can clearly see the different rates offered with loans from various banks, they’re free from being tied to one particular bank.
Earlier this year, Axo Finans acquired the established Danish loan app start up, LendMe. By expanding its already loyal customer base, Axo Finans has established itself as a real contender in the international lending market, particularly when there are so few consumer-led solutions outside of the Nordics.
Lenders like Axo can credit much of their success to good partnerships with affiliate marketers like Lånepenger.no and similar sites. These sites are often what you see when you google consumer loans services.
Klarna is a Swedish buy-now, pay-later company which counts celebrity Snoop Dogg amongst its shareholders. Klarna allows you to buy a product online and split the payment across three payments, from small purchases to high-end products from the likes of Michael Kors.
Online shopping became synonymous with home quarantine during the pandemic, driving global e-Commerce up to a value of 26.7 trillion USD in 2021. For Fintech, this has opened up plenty of opportunities to grab and problems to solve; from reducing the abandoned cart rate to enabling seamless cross-currency transactions to empowering consumers to gain a better overview of their finances, Fintech has been a rising star during the pandemic.
Klarna is no exception. This privately-owned Fintech was recently valued at around 5.5 billion USD and is expected to see stock market floatation within two years.
Another Swedish start up making waves in the global finance industry is Tink, an open banking platform. Tink provides an API from which anyone, from large banks to the smallest start ups, can build an app or other service connected to a customer’s bank account.
Open banking is becoming a pinnacle of today’s rapidly evolving formal economy. So much so, that all European financial institutions are mandated to provide an open banking solution. However, there currently is no standardisation of how this is to be offered; Tink solves this problem by integrating with 3,400 banks and financial institutions.
Several major players in the finance world have expressed interest in buying Tink, including Visa which publicly announced its plans to acquire the company for 2.15 billion USD. The marriage of Visa’s proven infrastructure and Tink’s API is expected to accelerate the adoption of open banking in Europe.
A mobile payment system from Norway, Vipps, has become a firm part of a Norwegian’s everyday life. The app connects with both Norway’s electronic identification system, BankID, and the national payment system, BankAxept, to allow users to send and receive money, both privately and for consumer goods.
Over 75% of Norway’s population use Vipps and the Fintech’s name has even become a part of the nation’s vocabulary: to “vipps” somebody is to send them money. Contactless payment globally has been accelerated by COVID-19, and Vipps met that trend in Norway, with it becoming commonplace to pay for goods in shops with the app, alongside other mobile payment solutions.
As the trend continues to grow internationally, Vipps has joined forces with two other Nordic mobile wallets, MobilePay and Pivo. Together, the merge caters to 11 million users across Norway, Denmark and Finland.
Biochips, the technology inserted into people, is an honourable mention on the list because of its disruptive potential. Biohax International, a small Swedish start up, was the original creator of NFC chips to be inserted into a person’s body, allowing them greater control over their digital identity.
Thousands of Swedes have already been ‘chipped’ by the company and have the ability to use their hand to purchase goods with compatible payment systems, open locks and store other information about themselves. If the technology gains popularity on the international market, then it could significantly disrupt the Fintech market by making many of the existing services obsolete.
Biohax International is currently on hiatus but is expected to resume operations post-pandemic.
The Nordic Fintech storm
The Fintech companies mentioned are just a handful of the flurry emerging from the Nordics. Where Fintech has seen a rise globally, with a global market value of over 100 billion USD in 2020, Scandinavia has long been a hotspot for successful Fintech solutions.
The European market is starting to offer up payment and lending technology that puts the customer first and maintains the relevance of legacy banks. However, Nordic players offer more standardised, ahead-of-the-game solutions that have already been tried and tested. The rate and direction that the global financial market takes may well be led by the Nordic Fintech storm on the horizon.