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Irish fintechs target growth in digital-savvy Nordic nations

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.

“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.

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. OECD data shows Sweden has 20 startups per 1,000 employees, compared to five in the US. Companies like Spotify, King and Skype are household names.

In recent years, the Irish fintech sector has grown impressively. Since 2014, Enterprise Ireland has invested in more than 80 fintech startups. That portfolio generated more than €1bn 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 fintechs have focused on solving problems across the global financial services industry. The mix of companies blending finance and tech has supported disruption with new ways to understand, test and prove adherence to 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.

Fenergo’s ability to solve challenges for global banks is proving an advantage in the Nordics, said Florence.

“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,” he added.

Beyond regtech, developments in big data, payments and cyber-security are compelling. 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.

Payments regulations are also creating challenges, putting banks’ revenue under pressure and removing barriers to entry, as changes in customer behaviour and increasing digitalisation opens the field to new local and international players. Innovative fintech solutions are driving banks to offer customers more engaging and interactive services.

The importance of cyber-security continues to rise, as threats become more sophisticated. 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 recently published a regtech white paper, which shows how regtech enables transformation across business functions by better utilising data and insights.

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