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Nordic fintech becomes a significant global player

The Nordic region accounted for three of the 10 biggest financial technology deals in the first half of 2018

The Nordic region created three of the top 10 global financial technology (fintech) deals in the first six months of this year as Europe proved the dominant location for investment, according to research from KPMG.

The buyouts of Nets in Denmark – the third biggest global deal – and iZettle and Nordax Group in Sweden, respectively the fifth and 10th biggest deals, accounted for $8bn spent in the region.

Overall global spending on fintech was $57.9bn in the six months, comprising 875 deals, according to KPMG. Europe dominated with a total of 198 deals worth $26bn, compared with £16.8bn in Asia and $14.2bn in the US.

The Nordic region is setting itself up for fintech investment. It has an ecosystem of startups that benefit from easy access to IT skills, and consumers who are keen to use the latest technology to spend money and manage their finances.

For example, a recent study by the Federal Reserve Bank of San Francisco found that the use of cash is continuing to rise in all the world’s economies apart from Norway and Sweden.

David Bannister, analyst at Ovum, said the Nordic region has always been held up as an example for others to follow in financial technology. “There is a high degree of collaboration between the governments, regulators, financial institutions and businesses, and a history of technical innovation – Ericsson, Nokia, Skype and Spotify, notably,” he said.

“In payments, the Nordics had real-time national payment infrastructures before the rest of Europe, so innovation in e- and m-commerce building on that has been a focus for the new generation of fintechs, as it has been in the UK and we are now seeing in Singapore and other territories that are modernising their infrastructures.”

Apart from Norway and Sweden, where the amount of currency in circulation (used as a measure of cash) has declined, in the other 40 economies it has either matched GDP growth or exceeded it.

Read more about startups in the Nordic region

  • Traditional Nordic corporations are starting to take advantage of the vibrant startup community in the region, and they are changing the way they think.
  • Swedish bank Nordea has continued its policy of financial technology collaboration by forming a partnership with Stockholm-based payments startup Betalo to expand its mobile offering.
  • Consumer-focused technology is just the tip of the iceberg in the Nordics, with some of the most exciting startups in the enterprise sector.

Across the Nordic region, private equity firms are increasingly interested in startups and maturing IT enterprises developing products in areas such as digital finance and artificial intelligence (AI).

The rising level of capital invested by private equity firms in IT startups mirrors a parallel development in the region, with banks, including SEB, Danske Bank and Nordea, forming equity-based partnerships with tech enterprises that specialise in fintech.

Lars Malmberg, global head of business development at Danske Bank, recently told Computer Weekly that the bank collaborates with fintechs to develop new customer services within open banking, and is actually moving into fintech ownership.

“Our acquisition deal with Spiir is the first time Danske Bank has become a shareowner in a fintech,” he said. “This is something new for us, but certainly not a one-off.”

Read more on IT for financial services

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