Copenhagen Fintech 2019 epaper

2019

COPENHAGEN

Keeping Ahead of the Fintech Curve

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From Furniture to Fintech - Nordic Design is a competitive advantage

The innovation paradox: Just because we have the ability to innovate doesn't mean we have to

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Women in Fintech - because it's better for business

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A year from today the future is already the past: AI and fintech have taken over the global financial markets.

It is said that making predictions is difficult, especially about the future.

But if you don’t try, you’re already falling behind.

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The only global law firm in Denmark

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Partners We would like to thank the following sponsors and advertisers for contributing:

About Copenhagen Fintech 2019 is produced by Reach Media in close cooperation with Copnhagen FinTech. This magazine helps fintech professionals navigate in the Danish and Nordic fintech ecosystem. We thank the sponsors, sources and the editorial team from TechSavvy Media for contributions.

Colophon: Editor in Chief: Jakob Lindmark Frier Journalists: Sebastian KjĂŚr, Ian Rummler and Jakob Lindmark Frier Layout: Kristoffer Lohse Published by Reach Media: Stian Faber, sf@reach-media.dk

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Content Keeping Ahead of the Fintech Curve Six of the most defining Danish fintech companies sees eye to eye on purpose and why the amalgamation fintech will soon be extinct.

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How Fintech Is Trending in Denmark

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Editorial: Why Fintech Matters

10-11 12-17 18-19 20

Partnerships Paves the Way for Expansion Nets on a Quest for European Scale

Copenhagen: The Nordic Capital of Asset Management and Fintech Digital Pension Savings Solution Will Help 325,000 Employees

21 22-23

Danish Fintechs Have Huge, Global Opportunities

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Partnerships Paves the Way for Expansion

25 26-27

DLA Piper - the Gateway to Global Fintech Success

Banks Were Not Made to Be Open

A Digitally Born Neobank Can Also Be Local Local brick and mortar branches are closing while global, digital-only neobanks are raking in customers.

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Banks Are Opening Themselves to Cross-Industry Collaborations

From Furniture to Fintech: The Competitive Advantage of Danish Design

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The Finance Sector’s Most Powerful Weapon Is Customer Experience

Danish design should be exploited when new fintech solutions are developed and launched.

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The Record-breaking Funding Year in Fintech

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Nordic Top Banks Are Staying Relevant by Investing in Fintech Startups

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The Doors Are Open for Anyone Who Wants to Invest

The Most Important Rresources in Digital Transformations Are People

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Dataism Is the Future Religion in the Financial Sector

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A Fintech Wants to Do All of Your Grocery Shopping

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Consumers Are Value-Driven – Retailers Should Be Data-Driven

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The Innovation Paradox Just because we have the ability to innovate doesn't mean we have to

48-51 The Future of Financial Institutions Will Require a Compliance Strategy

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53 Let’s Talk About the Next Big Thing in Payments In the near future, all of your transactions might be completed by using your voice.

Fintech Is Spreading to Every Sector – and This Scaleup Makes it Possible

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The Future is Biometric

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Three Payment Trends That Will Shape European Fintech

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There Is a Catch to the Cloud

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Incumbents Must See Digitalisation as a Silver Lining

Brace for Blockchain Impact

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Democratising Clean Air One Block at a Time

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Bias Drives Fintech Gender Gap

Will Quantum Computers Save us From the Next Global Financial Crisis?

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The Wave of Automation

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AI and Legislation Are Shaking up Bank Operations

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An Intelligent Mortgage Advisor Is the Human Side of AI

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The Nordics are leaders in gender equality, but not in the fintech sector.

It’s time to discuss unconscious bias, and bridge the gap in fintech, not just because it’s the right thing to do but also because it's better for business.

66-67 With the Digital Finance Revolution Comes Great Responsibility

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Finance Is Lacking Behind – Could Be the Solution for Greener Future

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Fintech in Emerging Markets is Not Disruptive – it’s a Vital Change

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Startups 2015

2016

2017

95 mio. DKK 246 mio. DKK 420 mio. DKK

2100 mio. DKK

2018 2015

2016

2017

Investments

2018

+ 200%

+ 2000%

Partnerships

Jobs

(Startup-Corporate)

(Startups) > 70 > 40

> 20 < 10

2015

2016

2017

2018

+ 600%

+ 200%

How Fintech is Trending in Denmark By: Jakob Lindmark Frier, Editor-in-Chief, Copenhagen Fintech Magazine

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ne year has passed since the last release of Copenhagen Fintech Magazine, marking an opportunity to take stock and look ahead. And what a year it has been. Among a host of highlights, Denmark saw its first fintech unicorn – as Tradeshift closed a record investment round, joined by Goldman Sachs.

By quite a large margin, the Danes managed to grab the throne from their Norse neighbours.

Yet, we have reason to pause and consider the old adage that ‘Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.’ It is important to keep in mind that, had Tradeshift’s monster round at 213 € not occurred, Denmark would be trailing Sweden.

Moreover, the dawn of fintech partnerships has arisen – particularly in Copenhagen. Like any other startup, reaching a critical mass of users is

crucial for fintechs. By entering into partnerships or white-label solutions with regulated organisations, the two have shown they can benefit immensely – creating win-win opportunities instead of fighting against each other. Additionally, many fintechs are faced with taxing regulatory demands, which often take more resources than a startup can afford. One effective solution we saw this past year was to partner with already regulated organisations to sidestep this process. In turn, the larger entities gained access to cutting-edge innovations.

Even so, it would seem that the definition of “partnerships” is up for debate, given that larger financial institutions simply used a startup’s products. Other than solving each others’ immediate pain points, the partnerships must be sustainable over the long-term – working on joint challenges as they emerge.

Overall, the number of fintechs in Denmark has increased, and the ecosystem has also increased the number of jobs. If current growth continues, by 2020 around 3400 new jobs will be created in the industry – including both startups and the more established industry. According to Copenhagen FinTech, calculations from Copenhagen Capacity show that an extra job within the finance and information technology sector creates 1.75 jobs in other sectors.

If fintech is to continue developing at the same speed, it must be on the agenda as a national position of strength. There is good reason to believe this is possible, as Denmark continues to create high quality, innovative fintech solutions, not to mention fintech has the potential to become a new export adventure and create growth and new jobs.

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Editorial

Why Fintech Matters By: Thomas Krogh Jensen, CEO at Copenhagen Fintech

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oday, Copenhagen and the old stock exchange has been taken over by fintech – at least for a while – as you can see from the cover of the 2019 edition of the Copenhagen FinTech Magazine. We gathered six amazing Danish fintech companies, representing 1.6 billion euro in valuation and more than 500 jobs created in Denmark, that exemplify what makes new Nordic innovation unique – the combination of technology and human-centred design. They solve real problems for real organisations and real people. Fintech matters, and for Denmark and Copenhagen, it has become a position of strength that we need to nurture and develop further.

Fintech is often seen as something (confined by conventional thinking) that only “happens” in the traditional industry verticals of financial services – banking, pension and insurance. Much of the technological innovation is still centred in the financial domain, where large incumbent organisations rule. However, this is rapidly changing.

We have moved from only focusing on competition to ‘coopetition’, and partnerships between fintech startups and the established industry are an increasingly critical vehicle for innovation. Startups are working on reducing cost and complexity, redefining the customer experience and increasing transparency. That journey, however, often makes them push and venture into other industries in search of new partnerships that can give them access to new distribution channels, sources of data and related customer problems that they can solve.

The consequence of open banking will be re-bundling of financial services in unique ecosystems, and we will see new non-financial marketplaces operated by players outside the traditional financial industry.

To discuss the benefits, fintech is not just about digitising money; it’s about monetising data.

Of course, this opens up another interesting conversation about ensuring the ethical use of data and are empowering the individual to be in control of his or her data. This situation provides an opportunity for the Nordics to make responsible data use a competitive advantage.

However, there is undoubtedly also a pull from other industries that are now beginning to see the potential in financial technology and how it enables them to accelerate their digital transformation.

Industry convergence represents the most fundamental growth opportunity for organisations, redefining the boundaries between sectors.

Agriculture can look to fintech solutions and technologies to solve some of farming’s problems.

We see fintech solutions support farmers in automating accounting and providing them with an overview and better understanding of their financial situation. Crowdfunding platforms enable them to fund new and more environmentally sustainable production. Blockchain technology helps the consumer see exactly when their food was grown, what sorts of pesticides and antibiotics were used, and how it compares to other products on the shelves. An educated consumer only needs her smartphone to determine which grocery item is the cleanest, healthiest and most ethical and environmentally friendly.

As the UN Secretary-General’s Special Advocate for Inclusive Finance for Development states: “Affordable, effective, and safe financial services

– savings, insurance, payments, credit, and more – can play a transformative role by fostering equitable growth and furthering vital development goals such as poverty reduction, job creation, gender equality, and food security.”

Fintech is accelerating the SDGs by making the world more inclusive and prosperous. Two billion adults – more than half of the world’s working adults – remain excluded from formal financial services. These populations, including women, low-income and hard-to-reach individuals, are often ones that are already marginalised. Being left out of the formal economy means that these populations are denied processes such as the extension of savings, credit, insurance and payment services. This is another area where we increasingly see fintech play an active role, which is something we will zoom in on at the Copenhagen FinTech Week in June.

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Banks Were Not Made to Be Open – Until Digitalisation Became Mainstream Digitisation and new technology presents banks with new challenges and opportunities. Although most stakeholders tend to focus on the challenges, banks have opportunities to grow and prosper, if they anticipate and strategically navigate change management.

By: Jakob Lindmark Frier

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n the 1990s, it was claimed that fintechs delivering a razor-sharp digital customer experience made banks look dusty and lumbering.

Now, tech giants are rapidly penetrating areas that had traditionally been home to financial institutions.

It is an open secret in the banking industry that they are weighted by legacy infrastructure. Research shows that a typical bank in Europe uses up to 80 per cent of its information technology budget on maintaining old systems – i.e. getting the same old engine to start again every day.

With such a large portion of the bank’s resources dedicated to maintenance costs, there is little room left to develop new solutions to meet the ever-changing demands of clients.

The question becomes: what will the banks of the future look like?

In the past it was genuinely incredibly difficult to deliver services at banking scale. But the introduction of cloud technology has made such a difference. Today, a quick glance at the services being offered across the financial sector demonstrates the power of partnership.”

Why is this agenda important to Nordea?

Ewan John MacLeod, Chief Digital Officer at Nordea

How has the digital development impacted the financial sector?

“It’s bringing a lot more choice to the sector. I remember just 10 years ago, ‘in-house’ was the only way development was done in big companies. You made your resource allocation once a year and stuck to it. I can recall sitting in budget meetings wondering ‘isn’t there another way – isn’t there a way we can do some internal development and leverage the capabilities of external partners too’?

"The financial sector was amongst one of the first industries to jump aboard the computing revolution, so it’s an industry that already recognises the power of technology. The challenge is selecting the right technologies, at the right time, to bring the very best experience to the end customer. 15 years ago, I might have experienced that sitting in a branch and marvelling as the advisor was able to create an account for me – right then and there – by typing into a Unix green-screen system. Now, the customer expectations are somewhat different. So it’s exceptionally important to carefully track those changing expectations and adjust accordingly."

How do you see the market for Banking as a Service develop in the future?

"The massive advances in technology make it possible and enable companies to specialise on specific parts of the value chain extending to the customer. I think we’ll increasingly see more specialisation across the financial sector, with companies doubling down on their areas of expertise.

It’s becoming so much easier, from a technical standpoint, to integrate. There remain some specific requirements for the financial sector when it comes to partnerships, especially in the context of security and data management.

I think banking-as-a-service is already happening in the context of changing customer behaviours and increasing technological capability. In the past, partnerships or the use of third-party services, was in the minority. That’s changing now, and I can foresee an exciting future for the finance sector in perhaps 5 or 10 years. In some cases, regulation could impact the trend towards banking-as-a-service – both positively and negatively."

How is the development of automation impacting Nordea’s core business and processes?

"We’ve been heavily active in the automation field. Just last quarter, our CEO Casper von Koskull reported that we’ve ‘robotised’ 38 processes using a mix of AI and robotic process automation techniques. Here’s another example: Our Nova Chatbot in Finland has reached roughly 25% instant resolution rate for incoming customer queries. In terms of quantifying what we’ve managed to achieve so far, our robots have the same capacity as 1,500 employees. It’s an area we will continue to focus on."

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advise. Regulations enable organisations to accelerate the open and digitised banking infrastructure, but what I really like about the legislation is that customers today have the right to protect their data. You must convince the consumer that you are creating something valuable to them – and that's what technology can do. If technology does not succeed, the customer can withdraw his or her data. It is the combination of legislation and technology that is quite interesting in this context. Free access to technology and free access to data will not end up in a good place.”

Why is this agenda important to Danske Bank?

Lars Malmberg, Group Head of Commercial Excellence at Danske Bank

How has digital development impacted the financial sector?

“When talking about banks of the future, regulation and technology must go hand-in-hand. The focus must be on solutions that are in the interests of customers. There is no doubt that when organisations gain access to customer data, they can create tailored products and services that are targeted to their needs, not to mention provide better

“This agenda has created better solutions for customers. It has, in a very practical way, created a development in mobile banking, where we provide more services and flexible solutions than we were able to 5 years ago. It has done a lot for us internally. The rise of digitisation has made us more open to partnerships and external innovations. This benefits the customer as well, even if you simply digitise the back-end processes or all that is involved in administration. Most documents today are digitised, so you can sign some documents. You can also do it through your mobile bank with a digital signature. In everyday life we do not think about this, but it is a minor revolution in the way we interact with banks.”

What will drive the agenda for Banking as a Service forward?

How is the development of automation impacting Danske Bank’s core business and processes?

“Much automation takes place through our back-office processes, and we work daily with robots and automation to make processes leaner. We applied artificial intelligence (AI) in developing the June app, creating investment profiles, and it also affects our models for credit, loans, and pricing.

It will only affect the industry to a greater extent in the future, as the technology becomes cheaper and more sophisticated. It is no longer a question of ‘being ahead,’ but a matter of living up to a requirement from the users to the experience they expect.”

“The crucial external factor is what customers are demanding and their stage of digitised development. We cannot

to develop and maintain for example a global capital markets engine which is the area we operate in, and that is why we see the trend of partnerships spreading much more broadly these years. Today, technology is so flexible that through open APIs, for example, it is much easier to deliver an offering specifically tailored to the partners' or clients' needs. The bank of the future does not develop much technology itself.

It helps clients navigate through the increasingly complex world of apps and smart fintech solutions by handpicking the best solutions and packaging them effectively.”

Why is this agenda important to Saxo Bank?

Kim Fournais, CEO and owner of Saxo Bank

be technically ahead of our customers, but we also cannot afford to lag behind. When the surrounding society is digitised to a very high degree, the customer expects the same experience when using banking services or any other digital service. It doesn’t matter if the platform is Netflix or a mobile bank. The customer expects it to be a fully digital, functional, and seamless user experience. For me, it's about creating an experience – even if the customer turns up at a branch. Strategically, we will enter into more and more partnerships and develop new customer solutions outside the bank's traditional financial market. That is because the technology makes it easier to integrate external solutions with our own solutions and drive new business models from open API’s.”

“Technology and innovation have been integral to our development since I founded Saxo Bank close to 27 years ago.

Saxo was in fact the first bank to realise that it is fundamentally a technology business. And our vision is clear, we exist to democratise trading and investment and for us to truly deliver on that vision we must stay ahead of the curve and leverage technology to give a wide range of clients’ better investment opportunities, better platforms, better services, more transparency, and much sharper prices.”

How has digital development impacted the financial sector?

How do you see the market for Banking as a Service develop in the future?

“Technology partnerships and more collaboration are the solutions to these challenges that banks are facing today.

It is very costly and time consuming for any bank or fintech

“From our perspective, it is clear that “banking-as-a-service” will be one of the defining themes in the years to come.

The financial industry is complex and highly regulated and

software providers might not always be able to navigate the system in a fast and efficient way. That is why entering into partnerships with other financial institutions that can deliver their core competency as “banking-as-a-service” is a very relevant solution. Partnerships will become one of the most disruptive factors in the financial sector in the coming years and become the foundation for a significant step forward in the sector’s use of technology. When banks no longer have to develop their own systems, significant resources can be unleashed to deliver better services and products for clients.”

How is the development of automation impacting Saxo Bank’s core business and processes?

“We are moving our entire technology stack to the Cloud to becoming a truly cloud native business. Part of the rationale is to fully capture and utilise the enormous potential of automation and AI-based solutions. With AI we can enhance the client experience by delivering even more timely and relevant content tailored for the individual client; from answering queries through advanced bots to notifying clients about events and opportunities in the markets relevant to the individual client.”

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Keeping Ahead of the Fintech Curve While six leading Danish fintech companies see eye-to-eye on why the intersection of finance and technology will soon dissolve, opinions differ on issues related to scale and fundraising. And we explore what the fintech founders mean when they say you should think global from your first algorithm.

By: Jakob Lindmark Frier Photographer: Kasper Løftgaard

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very individual in the financial sector and every community is committed to creating something that brings us forward. Otherwise, we will be stalled.”

Everyone around the table agrees.

To those gathered around the table at the Copenhagen stock exchange, Rune Mai, co-founder of Spiir and Nordic API Gateway, elaborates further on the associated responsibility: “Incumbents are closed communities behind a tough shell. Mostly, they have no idea of what is happening in the outside world. Fintech startups and scaleups are more fluid with their surroundings, and they might even partner up with a competitor if it creates a win-win scenario. Imagine a bank doing this just four years back? No way. The traditional approach from the banking world is not accelerating any positive trends.”

Of course, there was a time – in the near past – when regulations were aimed at protecting banks. However, the European Union’s payment directive, PSD2, now underlines the brutal fact that the politicians in Brussels are seeking increased competition in Europe’s monopolised financial market. Dubbed ‘disruption on-delay’ by many in the finance industry, the payment directive is a response to the evolution of customer demands and it makes the entire financial sector an open ecosystem.

Banks are now forced to open their data vaults and allow third parties – including fintech startups – to access their user data.

“You can no longer talk about fintech as a vertical.

It's horizontal. It's a focal point for facilitating data in different domains across markets. Take blockchain. This technology is about creating an ecosystem and how you add value to that system. It’s a financial technology applicable to many industries. One of the things you get in return is transparency, and that is what drives an ecosystem – the commercial relationships we engage in and the data we feed into that relationship. The industry and the data sources have been far too one-sided for far too long,” Gert Sylvest, co-founder of the first Danish fintech unicorn Tradeshift, responds.

Alongside four fintech entrepreneurs, Mai and Sylvest are gathered to discuss the biggest trends in the Danish and global fintech industry and the challenges that must be addressed to maintain the great momentum Danish fintechs are benefitting from.

Each of the fintech founders around the table have managed to establish a financial service in under 10 years – all with a fair amount of success, to say the least. In total, they represent 1.6 billion Euro in valuation and are responsible for creating more than 500 fintech jobs throughout Denmark – or 25 per cent of all fintech jobs in fintech startups in the country.

Solving a problem in Bangladesh is as good as solving one in Rødovre The global startup, Chainalysis launched in Copenhagen in 2014 and is now headquartered in New York City, employing 100 full-time staff members. Among other successes, the company has helped the United States’ Federal Bureau of Investigation to trap drug lords by removing anonymity in cryptocurrency. They are now poised to help banks secure themselves against money laundering through crypto. Michael Grønager, chief executive officer and co-founder of Chainalysis, shares his memories when he wrote the

15 first code for the company while seated on his couch in Denmark. He also knew, early on, that he wanted to grow beyond a Danish and Nordic market. But he needed a global strategy to do this.

“Startups have to address a global problem from the very beginning. The approach and mindset must be to solve specific problems that are scalable and to build services on top of it. This is unique compared to the way banks and financial institutions act and think, as they often focus on maintaining a target group and monetising it… We want to create financial inclusion across the world. Creating value for everyone and giving people a better life is very much a part of our raison d'être,” Grønager explains.

This impact is felt particularly in the insurance industry, where established players are having a hard time globalising their services because their products are tied to geography and demography.

“Insurance is a safety net and an extension of the welfare state. The border between support coming from the state and insurance can be blurry. The young generation who are passing on traditional insurance as is the case in Europe now, are exposing themselves to risks that they think the states protects them against. I also think the young generation are rejection traditional insurance because the product and user interfaces don't fit them at all, since they have never been an attractive target group to insurance incumbents. Taken together, this was an indication, that we could make a difference,” Sophie Bohr Grønbæk says, as co-founder of UNDO, a private insurance company for young people in Denmark. Unlike other Danish insurance companies, UNDO provides insurance through a digital platform.

“New global niche players rise to the stage, and they come up with new products, such as climate change insurances targeted at specific customers around the world.

You should not ignore the global market, as there are some very general problems around the world. If you start investigating then you can launch a global strategy from the start,” says Grønbæk.

On a related note, there is a surge in demand for digital services — no matter where users are geographically located. Still, it is a double-edged sword.

“On the one hand, large players can navigate a global market, commit large budgets to niche products, and make a great business even with a narrow focus. Moreover, on the other side of the table, agile scaleups spot consumer trends and demands for a deeper service. This is where technology plays a big role, because it essentially is completely different from what a bank has been providing its customers for over 20 years,” Jeppe Rindom, the co-founder of the Danish company Pleo, advises. The company financially empowers employees in every business in the world by giving them access to a company’s funds, responsibly and risk free.

Mai adds that companies have become more concerned and more aware of the global market because the world has become more standardised. He explains: “Some financial incumbents can identify a global need for their services. However, many of them still employ a local focus. To them, a customer is just a customer, and they struggle to go beyond that. They do not try to supply what a customer needs; instead, they try and sell any type of product from the shelf regardless of the customer’s actual needs.”

Amplifying this point, Grønager suggests that “you have to set your users and consumers free and realise that solving a problem in Bangladesh is just as important as solving it anywhere else.”

customers. Since very few large corporations lack an international supply chain and the degree of digitisation in this space is very low, we wanted to enter the American market at an early stage.”

To scale or bail?

Go deep and then go global

“Today banks don’t really focus on tech, but in the future, we will see banks being pressured from every angle to rethink business models through the use of technology,” Sylvest notes.

Sylvest refers to the EU’s PSD2. As the open APIs democratise money transfers, tech giants are well-positioned to take over a large share of the financial services that used to be the banks’ domain, and fintech startups are getting the smaller chunks as appetisers. There are two reasons why big giants banks are attempting to capture payments.

First, to create loyalty so that shoppers will spend more of their money on the platform, and secondly because they allow payments and refunds to occur over multiple instalments.

Tradeshift is a business network working on digitising every interaction between two companies – especially within source-to-pay, including payments and financing.

From their headquarters in San Francisco, Tradeshift digitises more than 500 billion USD every year.

As of May, this year, Pleo holds the record for the largest b-round in Danish fintech history. Rindom and Pleo’s co-founder, Niccolo Perra, have raised approximately 70 million Euro from foreign investors. This approach is vital for the Danish fintech to keep its momentum. According to Sylvest: “We see indications of more global investors looking at Denmark. Startups and scaleups need capital to scale, and preferably from venture funds situated in the markets they want to penetrate. If you are situated in the Nordic countries, you will experience difficultly getting through the middle ground after you have received (and burned through) your seed- or round of money. In our case, we scaled through our customers. We targeted international groups of

The two Aarhus-based fintech companies, Lunar Way and Spiir have a slightly different approach. Quite simply, they don’t focus on the global agenda.

The six startup founders at the old stock exchange

You have to set your users and consumers free and realise that solving a problem in Bangladesh is just as important as solving it anywhere else Michael Grønager, Chainalysis

“We are born in the Nordic countries and want to stay in the Nordic region. It’s our ambition to create a deep solution banking service and a marketplace approach,” claims Ken Villum Klausen, co-founder of Lunar Way. As it turns out, building a “neobank” in the Nordic region is a complex yet interesting undertaking. Despite being the

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Michael Grønager, Chainalysis

Jeppe Rindom, Pleo

Gert Sylvest, Tradeshift

Rune Mai, Spiir and Nordic API Gateway

Sophie Bohr Grønbæk, UNDO

Ken Villum Klausen, Lunar Way

most profitable banking market in the world, the Nordic region is also the most defensive and closed.

“In Denmark there are a lot of national subtleties and clearing system authentications. If you do not want to challenge the depth but be a horizontal player, like several of our neobanking competitors, then you must focus on products instead of depth,” Klausen says.

As a case in point, Klausen, and the team behind Lunar Way, closed a big venture round in February of this past year. However, they will need more funding to penetrate the entire Nordic market. Not surprisingly, their mindset is different from the target group of consumers. According to Klausen, “Half of the entire venture landscape doesn’t want to touch fintech. Of the other half, one third have already invested, the other third will only invest in global plays, and then you have to find the last third who are interested in a Nordic

bank play. So, we have a global mindset and the packaging, but it is a Nordic play and has been every day.”

Pleo is present in four European markets, and is not showing any signs of changing anytime soon.

Rindom expresses a preference to build in Denmark and scale from there: “We are not religious about it; it’s just our preference.

Fintech in Denmark and the Nordic creates opportunities for building companies that do not need to be global, because there is a large market to address and a regulatory environment that makes it extremely difficult to scale and for global competitors to enter.”

Contrary to what many readers may believe, both Tradeshift and Chainalysis see a potential talent pool in Denmark. In Grønager’s words, “We had not planned for our tech and research center to be located in Denmark, but it turned out that it was

easiest to recruit specialised labour – especially because the lifestyle we have in Denmark attracts highly skilled personnel to the country. This means we can hire the most talented individuals from large corporations who are seeking a new working environment in Denmark, but also throughout the whole of Europe it is easy to find a very well-educated workforce. In my opinion, we still must solve this fixation on a national problem and think bigger.”

The end of fintech Nordic infrastructure is second-to-none, with such services as instant transfers and the largest mobile bank adoption worldwide. The Dankort remains widely used, and its significance to the technical infrastructure is even known in foreign markets, according to Sylvest. This takes place against the broader and singular narrative of the Danish

17 financial sector – that we are proud of being cashless Vikings. But there are also less-flattering stories about the monopolised infrastructure.

Grønager points to the Rejsekortet as a prime example: “In the London Underground, you can pay with NFC chip on all your credit cards. There is no need for extra integration. You have the hardware, and it works and is applied to any possible solution in the public space. Everyone who has a credit card can take the tube in London

We do not consider ourselves as a fintech.

It is the necessary legacy that comes with the mission that will stick with us down the road.

Jeppe Rindom, Pleo

without any friction, whereas the friction you encounter in Denmark is extremely high. But it creates a captured audience. It’s representative of the Danish mindset. The Dankort contains a very high level of complexity and is something to be proud of, but it has also made the sector closed to other solutions.”

For Mai, fintech is a hot topic because it operates on one of the most defended data locks of all time. When the Dankort was launched, the Danish government was hesitant to launch an electronic trace of people's lives from the data. This is a strong legacy that will soon end.

In that same vein, Rindom explains: “We do not consider ourselves as a fintech. It is the necessary legacy that comes with the mission that will stick with us down the road. It's more about workflow, convenience, and the future of work. However, the regulatory part is the enabler to a protected and highly sophisticated infrastructure. If you strip the word of its meaning, it clashes with being a fintech or a startup because it has so much complexity attached to it.”

Interjecting, Grønager shares his view: “I'd rather say that everything has become fintech. If you manage to solve horizontal problems then you will have the opportunity to collect data in a different way and fintech will cross industries.”

Mai offeres the last approach, “Fintech is a movement that will eventually disappear because in reality, it is about access to infrastructures and data. In a few years, everyone will use financial data in their solutions, as it enables personalisation and services that know us. So as we know it today is prone to disappearing.”

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Left: Marianne Philip, Partner at Kromann Reumert and member of the steering mittee for Copenhagen Financial Hub

Copenhagen: The Nordic Capital of Asset Management and Fintech The financial ecosystem in Copenhagen has developed into a stronghold over the past decades.

Now, Copenhagen is gradually becoming a preferred location for global financial institutions looking for a domicile in the EU.

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or several years, Copenhagen has been lagging cities like Amsterdam, Stockholm and Frankfurt when it comes to attracting foreign financial institutions. However, according to a report from Deloitte, there is reason to believe that this paradigm is shifting. The Danish capital is one of the most attractive locations for investment banks, asset managers and fintechs Based on an analysis of nine location parameters, which are generally considered important when re-locating a financial company, the Deloitte-report ranks Copenhagen higher than London, Dublin, Luxembourg, Amsterdam, Paris, Frankfurt, Berlin and Stockholm. The nine parameters are

access to talent, taxation, regulation, political & macroeconomic stability, connectivity, cost level, ease of doing business, liveability and digital maturity.

High living standards, flexicurity and digital maturity give Denmark and Copenhagen a strong position, when comparing with other locations. However, it is not well known outside Denmark. Copenhagen Financial Hub, a public-private partnership, is working to promote the financial ecosystem in Copenhagen and to attract international financial companies.

The steering group is headed by Hans-Ole Jochumsen who returned to Denmark after a long career on stock exchanges in New York, London and Stockholm. Among the 11

other executive-level participants in the steering group are Allan Polack (CEO of PFA), Christian Clausen (board member at Blackrock), Michael Dithmer (Permanent Secretary at the Ministry of Business, Industry and Financial Affairs), Marianne Philip (partner at Kromann Reumert), Thomas Krogh Jensen (CEO of Copenhagen Fintech) and Claus Lønborg (CEO of Copenhagen Capacity).

Hans-Ole Jochumsen points to the Danish pension sector, investment community and fintech as the major strengths in the Danish financial system. â&#x20AC;&#x153;Danish pension funds are big and highly sophisticated investors, and that makes them interesting customers for global asset managers and investment banks as well as

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Establishing a business in another country is a long haul and not something you do overnight; it is important that they know about the favourable conditions in Copenhagen Anders Klinkby, project manager for Copenhagen

Middle: Hans-Ole Jochumsen Chairman, Copenhagen Financial Hub

Financial Hub

potential partners for fintechs. We are a small country but our pension funds are large investors, also on a global scale.

There is a great international interest in working with the Danish pension funds,” Jochumsen says.

Partnerships with fintech companies The fintech ecosystem in Copenhagen is blooming and accelerating the technical development, also within asset management and pensions. It is a global trend that the established part of the financial sector is dependent on

Total attractiveness Copenhagen

1.8

Amsterdam

2.1

London

2.7

Dublin

2.8

Berlin

3.1

Stockholm

3.3

Luxembourg

3.3

Frankfurt

3.4

Paris

4.0

*About the report: All data used in the benchmark model are either open source (e.g. World Bank, EU, IMD, etc.). or objective and verifiable data. On each data point, the cities involved have been ranked and clustered on a 5-point a scale defined by best (1) and worst (5) performance.

Source: Deloitte

sourcing the innovation that is taking place in smaller and more agile companies. Access to these partnerships is an important selling point for the Danish fintech scene. According to Anders Klinkby, Project Director for Copenhagen Financial Hub, pension funds as well as banks and insurance companies are potential partners and strategic investors that can help fintechs develop and scale their business.

“Much of the development activity within the investment industry focuses on technological innovation. Large investment firms invest heavily in innovation, and there is a clear trend that new technology and traditional investing are converging – which could benefit Danish fintech startups and the Danish financial ecosystem as a whole,” says Klinkby. “We have good arguments why international investment firms should consider partnering with Copenhagen Fintech or set up a development unit in Copenhagen.”

The fintech ecosystem in Copenhagen has boosted innovation tremendously over the last couple of years. Klinkby highlights Danish fintech scale-ups as Pleo and Tradeshift that now have the numbers to show that it is possible to build billion-dollar fintech companies from the region.

Three years ago, there were around 100 fintech startups in Denmark – that number has now increased to more than 230 fintech companies. A large number of these companies are focused on investing, wealth management and pension.

Copenhagen Financial Hub is working closely together with Copenhagen Fintech. Copenhagen Fintech has boosted fintech innovation in Denmark over the past three years.

“A great deal of work has been done by Copenhagen Fintech, and collaboration with the sandbox initiative made

by The Danish Financial Supervisory Authority shows that the regulatory institutions are open to talking to startup companies and fast track their development,” says Marianne Philip, Partner at Kromann Reumert.

With a new EU comes new opportunities The rapid technological progress within the financial sector is increasingly intensifying international competition. At the same time, Brexit opens possibilities to attract companies from overseas that are based in London and want to remain domiciled within the EU. “We are still to see how Brexit will shape a new Europe, but there is no doubt that many international companies will

be forced to decide on how to position themselves in Europe after it is a reality. We have a real opportunity to attract high-value jobs, but we also expect that there will be tough competition from other countries in the EU,” Philip says.

“Global financial institutions have realised that they need to move closer to the customers. In combination with Brexit that means that many are moving out of London and into continental Europe. Now our job is to make these stakeholders aware of the great potential Copenhagen holds,” says Marianne Philip.

Copenhagen Financial Hub Copenhagen Financial Hub is a public-private partnership and is supported by Nordea-fonden, Industriens Fond, the Danish Ministry of Business, Industry and Finance, Finance Denmark and Insurance & Pension Denmark. The steering group’s work is pro bono.

Copenhagen Financial Hub works closely with Copenhagen Capacity and Invest in Denmark. It has been operational for a year and a half and has hosted events and meetings in London, Boston, New York and Beijing. So far seven companies that Copenhagen Financial Hub has been in contact with have chosen to locate in Copenhagen, including the Chinese leasing company Minsheng Financial Leasing, Silicon Valley Bank (where Vækstfonden has played a very active role) and the UK based tech company Airfinity. Another four companies, incl. large global institutions, have made their decision to establish offices in Copenhagen and are expected to announce during the coming months.

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Digital Pension Savings Solution Will Help 325,000 Employees Start Saving The Danish fintech startup, Grandhood is helping 325,000 employees in small and medium enterprises start saving for retirement by giving them freedom and full control.

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ver 750,000 Danes between 25 and 59 years old are not saving for their retirement (Danish Treasury, 2018). The Danish fintech startup, Grandhood is working to change that.

“Grandhood’s mission is to help people without retirement savings and thereby help even out thirdage income inequality. 750,000 Danes haven’t started saving. What’s interesting is that in many cases, it isn’t because they don’t earn enough to begin saving.

It’s because there’s no value proposition for them in the offers that are currently available,” says Jon Lieberkind, chief executive officer and co-founder of Grandhood.

The fintech startup estimates that nearly half of the people who haven’t started saving – 325,000 Danes – are either a small business owner or are employed by one who doesn’t offer a pension plan. Quite simply, they don’t fit into the existing pension companies’ boxes. By offering a new, digital pension savings solution which promises to be anything but rigid, Grandhood wants to make it not only possible but attractive for the 325,000 to start saving.

However, the big pension companies can only afford losing money on the cheap insurance because they are making huge profits on a more hidden cost: The investment costs. That’s exactly what the end-user doesn’t see, but it is an enormous amount during a 30-year investment horizon – it’s compound interest working against you.”

The unbundling of pensions and insurance is already the norm in the United States and Great Britain markets. For Lieberkind, this approach creates a fairer and more transparent offer.

Amplifying the point, “We all have to focus on what we’re best at, so investment managers like Grandhood take care of the pension investments, insurance companies take care of insurance – and users get full transparency,” Lieberkind says.

A digital solution that keeps costs down This flexible and low-cost pension savings solution is made possible by the fintech’s digital base. In turn, the digital foundation makes Grandhood cost-efficient enough to be attractive to small companies.

“We have automated all the processes that can be automated, which means we can help onboard entire companies within 3 minutes. That has never been done in pensions before. Normally, the sales cycles are months long. With Grandhood, companies avoid a lengthy onboarding process, and it makes the model profitable enough for us to offer the product to companies with fewer than 5 employees, which isn’t attractive for traditional pension companies,” Lieberkind maintains.

Costs are further lowered because Grandhood, as an independent asset manager, maintains a lean and focused in-house investment team that invests pensions in exchange-traded funds.

On top of keeping costs down, the digital core enables users to set their own savings rate.

“Employees in the gig-economy of the future can adjust their savings according to their current income.

We already offer it now, but it will become even more seamless. The goal is to make our system fully integrated with payroll system providers, to allow Grandhood members to adjust the deposits from month to month directly from our app,” Lieberkind explains.

Grandhood unbundles pension savings from insurance Among those Danes who lack a retirement plan, there is a surplus of freelancers and individuals who are self-employed – categories that are only expected to grow in the future labour market. Current pension plans are typically offered to companies. This means that every employee is forced into the deal, which comes with mandatory rates, insurance premiums, and little say over where earnings are invested.

“We are turning things upside down. Grandhood doesn’t have any requirements on how much the employer or employee has to pay each month. There are no requirements as to how many employees from the company need to be part of the plan. Moreover, insurance isn’t mandatory,” Lieberkind explains.

With respect to Grandhood’s value proposition, Lieberkind observes that “The insurance part of pensions have seen a price war in Denmark because that’s what the end user can easily relate to. Cheap insurance is bait.

Grandhood Founded in 2017 by a team with extensive experience in the financial industry (Bank of America, Merrill Lynch, Danske Bank, and SAS Institute).

Prior to their launch (May, 2019), Grandhood had already attracted 600+ companies to their waiting list.

Grandhood is the first venture-backed fintech to get an asset manager license and has also partnered with Saxo Bank, which operates as their depository and trade execution provider. This positions the young fintech among established providers by enabling them to offer the same consumer protection.

Grandhood is the first of its kind to offer a subscription-based pension savings solution for small and medium enterprises, of DKK 59 per employee/month. Individual employees set their monthly contribution rates and decide as to whether they want to purchase insurance. There are no set-up fees, lock-up periods, or exit fees associated with these transactions.

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Partnerships Paves the Way for Expansion From a bleeding edge biometric payment fintech to anti-money laundering technology in cryptocurrency. There are many types of partnerships between Nets and fintechs. However, they are always looking for the same characteristics: a prominent and promising technology they can help scale and strengthen the presence in the European region.

By: Jakob Lindmark Frier

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he pace of innovation is staggering while the payment industry at the same time is still heavily regulated. The financial industry is changing, and PSD2 and open banking have become the new normal. This has opened up for new alliances, and especially the numbers of partner­ ships between corporates and fintech startups have grown tremendously in recent time.

Moreover, the great emphasis on partnerships has also found a way to Nets. Today, the Danish payment provider is involved in a multitude of corporations with financial insti­ tutions, fintechs and ecosystem initiatives.

"We collaborate with partners in Danish as well as inter­ national ecosystems that support our ambition to identify the most appropriate technologies that will shape the future payment industry. To partner up with the most promising of its kind enables us to stay at the forefront of the industry and accelerate idea development and innovation," Tony Bach Christensen, Director in Strategic Partnerships at Nets, says.

Nets is looking to expand its presence to the rest of Europe. Following several acquisitions, the company is now geared to collaborate with fintechs across a large part of the European region. Thanks to a partnership with Copen­ hagen Fintech and the international accelerator Plug'N'Play, Nets is now – among others – collaborating with anti­money laundering (AML) fintech Chainalysis and the Israeli ultra­ sound company Sonar Rax. "Through our local roots and local work in the Europe­

Through our local roots and local work in the European ecosystems, we are strategically expanding through the partnerships Tony Bach Christensen, Director, Strategic Partnerships at Nets

an ecosystems, we are strategically expanding through the partnerships," Bach Christensen adds.

Startups are notoriously known to shake up industries and challenge the so­called established players and fintech star­ tups are doing no different. However, they cannot do it alone.

Nets add legitimacy, credibility and compliance to the fintechs.

"In financial markets Nets is an experienced player, and we can help startups navigate the organisational

layers in a bank or avoid pitfalls that could stall their de­ velopment. They must focus on what they do best: drive change and technological development," Bach Christen­ sen says.

As the largest payment provider in the Nordic region processing more than eight billion transactions every year Nets processes a large amount of consumer data. To Nets it is a matter of defining the right use cases for the techno­ logies and in identifying essential applications that fits the users' consumption patterns. For instance, according to Bach Christensen, a finger scanner may not be suitable for payment at the grocery store but is ideal for a clothing store, and ultrasound payments fit very well with quick pur­ chases.

"We want to show our customers that there are solutions that apply to their business model or product and if they adopt new solutions, they can reduce costs and em­ bark on a new endeavour that will generate revenue and knowledge. We do not deal with prototypes, but well­devel­ oped technologies that look for scaling opportunities," Bach Christensen explains and stresses that Nets cannot afford to put customers' trust at odds by engaging with startups that are too inexperienced.

"They must have a few years of experience with a product in the market. That is why we work with highly skilled partners like Copenhagen Fintech and Plug'N'Play as they can identify a match between the most promising international startups and us."

Copenhagen Fintech

Plug 'n' play

Through a partnership with Denmark's leading ecosystem for financial te­ chnology, the hub expose Nets to a variety of startups. Thanks to the part­ nership, Nets have teamed up with the partly Danish­American anti­money laundering company Chainalysis.

"We have provided an infrastructure that will be otherwise inaccessible for Chainalysis to gain access to and the bureaucracy around it would be dif­ ficult for them. On the other hand, Chainalysis strengthen our work with an­ ti­fraud and AML – especially when it comes to an understanding the crypto market," says Bach Christensen.

The international accelerator Plug'N'Play operates in Frankfurt and Paris with a dedicated focus on fintech. The accelerator spotted the potential in the Israeli company that works with ultrasound.

"Ultrasound is a safe and cost­effective way to transfer data when con­ nected with mobile phones or ATMs. Most phones have a microphone and a speaker so they can cast and receive ultrasound. This means that there is no need to install new hardware to transfer money. This partnership serves as a great example of how to take a generic technology and combine it with Nets' knowledge of payments to develop interesting solutions."

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Nets on a Quest for European Scale The payment company wants to be a leading European player in a rapidly growing payment industry. Already a leading provider of digital payment products and services in the Nordic region, the group sees opportunities in scaling its digital payment platforms to offer digital payment solutions and value-added services to a European region where cash is still king.

By: Jakob Lindmark Frier

F Norway: BankID, DIBS/Netaxept online solutions, payment terminals, eFaktura, Storebox, BankAxept

Finland: Payment solutions for online and offline via Nets and Paytrail

or more than 50 years, digital payments have been a part of everyday life in Denmark - from PBS through Dankort to mobile payments which have become the new normal over the past three years. The cashless Vikings in the Nordic countries are regarded as front-runners in digital adoption. Today, more than 80 percent of all payments in the Nordic region are digital. And driving the conversion from cash to digital payments presents an advantage for Nets.

“Our expertise and scale from the Nordics give us a competitive advantage when expanding into Europe, and I am confident that we can become a key player within the European payments area. Contactless and real-time payments are both great examples of how through our innovation power, we can help provide a more digitised society and an easier everyday experience when conducting payments.

That will pave the way for further expansion into the rest of Europe,” says Bo Nilsson, CEO of Nets Group.

Nets is a leading payment group in Scandinavia and facilitates more than eight billion transactions a year, and now the payment provider wants to play in another league.

Nilsson explains how two main trends will shape the future European payment market: “Large industry players are consolidating at a rapidly increasing pace, and American and European players are challenging us in our own backyard. But we also see a lot of opportunities to expand into Europe through both organic and acquisitive growth, meeting the competition head-on."

Sweden: Online solutions (DIBS Easy e-commerce), acquiring agreements, payment terminals, BankID Denmark: NemID, Dankort, DIBS/Netaxept, acquiring agreement, Betalingsservice, Straksclearing, Storebox, e-Boks, among others Nets has a strong presence in the Nordic region. In Denmark, the company is best known for Dankort, Betalingsservice and NemID, while in Norway well-known brands include BankID, Netaxept and not least BankAxept.

* The map illustrates a selection of Nets' Nordic activities

Bo Nilsson, CEO of Nets Group

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Germany: Payment solutions, both online and in traditional commerce (Concardis and Ratepay)

Poland: Payment terminals, acquiring agreement, instant clearing (instant payments) and online payments (via Dotpay / eCard)

Switzerland: Payment solutions, both online and in traditional commerce (Concardis) Austria: Payment solutions, both online and in traditional commerce (Concardis)

Nets has acquired the company Dotpay / eCard. The company now supplies a number of solutions to retailers in Poland.

With the merger with Concardis, Nets took a leap into Europe. In the German-speaking countries, Nets now offers a number of payment solutions for both online and brick-and-mortar stores.

Hungary

Slovenia

Instant Payments

Italy Croatia: Managing payments for banks with Mercury

The recent European expansion has given Nets a presence in Croatia via its subsidiary Mercury, which provides payment processing to several local banks.

European payments champion A journey of a thousand miles begins with a single step. According to Bo Nilsson, CEO of Nets Group, Germany in particular holds great growth potential due to its size, high consumption and the fact that three out of four payments in Germany are still cash-based. The first step from the Nordics into Europe was a merger with the German payment company Concardis last year - a key player within merchant payments in the entire DACH region. Since then, Nets has further expanded with both an acquisition and a partnership in Poland with two leading players within e-commerce, namely Dotpay / eCard and Przelewy24.

And size does matter. With the recent mergers, Nets further enforces its position as the second largest provider of payment services in Europe. â&#x20AC;&#x153;As the number of transactions increases, the cost per transaction goes down. As our scale increases, we can be more focused across the group in our innovation efforts and, at the same time, be more cost-effective as we realise synergies and drive down costs per transaction. That allows us to be at the forefront of innovation in Europe,â&#x20AC;? Bo Nilsson concludes.

With the expansion into Europe, Nets aims to further strengthen the company's innovation power and ability to develop solutions that meet the growing needs of businesses and consumers for more digitised and user-friendly solutions.

Nets supplies Slovenia, Hungary and Italy with an infrastructure facilitating instant payments.

Estonia

Latvia

Acquiring agreements, payment terminals

Lithuania

Nets has had activities within terminals and acquiring in the Baltic States for several years.

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Danish Fintechs Have Huge, Global Opportunities Although financial companies face global competitors, this creates opportunities for Danish companies to innovate to stand out.

By: Sebastian Kjær

G

one are the days when brick and mortar savings institutions solved your financial woes. Finance is now a global enterprise.

While the internationalisation of the market – and its associated products and services – has undoubtedly benefitted consumers, it has also put pressure on Danish companies to perform. This has, in turn, created new business opportunities.

“I believe that Danish fintech startups have huge opportunities in most places in the world. The standards of financial services in Denmark are generally very high, and

consumers are therefore used to relatively high quality in terms of user experience, security, and technology. If new fintech solutions make it in this environment, I think they have the opportunity to make it big everywhere,” explains Simon Schou, chief innovation officer at Copenhagen Fintech.

Copenhagen Fintech encourages startups, as well as financial partners, to explore business opportunities outside of their home markets. Of course, this is no easy task. It takes preparation, ambitious long-term market strategies, and resources to execute as needed. However, success stories like Saxo Bank, Simcorp, IBA, and Tradeshift have proven this is possible.

First go deep, then go wide With more than 300.000 users on their budget management app, the Danish fintech Spiir is already successful in Denmark and is now looking to launch in Norway and Sweden later this year. ”Contrary to a lot of other entrepreneurs, I don’t focus that much on going global. I think a lot of the startups focusing globally too soon end up spreading themselves too thin. And to avoid that in a regulated space like finance – even within the EU’s borders – it requires that you do your homework properly. I prefer talking about ’glocal’ – a solution with global potential but local focus,” says Rune Mai co-founder of Spiir and Nordic API Gateway.

As the first Danish account aggregator, Spiir (which launched in 2012) focused on becoming integrated with 95 per cent of Nordic banks to gain a thorough understanding of the market and its users. Mai suggested this helped build the right product as well as a trusted brand before adding jet fuel to expand wider and more rapidly. In his own words, “Long-term, our plan is to become a pan-European platform.

Copenhagen Fintech encourages startups, as well as financial partners, to explore business opportunities outside of their home markets.

Contrary to a lot of other entrepreneurs, I don’t focus that much on going global Rune Mai co-founder of Spiir and Nordic API Gateway

With our license as an ‘Account Information Service Provider’ we can scale across Europe – and that makes it easy for us to expand once we’re ready.”

Nordic solutions have pan-European potential Among the businesses looking for pan-European solutions from bright Nordic startups and scaleups is the Dutch financial giant ING Group. So far, the financial powerhouse has partnered with 150 fintech companies, and attributes its Nordic scaleups to innovative strategies.

“The digitisation of the market in the Nordic region is clearly a little ahead of the pack compared to Southern Europe. It is only attractive for young entrepreneurs to launch a startup if the market is there – and because the market is massively digitised, the fintech solutions mature earlier. This makes it kind of a leading indicator for what is going to happen in other markets,” according to David Rasson, Lead of Innovation for ING Belgium & The Netherlands.

At the same time, Rasson views the Nordic culture as compatible with the Netherlands and Belgium, which makes it easier to strike collaborative and mutually beneficial partnerships with Dutch entrepreneurs and corporations. Similar to Belgium and the Netherlands, the startups focus on exports because of their relatively small home market. Compare this with the solutions developed in larger countries – like Germany and France – which are not necessarily built to scale outside their home markets.

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Untapped Asian Opportunities By: Sebastian Kjær Photocredit: Annie Spratt, Unsplash

E

ven though the European Union’s payment services directive, PSD2 has just opened the European market to fintechs, Copenhagen Fintech has already brought a number of fintechs to Asia – including India, Singapore, and Japan.

“For Copenhagen Fintech, Asia is an ocean of opportunities. On the one hand, we would love for the many talented Nordic fintech startups to embrace the huge Asian market much faster and better than they do today. On the other hand, I am amazed by the amount of creative talent in the world. And in Asia, where we have more than half of the world’s population, the talent pool is enormous,” claims Schou.

Copenhagen Fintech is creating entry points to the East for networks of talent and experience to flourish. The larger goal is to inspire startups to explore whether their products, that are currently rolled out in the Danish or Nordic markets, could be retrofitted for the enormous Asian market and its 4,5 billion potential users.

“What I am looking for is the global ambition I have seen among Israeli startups – driven by need because of close to a zero home market and not particularly fri-

endly neighbours. But nonetheless a scaling ambition I would like to see much more of in our own community as well,” Schou says.

MakerDao is benefitting from poor Asian infrastructure As an infrastructure project housed in the crypto-space, there is a strong sense in which MakerDao was born with a global reach – with more than 200 partnerships worldwide. Just 4 years after its inception, the organisation has successfully penetrated several Asian markets by empowering local companies to build financial projects on top of their infrastructure.

But the partnerships didn’t come without hard work.

MarkerDao has spent years cultivating relationships with both user communities and business partners, while maintaining a presence in China, Singapore, Korea, and Japan.

With respect to their business strategy, Gustav Arentoft, business development representative at MakerDao, explains: ”Our strategy has been to hire a community lead for each market with the responsibility of building a community in the market. Potential users and developers have to be interested before we can drive business – from there we have facilitated the first

partnership. And once it starts growing commercially we start hiring business developers locally.”

For this, culture is key in building relationships, networks, and trust. The company has a head-start, given that MakerDao’s founder, Rune Christensen, has spent 4 years living in China, not to mention the name of MakerDao’s stablecoin “Dai” means “to loan” or “credit” in Mandarin Chinese.

Once there is a cultural understanding and bridge, businesses must tailor their products and services to the market. MakerDao, instead of building products for the end-user, runs a crypto-infrastructure that promises to be cheaper, faster, and more advanced than existing infrastructure for money transfers. Still, they had to specify the value proposition for the market, as Asia is home to emerging as well as very advanced economies. ”You might say our value proposition is bigger in Asia and Africa than in Europe. But we service groups that lack infrastructures as well as those with very advanced economies like Singapore, Japan, and the US, where developers are using Dai to build web 3.0 applications.

So it’s hard to say ‘Asia’ as a coherent market. We work with startups, established banks, and even governments across different countries,” Arentoft explaines.

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A Digitally Born Neobank Can Also Be Local Local brick and mortar branches are closing while global, digital-only neobanks are raking in the customers. However, the neobank Lunar Way from Aarhus is suggesting a third format: a scalable digital bank that has made the conscious decision to not be ‘born global’ but to ‘bet local’ instead.

By: Sebastian Kjær

I

f you grew up in a small, rural village, you were probably able to deposit the coins from your piggy bank into the local branch of a local bank. That opportunity has diminished in the past few decades – and not simply because coins are declining in popularity.

During the past decade, the number of local bank branches has been halved – from 1962 branches in 2007 to 805 branches in 2017. At the same time, the industry has undergone a massive consolidation – from 146 to 65 banks.

Since the start of the millennium, only foreign banks have seen an increase in the number of branches in Denmark – from 20 to 27. While physical branches aren’t the trademark of the modern digital bank, the rise of internatio-

nal banks’ presence in Denmark might very well be a sign of what’s to come from digital neobanks.

“Incumbent banks are largely national or regional because they had to set up a large retail network which took a lot of time – similar to how supermarket chains are largely national or regional. One of the amazing things about the internet is that it allows companies to sell to customers all over the world, which means more competition and, therefore, better products and lower prices for consumers. So, I don't expect the same dynamics to play out with the neobanks as it did with incumbent banks,” says Bjarke Staun-Olsen, principal at the leading European early-stage venture capital firm Creandum.

Hyped neobanks with global plays like Monzo, Revolut and N26 are very much paving the way for this development. They all deliver a relatively uniform banking product to customers across multiple markets.

However, this might not be the only way that a neobank can succeed. At least, the Danish challenger bank Lunar Way is doing things a bit differently.

The deep and local approach A total of 85.000 customers have started banking with Lunar Way since its interception in 2015. It all began in Denmark, but the neobank recently launched in Norway and Sweden as well. However, unlike well-funded, growth-hungry global

The team behind Lunar Way has been growing rapidly since the companies interception in 2015.

27 just having a pre-paid card that a neobank can earn interchange on – and also on who the user is,” he says.

However, he doesn’t see any reasons for not going for a pan-European neobank. Though national governments and the EU still heavily regulate financial services, neobanks can relatively easily passport their banking licenses across the EU – an ability that investors find more attractive.

“What ultimately matters is the size of the market that a company is targeting. If a company targets the US then "global first" doesn't matter much, because the US is such a big market. Global first is important when you start in a small market like Denmark. And that is what is driving higher valuations for those Danish companies that go after the world as opposed to those that only go after their home market,” Staun-Olsen says.

Subtle distinctions are crucial

Top Neobanks

by Valuation Oaknorth (UK)....................................................... $3.5B N26 (Germany) ......................................................$2.7B Revolut (UK) ............................................................$1.7B Monzo (UK) ...............................................................$1.1B

Instead of offering a simple solution aimed at the widest possible audience across as many markets as possible, Lunar Ways focuses on a deeper banking experience for the markets it knows best. ”We use the same providers across the markets to ensure scalability, and we know the markets and customers really well. We would rather do what we’re very good at, and that is catering to the Nordic markets. We have a smaller customer base, but of course we hope this base proves more profitable,” Smith says.

A customer isn’t just a customer competitors like Revolut and N26, the neobank from Aarhus does not plan to enter additional markets anytime soon.

“Our ambition isn’t to create a simple, wallet-like product. In order to really challenge the established banks on their playing field, we want to become our customers’ everyday bank. And if we want Norwegians to choose us instead of DNB, we must be really present in their local market,” says Peter Smith, head of banking for Lunar Ways.

‘Wide & Global’ or ‘Deep & Local’ are two very different strategies. So far, to a large extent, investors have bet on neobanks that have millions of customers and a simpler product.

However, Staun-Olsen, says that a customer isn’t just a customer.

“There is a massive difference in the value of different users. The value depends both on how many services that user buys from a neobank – loans, mortgage, investment vs.

Branches in Denmark 2188 2159 2099 2067 2013 2025 1975 2000 1962 1879 1760 1598 1494 1436

Peter Smith, Lunarway

1155 1076 1004 949 805

Lunar Way admits that it could have gone for Germany – and a far bigger addressable market – instead of Norway and Sweden.

“With the streamlining of regulations inside the EU, there are not really any limitations for us. It’s a business decision. Unlike our competitors, we would rather build something specifically for the Nordics. The Nordics is a lucrative market – and we know the infrastructure and the customers better, which gives us the competitive edge,” Smith says.

Moreover, he insists that this journey requires the neobank to focus on only a few markets – similar as they might be – so that the neobank is more relevant than the competition.

“Even though the markets are very similar, there are some subtle distinctions we have to address if we want to compete with the established banks. We use Mobilepay in Denmark, Norway is using Vibs and Sweden has a third provider. We want to support those distinctions that matter locally – not just be a European superbrand,” Smith says.

The Nordic focus helps Lunar Way avoid spreading its efforts too thin. Moreover, it has proven to be a viable strategy thus far, though it might not have given the company a unicorn investment.

“Our approach might not be as sexy, but I think we’re experiencing a pretty decent demand from investors. The Nordic is a profitable banking market – more profitable than other markets. And it’s not always what’s sexy that gives investors the best return on investment,” Smith says.

Banks in Denmark 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

186 185 186 181 176 175 161 152 146 138 132 123 113

94 88 80 76 73 69 65 Source: Finans Danmark

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DLA Piper - the Gateway to Global Fintech Success A year from today – we will see many more Danish fintech unicorns (they are even publicly listed!), Denmark is an AI superpower and … even the sky is no limit.

By: Mette Lykke, DLA Piper Denmark

I

n DLA Piper Denmark we continue to be excited about our collaboration with Copenhagen Fintech.

With our global commitment to fintech, the ambition is to use our long-standing association with the Danish financial sector, our global presence and our in-depth knowledge about fintech to contribute to a strong development of the Danish fintech industry.

Globalization Technology is dramatically changing the world and reshaping financial institutions as we know them, because digital disruption, however challenging, opens the door to new opportunities. For instance, the story is no longer about fintechs beating banks, but banks partnering with fintechs to stay ahead. Now the story relates to models of partnership: how to partner and how to collaborate.

“That resonates also with the development in the Norwegian market where we have seen a lot of partnerships being formed lately between the established players and the fintechs, especially now triggered by the move into Open Banking and by the growth of the equity and lending based crowd funding platforms and within the area of wealth management” – Camilla Wollan, Partner and leader of the fintech area in DLA Piper Norway.

From our DLA Piper offices worldwide, we know that cross-border collaboration is fruitful and thinking about commercial, financial, regulatory and corporate matters in a global context provide for many benefits to reap. This also goes for the fintech industry, and DLA Piper is there – whether in Si-

licon Valley, Hong Kong, New York, London, Singapore or the Nordics – to support the startups who look to scale up.

“DLA Piper has always supported the startup ecosystem. For example, we mentor startups from all around the world, i.e. startups built on Hedera Hashgraph Platform at the Helix Accelerator, and we advise brilliant entrepreneurs who develop their businesses using cutting edge technology.” – Frankie Tam, DLA Piper Hong Kong “As part of our pro bono commitment to the nascent industry, DLA Piper is playing a major role in leading the development of community driven best practice standards, providing legal guidance, offering practical support, facilitating open access networking opportunities and linking international fintech clients and contacts together to collaborate, build and grow the community.” – Bryony Widdup, Partner DLA Piper (UK) LLP, London.

Our work in this space encompasses much more than the “meet and discuss” opportunities that we regularly facilitate, we are at the cutting edge in regulatory analysis, transaction documentation and project delivery. As a product of our longstanding engagement with startups in the broader tech industry, and reflective of our supportive approach to early stage businesses, we have launched “a starter pack” that facilitates early stage startup advice and legal documents at competitive rates to get ideas launched as quickly as possible. Investors and fintechs alike benefit from our broad network, as we help introduce investors to innovative businesses to produce mutually beneficial relationships. This goes for foreign investors and foreign fintechs going to Denmark as well as Danish investors and Danish fintechs going abroad.

of lawyers, when AI, robotics, machine learning etc. are not just the talk of town but conveniently implemented in all – big or small – law firms. The Danish Bar and Law Society has set up a committee to designate the most important trends and how its code of conduct applies to these trends. Based on DLA Piper’s experience from our close lab study of the rapidly developing fintechs, we urge the committee to keep up a solid pace, otherwise the committee conclusions will risk being outdated before being launched.

A b(l)ooming fintech scene Fintech investments are among the fastest-growing investment fields, and in Denmark investments in fintechs more than doubled from 2017 to 2018, including in particular foreign investments in Danish startups. This emphasizes that available capital remains one of the key elements of growing a local fintech hub into a global player and that access to risk capital is critical to fund the establishment and growth of innovative businesses such as fintechs.

DLA Piper has always supported the startup ecosystem. For example, we mentor startups from all around the world, i.e. startups built on Hedera Hashgraph Platform at the Helix Accelerator, and we advise brilliant entrepreneurs who develop their businesses using cutting edge technology Frankie Tam, DLA Piper Hong Kong

Working with fintechs

Frankie and Bryony are joining the Copenhagen Fintech Week as speakers – come along to meet, greet and listen in

Arising from our commitment to fintech, we have implemented daily rotation of stationing legal staff members in the Copenhagen Fintech Lab to discover and support new forms and methods of collaboration. This hands-on experience has taught us that the technological development also has an extensive influence on our own (from society’s point of view ancient) legal industry resulting in both disruption and synergies. The future will provide new digital solutions for our clients directly and for the everyday work

Denmark is in the forefront in many ways, we are about to start building a “European Silicon Valley” on nine artificial islands off Copenhagen, we are by Forbes ranked seventh best country in the world for doing business, we have a strong tradition of EU/government programs supporting innovation, and, generally, we are a progressive nation welcoming innovative technology.

This would all lead one to think that risk capital is readily available in Denmark, but we are not all that business friend-

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As part of our pro bono commitment to the nascent industry, DLA Piper is playing a major role in leading the development of community driven best practice standards, providing legal guidance, offering practical support, facilitating open access networking opportunities and linking international fintech clients and contacts together to collaborate, build and grow the community.”

Bryony Widdup, Partner DLA Piper (UK) LLP, London.

ly compared to our fellow Scandinavian countries. Denmark has a strong tradition for fostering small and medium-sized businesses, but it is key that more companies have the market opportunities to grow into large businesses.

“While fintech companies in Silicon Valley continue to garner significant attention and investment, our data reflects the increasing percentage of investment dollars directed to fintech companies outside of Silicon Valley and confirms

that fintech companies can grow anywhere – as long as the environment is hospitable.” – Brad Gersich, Co-Chair DLA Piper LLP’s Corporate Practice in Northern California.

Copenhagen – a global fintech hub Danish interests aside, globalization has helped the access to foreign risk capital and strategic partnerships in foreign markets. Thanks to a transparent judicial system, high le-

gal protection in respect of intellectual property rights and financial services as well as a professionally organized fintech scene, Danish fintechs look attractive for global investors. Matching that with regulations on passporting of licenses, free movement within the EU and the general Danish readiness for change, Danish fintechs can go Nordic or go global as it may fit and the investor may match.

The future of fintech is exceptionally bright!

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Jon Schäffer, senior vice president, Danske Bank

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Banks Are Opening Themselves to Cross-Industry Collaborations In banks, innovation has traditionally occurred behind closed doors. Faster market penetration is calling on banks to cooperate with their partners and co-create innovative solutions.

By: Jakob Lindmark Frier

T

he digital transformation has become an inescapable reality across industries and sectors.

The move towards a digital center revolves around which business models and value chains are digitised to the greatest extent possible. In this climate, banks, in particular, are on the verge of a digital vortex.

Danske Bank’s senior vice president, Jon Schäffer embraces this change with open eyes and sees the opportunity to embark on new business ventures, in collaboration with fintech startups and partners across industries. This takes place against the broader backdrop of fierce competition in creating the most sophisticated platforms for third-parties.

“Notoriously, during the past 10 years, banks have focussed on cost value - i.e. driving cost down - and, for quite some time, we have focussed on the value of customer experience. None of this is really transformational innovation, it’s more about automating and digitising products and processes. What we are throwing ourselves at now is defining the future of the financial industry. The most defining ones – those surviving the digital vortex we are currently in – are the banks who manage to build and create a true platform value,” Shäffer advised.

In the same vein as retail industries (Amazon) or media and entertainment (Netflix) – where the winners have been the companies that have been able to build cost, experience, and platform value – the financial sector is facing the same threats and opportunities.

Opening up But this is easier said than done. Simply put, banks were not built to be open; most of them struggle with legacy infrastructure that holds them back. As they continue to feed off of the global competition of big techs as well as fintech startups, banks will have to cross that divide.

“The threat is real, long-term, and it will change the way we look at our current business models. It is becoming increasingly harder to be a bank that serves all customer segments with multiple products across many countries.

Banks need to decide where we want to excel and own the customer interface, where partnering up is the better opti-

on. In this new era, having a strong platform and becoming the best partner bank is a strong competitive advantage.

To succeed, you need to create a change in mindset and culture. Establishing trust and improving how we collaborate with partners across other industries will be key in the future,” Schäffer observed.

In short, internal banking innovations are no longer enough. One of the main obstacles to expanding the scope of innovation has been a lack of public accessibility and open banking interfaces (so-called APIs) that allow a third-party to bring new applications and services to draw data from banks. Danske Bank has reached a point where co-innovation in collaboration with third parties is the key to opening up and readying for innovation. If a startup wants to use bank data to, say, create a visual overview of a customer’s spending, it needs to connect with the bank’s system through an API to get the data automatically. Giving third parties direct access to banking data opens up a huge landscape of new services for customers, not to mention business opportunities for many companies.

“The long term winners are the banks that manage to make products available where the customers are, and that requires more openness to integration,” Schäffer remarked.

Platformisation 101 Danske Bank is on a mission to transform what it means to be a bank – to become more open and better at cooperating with, and integrating, partners. The company has already engaged in a partnership with the largest insurance company in Denmark, Tryg; the Danish scaleup and API-platform, Nordic API Gateway; the subscription management service, Minna Technologies; and the real estate startup in Finland, Tomorrow Tech.

For Danske Bank, the Nordic API Gateway is a vital partner in their efforts to provide an open API platform. Today, Nordic API Gateway hosts sophisticated APIs from several banks, while their competitors only provide basic APIs that live up to the bare minimum of what is required from the European Union’s payment directive, PSD2.

“We are the only provider that has existing connections for all Nordic banks already in place. When the launch of

PSD2 occurs in September [2019], we can offer a smooth transition with stable operations. It is our goal to provide better and more sophisticated APIs than just PSD2. For that, we are already partnering with banks to provide premium APIs that go much further than PSD2,” Rune Mai, CEO of Nordic API Gateway shared.

By enabling data aggregation across all Nordic banks in one location, the Nordic API Gateway offers new possibilities for developing solutions and services for its customers.

Essentially, investing in the platform is an investment in the future of Danske Bank.

“By providing API’s through our own Danske Bank Developer Portal and via Nordic API Gateway, partners have the freedom to choose which platform they will extract data from,” Schäffer noted.

Bank as a financial marketplace “By making APIs available, we provide the opportunity for third parties to integrate solutions into our channels, and perhaps even more importantly, to integrate bank products into other services, such as in retail, mobility, real estate, and so forth. With the right strategy and focus, the opportunities are numerous,” Jon Schäffer says.

Open banking is still early stage, but two-way integration is already happening and driving innovation and new business models across companies. And looking into the future, it is not hard to imagine how these interconnections could turn open banking into an open ecosystem of data and functionalities across multiple sectors and industries.

Much like the business model behind digital marketplaces today – i.e. companies or people selling goods (or services) and people looking for these goods (or services) - Open Banking has the potential to mature into an ecosystem where data and functionalities can be found and bought.

And if this marketplace were to happen, it could become the real innovation that completely changes the market dynamics for financial services. A marketplace, where financial incumbents no longer need to reinvent the wheel – or even build the wheel – to create innovative commercial vehicles.

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From Furniture to Fintech: The Competitive Advantage of Danish Design Danish design is recognised worldwide, and this should be exploited when new fintech solutions are developed and launched.

By: Sebastian Kjær

W

hen the fintech startup, Grandhood raised its first €2,65 mio for its digital pension savings solution, only a handful of investors and businesses even knew about the company. And with good reason. The company’s product hadn’t even hit the market.

Sure, the seasoned team behind the startup and their innovative idea helps to explain the company’s appeal to early investors, but the design also played a critical role.

Startups are typically strong on the technical side of things, but very few manage to link the technology and communicate why it creates value in a new way Carsten Henriksen

According to Grandhood’s co-founder and its chief technology officer, Jens Kam: “Trust is essential when people have to choose who gets to manage their pension savings. For that reason it became very important for us early on in the

process to create a strong and coherent story – not least visually – so we didn’t risk having to change it too much later on. It was important to us that people knew who we were and got the impression that we knew what we were doing from the get-go.”

Building their brand story, the young company worked with the design giant, Designit to foster trust among investors and customers alike and to keep them happy with the platform. Designit have also helped the prominent fintech startups Lunar Way and Undo shape their visual identity.

The company’s design director, Carsten Henriksen, explains, “The design industry has had a hard time communicating the value before a company starts selling something to the market. However, our work with fintech startups has shown how you can get sign-ups and attract investors before having a product by having a strong design-DNA connected to the company’s values early on in the process. You skip some steps because you’ve managed to articulate value very early on, so you don’t have to pursue 3-4 prototypes before investors and customers see the potential.”

Technology and design go hand-in-hand ‘The Egg’ chair, PH lamps, and the Sydney Opera House have each played a vital role in putting the minimalistic and functional Danish design philosophy on the map. Of course, great design isn’t just about introducing a beautiful product into the digital world. Equally important is the user experience and the brand that is carrying the product.

“Great design is what differentiates products and services and creates additional value for the customers. Danish design and our design DNA is something we’re world famous for – something that differentiates us from other countries,” says Christian Bason, CEO at Danish Design Center.

Expanding on this idea, because legacy systems and heavy regulation characterise the financial sector, Bason suggests it’s especially important for the sector to develop digital solutions with a bias towards user-friendliness and uptake.

As a case in point, Bason explains this approach has “… been the great success for Mobilepay. When we look at who’s winning today, it is solutions and products that have reduced complexity. That makes it simple, intuitive, and me-

aningful for customers to engage with something that has traditionally been hard to understand.”

Consistent with this, Designit leads with the assumption that they will not “geek out” their products. Granted, sophisticated technologies and algorithms are essential in the development process, but what takes the lead is understanding how technology can create value for the customer.

“Startups are typically strong on the technical side of things, but very few manage to link the technology and communicate why it creates value in a new way. If that isn’t part of the engine room from the beginning, it’s just another product – not part of the brand,” according to Henriksen.

Great design fast-tracks success Not only startups but also established companies are discovering the importance of design. By including design early on in their journey, young companies have an opportunity to inject an advantage into their very DNA – without having to complete a 180-degree turn down the road.

True, it can be expensive for a startup to absorb the costs of design consultants from the beginning. For Henriksen, the head-start that comes with design thinking is

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we could dare to be a little wilder and more experimental – especially when it comes to new technological possibilities,” Bason suggests.

Acting on this, the Danish Design Center and partner organisations have articulated ten principles at the heart of Danish design. In a nutshell, Denmark isn’t leading the

Everyone has access to the technologies, but they don’t have access to our designers and design tradition Christian Bason, Danish Design Center

evident in a number of ways. Paraphrasing, great design will make it clear to potential customers and investors early on why they should get on board; this, in turn, will fundamentally affect the business culture and brand.

“Being a startup is a maturity process. You’re not just building a project, but also an organisation and philosophy.

All of a sudden, you’re growing from 3 to 20 employees, and that makes it important to have a brand and a common understanding of what the company is and wants. It’s possible to hire very skilled people by having a mission and strong self-understanding. You only have one shot – and there's a risk in letting your aunt be in charge of branding and design,” Carsten Henriksen says.

Design-DNA must be cultivated Although Danish design is recognised worldwide, other countries are starting to share the stage, including Singapore, Great Britain, and Sweden.

For that reason, Bason thinks it’s important that Danish designers consciously reflect on and grapple with what constitutes our design DNA. “I don’t think our DNA – which has a unique aesthetic and is more social, collaboration-oriented, and sustai-

nable – is something you can just imitate. However, we can’t rest on our laurels. If we want to be even sharper and develop our DNA; we have to know what it is… maybe

global race to develop new technologies, but Danish design has an edge which can be used competitively, and it ought to be exploited.

In Bason’s words, “Denmark isn’t known for being Silicon Valley. However, we are known in the rest of the world for being accomplished designers. We have to take advantage of that. It might be our unique resource in a global context. Everyone has access to the technologies, but they don’t have access to our designers and design tradition.”

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The Finance Sector’s Most Powerful Weapon is Customer Experience The financial sector’s digital transformation gives banks, as well as pension and insurance companies, new opportunities to compete by offering tailored customer experiences. At the same time, this allows for novel and significant business potential.

D

espite the fact that many companies offer loans, insurance, and pension savings, they tend to look very similar. Because these services have become commodities, it is hard for companies to diversify their offerings and set themselves apart from their competition.

“This means that customers aren’t very engaged in their relationship with banks, insurance, and pension companies, and their loyalty follows. The barriers associated with changing providers is primarily what keeps customers from shuffling between them,” according to Lars Bjørn Falkenberg Chief Executive Officer, Charlie Tango A/S. Historically, customers were loyal to financial institutions, but this changed in recent years. So much so, that the highest rate (ever) of customers switching banks occurred in 2018. While the volume of customers switching banks is driven, to some degree, by discontent with the ongoing scandals across the sector, Falkenberg also suggests another part of the explanation is discontent with the services and experience customers receive.

As Falkenberg sees it, “New, as well as less established players, are hijacking customers from the bigger and more

established players. Their offers are to a large degree driven by new technologies, new business models, and new ways to deliver their services, which are way less complicated – and let the customers decide much more for themselves through strong self-service solutions.”

For that reason, Charlie Tango helps established players in the financial world to offer greater personal service.

It stands to reason that companies offering the most personalised digital experience will win in the financial sector – especially in the younger segment of the population (under 30 years old).

Customers still need service after onboarding “The last couple of years, we’ve seen strong investment in the marketing area, which means that everything going on before the customer is onboarded has been digitised, automated, and, for many, also personalised. Now is the time to take the next step, to ensure the digitised customer experience – after the customer is onboarded – is also engaging and personalised,” Falkenberg cautions.

In other words, it doesn’t matter whether the customer

requires banking, insurance, or pension support. Waiting for the customer to reach out for service – or letting them terminate their engagement before they hear from campaigns or sellers to lure them back as customers – is no longer good enough.

“When customers are onboarded, all proactive and personalised service often stops. That has to change, and financial companies have to differentiate how customers experience and receive services and products through all of their lifecycles,” Falkenberg explains.

The customer experience that companies have mastered starts on the website and lures customers to continue as a seamless, digital onboarding process and organically transitions into ongoing service. A key pain point is to make self-service more readily available – as per the segment of the population under 30. Said another way, the human advisor becomes optional. At the same time, new digital tools can help advisers keep up-to-date with their customer’s current situation, so they know what the customer needs before they even reach out.

“It’s a completely different challenge. To date, the challenge had more or less been possible to solve by the

Sponsored content marketing division, in collaboration with digital experts and IT people. The new challenge is a relatively IT-heavy one, which touches the core processes of financial companies.

The new solutions still have to be based on a strong understanding of the customer and the customer journey.

However, there are new demands for strategy, creativity, and technology to work together, which has to be executed in operations,” according to Falkenberg.

The financial sector is underway – and has the experience to endure In the first months of this year, innovative apps and new digital solutions have already been launched. Few of them offer proactive and personalised services.

Falkenberg observes, “A majority of the solutions are developed in marketing and innovation garages, and have never made their way from project to operations for a lot of good reasons. From an IT perspective, those solutions have become islands and silos, adding complexity to the overall IT landscape. This makes it difficult to create a smooth customer experience across the engagement platform.” He goes on to add that the solutions have only rarely led to absolutely needed cost savings.

That said, the experience the solution offers can benefit existing financial companies. If they start spending as much energy building new digital services into their core business model and structure as they spend digitising marketing and building complementary solutions for the core business, they will create a strong foundation to meet the needs of existing customers and stand out to potential ones.

“In addition to challenging the existing, there needs to be a focus on creating better and more profitable processes for the core business. The easiest way to do this, in our eyes, is to go through every single customer interaction process.

How do you buy car insurance, create children's savings, or pick an investment profile? We think each process all the way through and spend the resources required to build new, innovative services instead of building on top of relatively inefficient customer processes,” Falkenberg advises.

New competitive arena New fintech companies have already proved that it’s possible to deliver reliable solutions with a novel and lower cost-base thanks to technology.

“The work that has been done so far doesn’t give the businesses a big boost in turnover or affect costs significantly. There is significant business potential in personalising the entire customer journey,” Falkenberg suggests.

Of course, this requires the digital changes to run deep into the core business. While there is no silver bullet, strong and validated methods and platforms are available.

“In many cases, it will also be beneficial for financial institutions to use third-party platforms to reduce their costs and offer better customer experiences – before, during, and after they become customers… while getting rid of many IT-related issues,” says Falkenberg.

As the financial world continues to open through the European Union’s revised payment service directive (PSD2), the need for financial institutions to deliver personalised and proactive services is becoming increasingly urgent.

That is because the PSD2 allows customers to do even more shopping around for financial providers, not to mention non-financial providers after their financial needs have been met. Once established companies manage to personalise their customer journey cost-effectively, PSD2 opens up excellent business potential.

“With the many digital initiatives that have already been created, we can see that financial institutions have begun to regroup and use the experience to address the

root of the problem; namely, optimising the entire customer journey in the core business by using new technology – instead of having new technology running next to the core business. It’s those initiatives that can change the business significantly, and that is what is needed to challenge new players,” Falkenberg concludes.

Charlie Tango transforms brands by delivering coherent customer experiences – combining strategy, creativity, and technology.

With a diversified team of 200 specialists, Charlie Tango masters the full digital lifecycle process, from digital strategy development and innovation through to creative and technological engineering and services.

Established in 1994, and now a subsidiary of KMD and NEC Corporation, one of the largest technology companies in the world.

In 2018, the company saw a turnover of €39 million Charlie Tango hosts the CXPaaS platform, the CX and customer communication management foundation of 70+ financial institutions in Denmark.

LARS BJØRN FALKENBERG Vice president and Chief Executive Officer, Charlie Tango A/S and FSI Lead Member of division management for KMD Business (KMD A/S)

Lars Bjørn Falkenberg, Vice President & CEO, Charlie Tango A/S and FSI Lead

Former Chief Executive Officer (Epinion A/S), SVP (SimCorp A/S), and former Head of Marketing, Digital & Sales Support (Nordea Bank S.A)

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Denmark

Sweden Amount invested in Fintech

Number of investments 6

7

Amount of money invested

4

3 1 Q1

Q2

Q3

Number of rounds in Fintech

122 M

Q4

2018

2018 ����������������������������������������� € 174.4 M

1750 M

6

Q1

Q2

2019

UNDATED 2018 Number of investments: 7 UNDATED 2019 Number of investments: 1

2019 H1 ���������������������������������€ 217.7 M

Q1

20 M

Q2

Q3

394.5 M

430 M

Q1

Q2

2018 ���������������������������������������������������������������39

159 M

Q4

2018

2019 H1 ������������������������������������������������������17

2019

UNDATED 2018 Amount of money invested : 13.4 M UNDATED 2019 Amount of money invested : 15 M

Biggest rounds 2019

Biggest rounds

2019 H1 Klarna ������������������� € 83.1 M 2018 DBT Capital ��������������� € 18.5 M

Pleo ������������������������������������������������������������������������������������������������������������������������������������������������372.000.000 kr.

Norway

Chainalysis���������������������������������������������������������� (two rounds): 40+198 mio = 238.000.000 kr.

Amount invested in Fintech

Lunarway:���������������������������������������������������������������������������������������������������������������������������������������97.000.000 kr.

2019 H1 ������������������������������������ € 12.7 M

Viabill: �����������������������������������������������������������������������������������������������������������������������������������������������66.000.000 kr.

2018 ��������������������������������������������� € 34.8 M

Biggest rounds 2018

Number of rounds in Fintech

Tradeshift: �������������������������������������������������������������������������������������������������������������������������� 1.600.000.000 kr.

2019 H1 ����������������������������������������������������������2

MakerDAO: ��������������������������������������������������������������������������������������������������������������������������������100.000.000 kr.

2018 ���������������������������������������������������������������14

Pleo: �����������������������������������������������������������������������������������������������������������������������������������������������100.000.000 kr.

Biggest rounds

Chainalysis:�������������������������������������������������������������������������������������������������������������������������������100.000.000 kr.

2019 H1 Zwipe���� ���������������� € 12.5 M

Spiir ������������������������������������������������������������(two rounds in 2018): 25+39 mio� = 64.000.000 kr.

2018 �������� Aprilla Bank��������€ 17.4 M

Source: Copenhagen Fintech

Netherlands

Germany

United Kingdom

Amount invested in Fintech

Amount invested in Fintech

Amount invested in Fintech

2019 H1 ������������������������������������ € 32.8 M

2019 H1 �������������������������������� € 709.4 M

2019 H1 ���������������������������� € 2018.6 M

2018 ������������������������������������������€ 137.3 M

2018 ������������������������������������������€ 767.3 M

2018 ������������������������������������� € 2128.4 M

Number of rounds in Fintech

Number of rounds in Fintech

Number of rounds in Fintech

2019 H1 ������������������������������������������������������10

2019 H1 ������������������������������������������������������23

2019 H1 ������������������������������������������������������64

2018 ���������������������������������������������������������������24

2018 ���������������������������������������������������������������86

2018 �����������������������������������������������������������225

Biggest rounds

Biggest rounds

Biggest rounds

2019 H1 Brand New Day ����€ 25 M

2019 ��������N26 ���� ���������������� € 268.2 M

2019 H1 Greensill����������� € 715.1 M

2018 �������� BitFury ���������������� € 71.5 M

2018 ��������N26����������������������������€ 143 M

2018 �������� Revolut ������������ € 223.5 M

Source: DealRoom

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The Record-Breaking Funding Year in Fintech Danish fintech has broken every record over the last 12 months. A Danish fintech unicorn is born, foreign investors have set their scope on the Danish financial ecosystem, one fintech raised 2,7 million euro without having launched a product yet, and financial incumbents are partnering with and investing in scaleups.

By: Jakob Lindmark Frier

T

he number of Danish fintech companies has risen from mere handfuls 10 years ago to more than 200 today. Both local and international investments have breathed new life into the Danish fintech sector.

Last year was a record one, with Denmark outperforming its Norse neighbors in total capital attracted from both Danish and international investors.

“Fintech in Denmark is doing better than ever,” says Rolf Kjærgaard, Chief Investment Officer of the Danish Growth Fund, Vækstfonden. “The sector has been growing in recent years, and as a result, fintech is experiencing a rise in attention from both the media and investors.”

Kjærgaard explains that this increase in attention stems in part from prominent investments like the 350-million-kroner Series-B investment that Danish fintech Pleo secured in May 2019. However, the real reason for the current optimism surrounding fintech lies in the strategic partnerships between old and new.

“Up until a few years ago, the financial sector was far behind on investments in technology, IT infrastructure and user-friendly solutions,” says Kjærgaard. “But the need for digital transformation has paved the way for fruitful relationships between the banks and mortgage credit companies on the one hand and the fintech companies on the other.”

Not long ago, fintech companies were entering the scene seemingly destined to outmatch and replace the old-timers in the finance sector. Meanwhile, banks felt so confident in their capacity to innovate, they did not engage with the new. The situation today is completely different.

“Today we know that a credit card solution alone is not enough for fintech to secure success,” Kjærgaard says. He elaborates: “You have to be a part of the value chain of financial offerings in its entirety and be in possession of the

know-how needed to navigate within the regulatory framework of the finance sector. This is what the banks have to offer. But the banks have also realised that, in terms of user friendliness and usability, they can’t compete with the new fintech companies.”

The result of this, according to Kjærgaard, seems to be a symbiosis between fintech scaleups and financial incumbents. The banks need the innovation of the fintech sector while the fintech sector needs a platform through which it can implement its solutions. This is why we’ve seen Spar Nord invest in a digital piggy bank called Ernit and why we’ve seen Danske Bank invest in a tech solution for home economy, Spiir, and the payroll facilitator Zenegy.

Cases like these lay the groundwork for future investments, not only from Denmark but also from the rest of the world.

“The local willingness to invest that we are witnessing right now will continue,” says Kjærgaard. “More fintech companies will emerge and we will experience more late investment rounds with the potential to attract international capital.”

Local investments aside, is there another reason why the Danish and Scandinavian markets are able to attract investors from around the globe?

“Well, the international investors can see that investments here are paying off,” says Rolf Kjærgaard.

“If it were just a single company it wouldn’t raise an eyebrow, but we now have several hundred fintech companies in Denmark alone, of which many have been successful in rolling out their business solutions and securing initial investments. This is something that calls for attention. Denmark has gained a reputation as a country with a dynamic fintech scene and this alone can attract more investments.”

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Top Nordic Banks Stay Relevant

by Investing in Fintech Startups Investing in fintech is no longer exclusively for venture capitalists focussed on returns on investments. Top Nordic banks have gotten in on investing, and with a more strategic focus.

By: Sebastian Kjær and Jakob Lindmark Frier

J

ust a few years ago, banks didn’t view fintech as a part of the financial ecosystem. In response, the startups turned into disruptive beasts that wanted nothing more than to overthrow the established system.

A lot has changed since then. Over the past year, top Nordic banks – like Danske Bank, Nordea, and SEB Bank – have entered into partnerships with fintech, pouring millions into up-and- coming companies. The Denmark-based fintech, Zenegy received an investment in the millions. Nordic API Gateway absorbed approximately €10M from DNB and Danske Bank. And Nordea and SEB Bank were among the investors behind Tink (from Sweden) raising €56M earlier this year.

More than just new sources of investment money, this shift has changed the entire structure around the startup's strategies, according to Johan Lorenzen the former chief executive officer at Holvi, which as acquired by global banking group BBVA, as well as investor and board member in current advisor for a series of high-profile fintechs, including Brickshare, Nordic API Gateway, and Grandhood.

The different types of investments have different goals. Private investments from venture capitalists are, primarily, aimed at generating a financial return, while corporate money is aimed at generating a strategic return. Both models are viable, but also very different,” Lorenzen explaines. Where venture investments have the simple goal of earning more money from an exit than the initial capital invested, the strategic return for banks can have several strings attached.

“Often, early-stage investments from corporations are seen as an investment that adds something to the corporation that it didn’t have before – whether capacity, technology, or knowledge. If they are willing to work together on that premise, it can be highly beneficial for both parties. But it requires a more nuanced mindset,” Lorenzen says.

Danske Bank: A cornerstone going forward By investing in innovative startups, corporations can access cutting-edge technologies, discover novel products or services, gain access to entrepreneurial talent, and experiment with different business models. Danske Bank is one of the Nordic banks pursuing this strategy.

“At Danske Bank, we view corporate venture capital as one of our innovation vehicles that we need to master going forward. It serves as one of the cor-

nerstones in our quest to develop the best customer solutions. The long-term perspective is the knowledge return we harvest from gaining insights into how the solutions of tomorrow will be shaped – business model-wise as well as technology-wise,” says Katrine Mitens, Executive Vice President, Payments and Innovation at Danske Bank.

Danske Bank invest in funds, like ByFounders, and also acquire equity in relevant partners, like Spiir and Zenegy. These acquisitions lead to strategic fits that can add the most value for their customers. To be sure, the fintech’s solutions are being offered directly to customers, and the process of integrating the two parties allows for new terms. Startups are optimising for speed, while corporations are optimising for risk. These approaches must be balanced in order for the partnership to work. Quite simply, the startup can’t be caught up in rigorous processes, while the corporation can’t take the same risks as a startup.

“When developing new solutions or integrating with partners, we organise in agile teams, who are empowered to make the decisions needed. That said, we depend on solutions that are trusted, and, for that reason, we consider risk carefully in our development. That might sometimes seem like a heavy burden coming from a startup, but we try our best to organise the processes around this to fit with our agile development,” Mitens explains.

Strategic investments are more patient “If you rewind and take a look at how we started Spiir, it was through blood, sweat, and tears – and a lot of battles with the banks. That environment has shifted drastically in the past few years, and today we’re partnering with the banks,” says Rune Mai CEO and co-founder of Spiir and Nordic API Gateway.

In the early days of Spiir – which is a budget management tool, founded in 2011 – some banks were actively working against the startup when they tried to integrate their solution with banking data. Today, the fintech scaleup and its API aggregator, Nordic API Gateway has generated approximately €10M in investments from Danske Bank and DNB. Their solutions are also integrated into Jyske Bank.

Instead of raising capital from venture funds, Spiir decided to enter into a strategic partnership with the established banks to access their expertise, networks, and explore product synergies. Paraphrasing Mai, taking this route gave them the peace of mind to focus on solving persistent problems in the sector, instead

of relentlessly hunting growth opportunities to satisfy venture-investors.

“My biggest concern against hyper-invested fintechs is the fact that tremendous amounts are thrown at a relatively limited product. This means the startup has to run even faster to meet growth expectations. In the worst case scenario, this results in an odd platform that wants to be everything and nothing – without really solving anything,” Mai says.

Win-win requires alignment More funding opportunities means more ways for startups to become established financial businesses.

According to Lorenzen, there is plenty of capital for fintech. Fintech-specific funders have put knowledge behind their money over the past 5 years, and the opportunity to find a strategic partner among the banks creates access to new resources.

If fintechs and their technological solutions succeed in working together with banks on innovative solutions for themselves and their customers, the result will be a win-win partnership. However, this requires for both parties to agree on a common goal. And Lorenzen thinks this is where the more experienced and sophisticated will depart from the rest.

“Banks who all of a sudden realise they want to invest in a fintech might want to get 90 per cent of the ownership for half a million Euros, and then expect the team to (more or less) work for them. This is the wrong foundation for a partnership. The bank's directorship shouldn’t just sit back at the headquarters and expect fintechs to find them. Those who have been successful are leaning into the ecosystem – on the ecosystem’s premises – and actively pursuing the fintechs on their own playing field,” Lorenzen advises.

Johan Lorenzen, former CEO of Holvi and chairman in Spiir Nordic API Gateway and Grandhood

Katrine Mitens, Executive Vice President, Payments & Innovation at Danske Bank

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The Doors Are Open for Anyone Who Wants to Invest Kameo runs an online platform for crowdlending with a strong focus on property projects.

The Danish CEO sees significant growth in alternative forms of financing right now, including crowdlending, and the ambition is to list Kameo on the stock market within five years.

By: Michael Monty

C

rowdlending company Kameo entered the Danish market in December last year when they opened their first Copenhagen office. They currently reside in Copenhagen Fintech Lab, and the ambitions of the newcomers are high – both in the long and short run.

Kameo is authorised to operate payment services by the Danish Financial Supervisory Authority (Finanstilsynet), and they mainly focus on asset-backed loans to property projects and small businesses in Scandinavia, offering investors an expected return rate around 10 %. Crowdlending – also known as loan-based crowdfunding – is considered a supplement to bank financing , and the company's Danish CEO Jesper M. Johansen describes Kameo as a door opener to the financial market for both lenders and borrowers.

"Our philosophy is that everyone should have the opportunity to invest – regardless whether you have small savings in the bank at an interest rate of 0.0%, or you are a professional investor who, based on a calculated approach, will invest millions in a single project. Our minimum investment is set at a mere 500 DKK, and the creation of an investment account is free of charge,” emphasises Jesper M. Johansen.

According to Jesper M. Johansen, Denmark sees a great rise in alternative forms of financing right now, and crowdlending is one of the relatively new tools that more and more people are using.

"In recent years, crowdlending saw strong growth in our neighbouring countries, and we believe that Denmark

at the same time a unique opportunity to invest across borders. As an investor, you have the opportunity to create a diversified portfolio of loans, essentially establishing your own small fund,” he says.

In the future, Kameo plans to expand the palette of investment opportunities on the platform. The plans include a secondary market, allowing borrowers to trade loan shares, and equity crowdfunding, especially interesting for scale-up companies.

Looking further ahead, the plan is to be listed on the stock exchange.If Danish CEO Jesper M. Johansen’s expectations are met, the listing will be a reality within the next five years.

Jesper M. Johansen, CEO in Kameo Denmark will follow. After all, it would be a very logical development, especially given our history and strong tradition for co-operative movements and even cooperative banks,” Jesper M. Johansen points out.

Facts about Kameo Founded in 2014.

Investing across borders

Online platform for crowdlending, also called loan-based crowdfunding.

Within five years, Kameo's Danish CEO hopes to see Kameo grow to become the preferred crowdlending platform in Scandinavia.

“We offer all private investors across Scandinavia the opportunity to invest in attractive loans to property projects and small companies with high expected returns – and

The company name is a Nordic variant of the term Cameo role, emphasizing how Kameo plays the supporting role, while investors and borrowers take the main stage.

Offices in Oslo, Stockholm and Copenhagen.

How crowdlending works Investments

Through Kameo, private individuals and companies can invest directly in loans to property projects and small businesses across Scandinavia.

Loan Company

Crowd

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Installments & interest

Installments & interest

Authorisation as a payment service provider from the Danish Financial Supervisory Authority (Finanstilsynet).

It is owned by employees, the board, and the investment bank ABG Sundal Collier.

Read more at www.kameo.dk

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The whole idea of crowdfunding and distribution of ownership is really interesting and positive, and we think Kameo has a good eye for the innovative – therefore we fit well together Bo Benzon, CEO and architect, Arkitekturministeriet

Our Reason to Seek Funding Through Kameo Architect and CEO of Arkitekturministeriet, Bo Benzon, has borrowed one million DKK from Kameo's investors to finance the construction costs of 30 new student housing units at Gribskov Gymnasium.

“

In Arkitekturministeriet, we want to pioneer the world to become a better place – both through what we draw and build, and through the political and economic play that takes place in connection with construction projects and the development of communities. The whole idea of crowdfunding and distribution of ownership is really interesting and positive, and we think Kameo has a good eye for the innovative – therefore we feel it is a good fit. Moreover, we have a lot of other projects that I can easily imagine to be financed through crowdfunding.”

“When Studiebyen is finished, and the students move in after the summer holidays, it gives me as an architect and entrepreneur an even greater pride when I think that many people have helped to raise the money for the construction. At the same time, both my architectural firm and the entire project at Gribskov Gymnasium receive a lot of ambassadors and a unique network in the local community. Moreover, I think those who think beyond the return of the investment will also have emotional ownership and pride that they have helped create something exciting in the local area,” says Bo Benzon.

New Main Shareholder ABG Sundal Collier believes in a future for crowdlending, and the director is impressed with Kameo's platform and offerings. Therefore, the investment bank has chosen to invest in Kameo.

T

he Nordic investment bank ABG Sundal Collier sees a bright future for crowdfunding and crowdlending. This is one of the reasons why ABG Sundal Collier has become the main shareholder in Kameo.

According to Tue Østergaard, who is Head of Markets in ABG Sundal Collier in Denmark, the investment

in Kameo is part of ABG's strategic agenda to increase the range and scope of products for its investors.

“I am very pleased with this strategic investment. I am convinced that interest in new investment opportunities through crowdfunding and online platforms will increase further in the future. Also, we are impressed with the Kameo team and platform as well as the qua-

lity of their investment offerings,” says Tue Østergaard.

Sebastian Harung, Group CEO and founder of Kameo, is also looking forward to having ABG on the team.

"With ABG Sundal Collier as one of our largest shareholders and partners, we are ready to take the next step and further develop the company into a truely Nordic platform," says Sebastian Harung.

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The Most Important Resources in Digital Transformations Are People

"As a union, we play a significant role in ensuring that development in the startup community has people and talents as a key point" - Steen Lund Olsen, vice president in Finansforbundet

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Digitisation has become an integrated part of the financial sector, and that might mean fewer employees. However, lessons from the best digital bank in the world indicate that people must be at the centre of the transformation. Moreover, with a combination of employee training and national effort, the sector can become a job-creating stronghold.

T

he best digital bank in the world is The Development Bank of Singapore. That became clear last year, when Euromoney handed out its awards to various categories of banks.

Moreover, when Finansforbundet (Financial Services Union Denmark), visited the bank last year, alongside a delegation of representatives from the Danish financial sector, it was revealed what makes the bank such a robust digital player: People.

With regards to digitalization we are at the forefront in Denmark, but Singapore is home to large banks like DBS, which was awarded the best digital bank last year. As an organisation, they think holistically to keep customers and employees at the core. They have recognised that human resources are the most important resource for the organisation,” says Sune Lundtoft, business policy consultant in Finansforbundet.

The bank has already trained a number of its traditional employees – like cashiers and advisors – to take on new roles within digital services. An example is the bank’s classic ATMs, which have been transformed into digital service stations that fulfill the bank’s promise of “Live More, Bank Less”. At those service stations, advisors can interact with customers virtually and issue credit cards on the spot. In that way, customers get much faster and more efficient service when contacting the bank.

Though Singapore is geographically far from Denmark, Lundtoft believes that, due to the similarities between the two nations, the latter can learn from the former.

“We are both relatively small nations and very export-focused countries, and we both have open economies that have to act proactively on the innovation arms race.

We are conscious about the fact that we have to be curious about the changes happening in the sector – and act on the trends that affect our members in the end,” he says.

Developing the financial sector isn’t just about new technologies and digitisation. It’s also about customer solutions that require the skills of an actual human being.

Technology is coming – and creating new possibilities for people Self-service, automation and robots are coming. Finance and technology are very much two sides of the same coin.

The financial sector has experienced a 12 per cent reduction in the number of employees since 2008. That trend must change if the Danish financial sector wants to remain competitive globally.

“The largest resource banks have are their employees – and the example from Singapore shows that it’s also true in a digital bank. If aying off your way to growth is the strategy, I don’t think it’s sustainable in the long run. Long-term growth demands collaboration between human skills and technologies,” Lundtoft says.

Automation has found its way into businesses, and digital tools are making employees more efficient. Thus, the need for human value injection and skills is moving

elsewhere. That’s one of the findings in a mapping of the financial labour market that Finansforbundet has made.

This mapping shows that a combination of, and collaboration between, different skills – economic, social, cognitive, digital and personnel – will typically be required across job functions in the future.

“You don’t have to master it all, that’s clear, but digitisation creates new conditions and requirements for the employees. For that reason, we encourage our employees to be open, curious and up-to-date with the new opportunities that are constantly on the rise in the industry. The skills of financial employees have great value both today and tomorrow and companies have to make use of it as a key asset – also in the future, which becomes still more digital,” Lundtoft says.

necessary understanding between the two parties and how they can support business while developing employees.

“In the fintech scene, we often hear that there’s a growing demand for employees with a financial background and experience from the sector – because it’s employees who have the necessary insight and understanding of the infrastructure, development in the sector and, not least, customer understanding that newly established startups need.

We need to be much better at understanding and taking advantage of those dynamics to create future growth and jobs in Denmark,” Lund Olsen says.

To learn more about the dynamics, Finansforbundet has established an entrepreneurship commission in cooperation

Humans will drive digital growth and innovation It’s no law of nature that digitisation means fewer employees. Singapore has set a national goal of creating 5.000 new positions per year within finance – and fintech is a way to make the sector a national stronghold.

Finansforbundet has projected that fintech has the potential to create 10.000 new jobs in Denmark before 2025.

For that reason, to strengthen innovation in the sector and support job growth, the union has co-founded ‘Copenhagen Fintech’, which is currently home to 60 financial entrepreneurs.

“Copenhagen Fintech is a great example of what demand-driven business policy and partnerships can be a part of creating – where public and private stakeholders collaborate to lift a very ambitious agenda in creating jobs and growth. We’re happy to participate as a union, because of the opportunities for job creation and growth. I don’t believe that Denmark should try to copy Singapore one to one, but we have to learn from their key findings in broad collaborations, targeted training and focused job creation. The financial sector is a great asset, partly because Denmark has a well-established digital infrastructure, a lot of skilled employees and not least our innovative spearhead in fintech. For that reason, it’s also important that the government creates the right frameworks and has the needed focus,” says Steen Lund Olsen, vice president of Finansforbundet.

Through an exercise initiated by ‘Danmarks Erhvervsfremmebestyrelse’, in which the business support system is being rethought and consolidated in a series of flagship industries, he thinks it has become obvious that finance and fintech should be prioritised as a significant cluster in Denmark.

New commission for entrepreneurship with people at the center New fintech solutions and partnerships between established players and startups are becoming more widespread in Danish businesses. For that reason, it’s important that we create the

The financial sector is a great asset, partly because Denmark has a well established digital infrastructure, a lot of skilled employees and not least our innovative spearhead in fintech.

Steen Lund Olsen

with the organisation Akademikerne. In 2019, the commission will develop legislative proposals to help foster an attractive startup community in Denmark.

“As a union, we play a significant role in ensuring that development in the startup community has people and talents as a key focus point. We need to emphasise the urgency of prioritising topics such as the importance of interdisciplinary collaboration in startup teams; the relevance of smart capital; the gain from working with experienced mentors; the development, attraction and retention of qualified labour; and internationalisation. These are topics that have one thing in common: People are at the centre,” Lund Olsen says.

Member of the Danish parliament Mette Reissmann (S) is anchoring the initiative. The combined solutions will be presented and debated with politicians from different parties at Christiansborg at the end of 2019.

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Dataism Is the Future Religion in the Financial Sector The financial sector has always been a wealth of data. As the value of data is rising, it leaves the banks and financial institutions with the question: What value can we achieve through a more commercial approach to data?

By: Sebastian Kjær

D

ata is the new oil. You have probably heard this so many times that it’s starting to become cliché. But it’s an undeniable fact that the most valuable companies are no longer oil companies - it’s the tech-giants who skillfully drill and refine data.

“The development in use of data has gotten the Israeli historian Yuval Noah Harari to appoint dataism as a new, fast-growing religion. A dataist swears to the authority of data and sees the universe as one massive data stream, where organisms are reduced to biochemical algorithms. A new religion, where Silicon Valley is Bethlehem,” Tobias Holger Hansen, Chief Legal Officer in the Danish scaleup Cardlay, says.

The financial sector is one industry with access to a massive amount of customer data, and with the mindset of a dataist it has the potential to create value for both customers and the sector itself.

Every credit card is essentially a software code that leaves data behind, which no one but your bank can access. But despite other industries looking enviously at the amount of data they hold, banks traditionally haven’t used it commercially.

Fintech could help banks refine “Fintechs are entering the market with new ways to use data better and smarter. I’m certain this is one of the arenas where banks will compete in the future,” Hansen says.

Cardlay is a good example of this statement.

Cardlay has developed a white label product for banks and card issuers that offers a high level of data enrichment for card transactions. By using machine learning and intelligent solutions for enriching the data, there is a great potential for bringing transaction data to life and developing new products. Cardlay sells it to the banks, who sell it to their own corporate customers.

Cardlay have used this data to build a service that helps companies get VAT refunds across country borders in the EU. This is an opportunity only few takes advantage of today, either because the process is rigorous - or simply because they don’t know about it.

“By asking two questions we can extract the data we need to automate the refund on the customer's behalf. Money they wouldn’t otherwise have gotten. And it’s possible because we enrich the transaction data, which is already available,” he says.

prove the banks’ internal processes - e.g. onboarding or fighting money laundering.

“When you first start accessing the data, it’s like opening Pandora's box. And we’re currently starting to see the first products offering a smarter solution thanks to data,” he says.

This development might change the role of a bank in the coming decades. They might become more of an infrastructure provider that fintechs build services on top of, which will make everyone’s everyday life easier by predicting patterns through data.

“Banks have already demonstrated how skilled they are at handling peoples money. Now banks have to show that they are capable of handling customer data in the same secure way. If that’s the case, banks are well equipped for a future with data-capitalism.”

The future of banks is all about data “More and more companies are making solutions based on bank data alone. If I have access to your most recent 100 transactions, there is a huge probability I can predict transaction number 101. This can benefit the customer: If a bank knows you are most likely going to buy milk next, it can provide you with some offers on milk in your neighboorhood,” Hansen says.

There is a lot of customer-facing examples for data such as this, but data can also be used to im-

Tobias Holger Hansen, Chief Legal Officer at Cardlay

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Camilla Kerlauge and Maria Flyvbjerg Bo are the founders of the Spenderlog

A Fintech Wants to Do All of Your Grocery Shopping While Making You Healthier and Wealthier Spenderlog nudges consumers to buy items that help them spend money smarter while simultaneously achieving personal health goals, and the team sees significant potential for making all shopping experiences more convenient through fintech focused on creating fully automated grocery shopping.

Y

ou are what you eat – at least according to the founders of Spenderlog, who have the data to prove it. Moreover, think about it: How much information does your grocery shopping reveal about your spending habits?

It creates consumer patterns that tell a lot about how conscious you are of your wealth and health – and about a sustainable society as well.

Based on artificial intelligence, the Copenhagen based startup Spenderlog not only provides a shopping list, but also shows you detailed insights regarding your purchases, and the app helps you set personal goals to achieve either a better lifestyle or save more money. Spenderlog reads your receipt from the supermarket, while the artificial intelligence recognises the items purchased and translates them into patterns of behaviour, helping you make better decisions.

“Where banks have PFM (personal financial management) tools, which only give you the total cost of what you spend on groceries, we break it down by each item and how it's composed. The app then shows you the specific areas where you can cut costs without a significant loss of well-being. You can also see how your spending compares to other people, which gives you insight on whether or not you’re living healthier than most people,” says Camilla Kerlauge, CEO and founder of Spenderlog.

By: Ian Rummler

Whether you’d like to be healthier or save money, Spenderlog is your true companion, according to Kerlauge: “While you might not be able to control your rent or utility bill, spending at the grocery store is in your full control.

So we believe this is often where you can make the most impact on your budget and your life.”

Fintech should provide convenience and efficiency Fintech is often seen as a tool for saving money, but saving time in our lives is just as important. Thus, fintech is now bringing improved user experiences and decisions closer to the consumer and, to some extent, greatly improving your financial options. We’re likely to see far more technologies and apps in the coming years that not only do that, but that also make our lives dramatically easier.

“I believe there’s still much opportunity in the area of convenience out there. There’s a huge potential in online shopping, and you can add a lot more convenience and relevance to that journey than we have today,” says Camilla.

While AI is a complex tool, it can be implemented merely to provide a lot of added relevance throughout any consumer experience. “AI is just a tool for handling data and processes more intelligently, and it's going to be a bigger part of our toolbox moving forward. As long as we’re cautious,

it can be used effectively as a powerful tool for achieving relevance in any consumer interaction.”

Camilla Kerlauge and Maria Flyvbjerg Bo are the founders of the Spenderlog. Camilla got the idea for Spenderlog during her nearly 20 years in the financial sector. In 2017, she left her job as Head of Data & Analytics at Nordea to pursue the idea.

Maria Flyvbjerg Bo, serial entrepreneur and co-founder of Hufsy and Nest Copenhagen, brings a strong focus on users and commercialisation.

“The vision is to create a fully automated shopping experience where the goods you need are delivered directly to the door when you need them. At Spenderlog, data and technology are put into play to enable the user to take control of your consumption and achieve your personal goals,” says Maria Flyvbjerg Bo, CXO & co-founder of Spenderlog.

Spenderlog is live in Denmark, and with more than 10.000 downloads, the app is growing steadily. During the first year of the app, they were very much focused on making the AI perform; now, they’re focusing on expanding and building more services for users. The company is currently raising money to support further growth in Denmark and to expand to one or two new markets in the year to come.

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Consumers Value-driven

are

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â&#x20AC;&#x201C; Retailers

Should Be

Data-driven Contrary to popular belief, the retail experience does not end the moment a customer pays for a product. People demand clear returns, refunds, or exchanges process. What retailers donâ&#x20AC;&#x2122;t recognise is the impact of a poor after payment experience; it will result in them losing customers, loyalty, and, ultimately, profitability.

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E

very retailer, whether online or offline, claims to focus on customer satisfaction, the customer is king – they say. While this is still true, a lot has happened to the way retailers seek to satisfy customers. The time when the shopping experience ended the moment a customer’s cash was handed over is now a relic of a bygone era. Expectations have changed, customers now want a consistent customer experience across all touchpoints – before, during, and after payment.

Online commerce, changing consumption patterns, and fierce competition from global big tech companies are shaping the consumer as we know him or her.

“Consumers have become much more demanding, and their expectations of retailers and the shopping experience they deliver is at an all-time high. Today, consumers investigate the product thoroughly before purchasing or ordering it. On top of that, they expect retailers to understand their needs even before they enter the store. The new reality and the rapid development and adoption of day to day lifestyle technologies and social platforms have gone a long way in shaping that,” Bettina Thorkelin, Nordic Director at Valitor says.

According to a report conducted by Valitor, a majority of consumers – especially the new generation Z from age 18 to 25 – are open to sharing data on how, when, and where they made a purchase. The younger generation makes it clear that they expect the same great experience instore and online.

“Retailers must understand their customers, personalising communications and experiences so that shoppers feel valued rather than bombarded. A 360-degree view of customer behaviour, online and offline, can be valuable.

The retailer must take advantage of and carve out a distinct voice and purpose across all channels that consumers use to browse, shop, and return,” says Thorkelin.

In other words; consumers are value-driven – retailers should be data and experience driven. One option here is to implement an omni-channel payment solution that provides insight into shopper transactions across multiple channels. For example, by understanding where and when a shopper makes repeat purchases, a retailer can deliver relevant and personalised offers that add real value while continually improving the customer experience they provide. Customer retention is a significant area of impact for an omni-channel payment solution as better personalisation, and a better understanding of customers consistently allows retailers to deliver better value to customers.

One token to rule them all While the customer is still king, the critical factor in appealing to – especially – the younger clientele has changed. As behaviour changing technologies arise and grow, so does the challenge and complexity for merchants as they try to retain their position and purpose in the market, navigating multiple channels and platforms to meet these requirements.

“When it comes to payment solutions, Europe is fragmented with many different payment methods. A

pan-European merchant will most likely have to deal with different payment solutions. The Nordic region is much more digital than the rest of Europe. In Denmark, many use Mobile Pay, and Norwegian consumers use something different and in Germany a third,” explains Halldór Lúðvígsson, Managing Director at Valitor.

Merchants are forced to manage multiple different projects to cater for this, which can often be costly and resource heavy to implement. When merchants do business across Europe, they must invest in different systems, payment methods, and platforms. Highly complex and complicated infrastructure, along with bureaucratic and technical tasks for financial departments, results in very manual, resource heavy work, with multiple systems involved to update and maintain the different platforms.

Merchants have to implement multiple payment methods in different countries to cater to the preferences of the local market. It is no big challenge for retail incumbents like Amazon, Zalando, or Walmart who can easily collect data across markets and countries, but Valitor’s solution gives retailers of any size the ammunition to fight back against increasingly fierce competition across every channel.

“Through cross channel tokenisation, we can track and convert data from transactions into actionable insights, that means more personalisation, better service delivery, and better customer experience. Whether I use my credit card in Denmark or Iceland to buy something in a webshop, the purchase is mapped to an individual token so that merchants can identify that shopper across all the channels and as such make smart and personal decisions about how to best serve them. We provide this for all our customers, and it is a key differentiator for us in the market,” Lúðvígsson says.

Valitor simplifies the complexities of managing multiple systems in multiple geographies to deliver best in class customer experiences. Payments are intrinsic when considering how to navigate the challenges of the modern day retail landscape, the ability to make multiple platforms work together is a massive win for retailers.

Loyalty in return In further research conducted by Valitor, it was discovered that up to 60 per cent of consumers wish for a longterm relationship with a merchant they feel connected to and valued by, but will not hesitate to share negative reviews if they feel badly treated. The research highlighted that the primary thing that annoys consumers the most are strict and complicated return policies.

“Only a few platforms can offer an easy and seamless return policy. Many retailers struggle to recognise a consumer and handle the return automatically. With a tokenised solution, the consumer can buy a product in Iceland and return it in Denmark because the merchant has the opportunity to recognise the consumer,” Thorkelin says.

While revenue continues to rise from online commerce, physical stores are struggling to keep

Bettina Thorkelin Nordic Director at Valitor

Halldór Lúðvígsson, Managing Director at Valitor

up with them. Physical stores are not playing to their experiential strengths and in the face of fierce competition and pricing wars, the retail landscape looks to get even more difficult. Those who don’t capitalise on the opportunity to carve out a distinct and exciting experience within their physical stores will face being wiped out.

“This does not mean that the high street will be extinct in a couple of years. Consumers need to feel and experience products and brands in the future “high street”. Physical stores will become experience and convenience centres that project all the values and services that retailers want their everyday shoppers to buy in to and regularly use,” Thorkelin says.

Much indicates that physical stores must get used to a new reality in the future — an omni-channel one.

Retailers must use data from all channels to increase understanding of customer behaviour and ultimately boost sales through perfectly curated shopping experiences, adding applications and services that support the purchasing experience we know. Retailers must do this to reach the high standards of the modern shopper, exceed their expectations, and ultimately ensure the survival of their business.

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The innovation

paradox:

Just because we have the

ability

to innovate does

not mean

we have to

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By: Jakob Lindmark Frier Photocredit: Adobe Stock

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ithout question, human beings are drawn to convenience. As a testament to this, consumer behaviour has changed with the speed of innovation, and we continue to demand more. The flipside is that we are often overwhelmed by the wealth of choices we have, and are left unable to assess our options and act according to our best interests.

But should we just accept that the world has gotten too complex for individuals to make the best decisions for their financial health? Or should we, instead, pause to consider the financial industry’s role (and perhaps even responsibility) to help consumers to understand, navigate, and use services, alongside the convenience of the services they are offering?

In truth, many new services and products respond to the need for convenience and drive users to seek out more streamlined and simplified options – ones that reduce friction. Therein lies one of the problems. Most of the services we see today are just simplified versions of earlier iterations, dressed up to look good with one or two strong selling points. The fact that these new services must capture attention right out of the gate means that they have to fix the consumer’s attention on selling their service rather than educating on why, when, and who should use it.

There is a strong sense in which the financial industry is creating services where all friction dissolves. Of course, this is not unique to this sector, but it carries consequences that we do not always anticipate or perceive.

As a case in point, in fintech, digital development makes cash disappear. A cashless society means that there is no money to touch or see. Studies confirm that when individuals don’t feel the friction of objects, they have a harder time relating to them. In fact, using credit cards for payments increases the propensity to spend, compared to cash in identical situations.

Now it is easier than ever before to buy products and services, but it comes at the cost of losing control and oversight.

“The growing subscription business is even worse (than brick and mortar shopping red), as it completely hides the ‘pain of paying’ from us. I believe the obvious party to take responsibility here is the banks, as they have our account information and credit/debit cards. The banks need to build solutions that help people understand how their money is being spent, and help them to gauge their expenses,” says to Thomas K. Laursen, CEO at the fintech and subscription company, Subaio.

Digital money is a blessing and a curse The fintech startup, Ernit is on a mission to make digital money tactile.

“My daughter has dubbed my credit card ‘the magic card.’

She believes it contains an endless stream of money, and she simply doesn't understand the value of money today,” explains Søren Nielsen, CEO and co-founder of Ernit.

When cash disappears from her father’s wallet, it also disap-

pears from her piggy bank, impacting her perception and understanding of the value of money. Responding to this, Ernit set out to make a smart piggy bank that could provide children with an experience of money that they could feel. For this, the fintech startup combined an internet of things (IoT) device to an app and a corresponding bank account.

“We use sound to stimulate young people and children’s understanding of money. There are sounds associated with money going into an account and sounds when the piggy bank is empty. In addition, we also think a lot about how we use the technology in behavioural nudging in getting people to use and benefit from the technology. There must be a meaning assigned to it and that should definitely not be to spend as much time with the product as possible,” Nielsen says.

Nielsen explains how too many companies and investors rely on numerical identification to understand whether and how a product successfully engages with the user. Essentially, they focus on the number of users on the screen, optimise the peak usage, and aim to have as many sessions as possible.

“During fundraising, we are often challenged by venture funds on parameters such as interaction and downloads. The more people using the products, the better. And the more products the merrier. The same happens in relation to our customers. But, for us, it's not just about making it as easy to pay as possible. It's about forcing in friction, so that consumers get a deeper understanding of what they're doing. In fact, many potential commercial partners have contacted us to place adverts in our channel so that they can sell products targeted at kids.

Commercially it makes great sense, but it does not fit in with our why and the essential wisdom the kids need,” Nielsen points out.

When commercial interests conflict with ethics, the latter tends to go out the back door – as we saw this past year with Facebook’s Cambridge Analytica scandal.

“Profiling provides competitive advantages. It is of great market value to be able to profile customers with targeted marketing and personalised products and services. There are good ethical reasons to avoid profiling. It is mostly based on the collection of very sensitive personal data, and it gives companies other opportunities to exert an unprecedented influence on, and control of, our lives,” Thomas Ploug, professor at Copenhagen’s Centre for Applied Ethics and Philosophy of Science, says.

The Big Macs of finance Interestingly, one of the latest trends in the finance industry are digital platforms that provide automated, algorithm-driven financial planning services, with little to no human mediation.

Yet many of these so-called “solutions” are challenging to understand and adopt by regular, non-tech-savvy users.

Ultimately, the banks have an ethical obligation to build solutions that are in the consumer's best interests and that are easy to understand. Economics is an important cornerstone of our lives, and it intersects with all areas of well-being.

Continues

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Paraphrasing Laursen, too many banks are focusing on launching new products that do not respond to or address customers’ actual needs. If you ask anybody who is not into finance or technology to interact with an investment robo advisor, many will not understand the prompts, the information shared, or how to take next steps. This is something of a paradox, since they are targeted to people who are not financially savvy.

“We have only seen the beginning of an era of new exciting financial services – all of them vying for the attention of consumers. I am all for diversity and options, but it is worth considering whether these services are more financially healthy options for people, or rather the Big Macs of financial services – fun, but not really nutritional. Services like this exist in a bubble – they only sell the small part they do for people and do not take responsibility for the broader, more complex financial reality of their customers. This direction will leave us with an increasingly fragmented world of services that only take responsibility for parts of the financial health of a customer but never the full picture,” Laursen reflects.

Laursen also points out that worldwide rates of financial literacy are falling. This is very unfortunate, as there are clear correlations between financial literacy and good saving and borrowing habits.

“While we still have a high financial literacy in Denmark, there are indications that we need to focus on it to keep it that way. Only about half of the young people in Denmark today say they have received an introduction and/or counselling in finances. Of those, most have received it from their parents. Compare this with the fact that one third of the youth in Denmark carry a consumer loan. Although the number of young people who are registered RKI is dropping, they are still over-represented in RKI and seem to have a hard time finding their ‘financial footing’ after having been in the registry,” Laursen observes.

Technology isn’t evil, but we must appreciate the consequences The human tendency is to pursue and invest in easy, convenient options. Artificial intelligence, automation, and the increa-

sing complexity of how the world works will eventually make it humanly impossible to comprehend the consequences of the technology we employ, Laursen fears.

“Even though it is a paradox, I do not believe it relieves people in the industry from their ethical responsibility. It is the industry itself that has chosen to use these solutions in the name of efficiency and a fatter bottom line, so we, as an industry, must take responsibility of how that affects our customers,” Laursen maintains.

For its part, Netflix has openly declared that their biggest competitor is sleep. This is a sad commentary on our times. In general, today’s viewers are not critical of what they are consuming on digital channels.

As Laursen sees it, companies must decide how they are going to affect their consumer base – and that it is naïve and ill advised to think otherwise.

“Large corporations and platforms, like Facebook, have nudged us to do things in a certain way. We need technology, and especially smartphones, in our reach to get the shot of dopamine we are looking for. As a collective, we must make demands on what companies build. They can build something that makes a lot of money, but if it does more harm than good, then why should they build it?”, says Nielsen.

In Ploug’s words, “We are not aware of how data is actually collected systematically and how it can be exchanged across all sorts of different platforms. First, we do not take consent seriously in a large number of situations. We do not embrace conditions for various services and products, not do we protect our privacy in different ways (e.g., privacy settings on various social platforms). Regardless of the amount of data collected, we tend to consent to access more products and services. Perhaps that is because the scale of scandals with the misuse of data has not reached a level where it really makes us stop.”

Thomas Ploug, Professor, Centre for Applied Ethics and Philosophy of Science

Søren Nielsen, CEO and co-founder of Ernit

Thomas K. Laursen, CEO at the fintech and subscription company Subaio

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Sponsored content

The Future of Financial Institutions Will Require a Compliance Strategy, Not Just Innovation Financial institutions must transform compliance strategy to a digitised world and a holistic and transverse mindset can in some financial companies be perceived as a major challenge.

However, change is necessary, and new technologies can accelerate the change.

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ith trust comes great responsibility.

Moreover, in a world driven by rapid development and staggering complexity, the financial sector has a great task ahead with crucial data at stake. Millions of consumers are affected by fraud and cybersecurity threats, and financial institutions face challenges to fight back these threats that are becoming increasingly sophisticated, while transaction volumes are rapidly growing. Fraud prevention and security as we know it is becoming increasingly important.

Financial institutions meet growing demand for instant payments and a growing number of digital solutions and payment transactions happening at the speed of light. Traditional fraud and AML mechanisms are ineffective in the new digitised world, and the regulatory authorities introduce new complicated requirements that have significant implications on corporate budgets,” says Michael Jacobsen, Business Development Manager CGI in Denmark.

It can be a costly affair to be compliant. According to Jacobsen, up to 30 per cent of a company's IT spend is allocated to compliance. However, the consequences can be even more severe. In the worst case, lack of compliance can result in insurmountable costs in the form of fines, loss due to fraud, loss of customers and loss of reputation. It is a challenge for every single company in the financial sector.

“Many solutions we see today are fragmented and run by old legacy systems. This is due to silo thinking in many large corporations. Often companies tend to look inward and are unaware of the potential of sharing information internally. A more holistic, cross-department approach and a comprehensive solution to compliance is needed. The efficiency of AML (anti-money laundering), and anti-fraud solutions will increase trust significantly, while considerably reducing costs,” explains Jacobsen.

Fighting financial crime with AI Fraudsters change their behaviour according to the change happening in the sector, and customers demand a fully digitised, real-time service utilising the latest technology.

International banks facilitate around five to six million payments every day. About 10 per cent of transactions are flagged as false positive alerts – meaning that the it-systems detects suspicious activity. Every time a transaction is flagged, it costs the company resources in manual work.

“New technologies such as machine learning, artificial intelligence, advanced and predictive analytics have the

Michael Jacobsen, Business Development Manager CGI in Denmark

potential to help some of the world's largest banks and insurance companies comply with regulatory requirements and protect both businesses and their customers from fraud. The companies must apply systems that are constantly learning and training their ability to detect suspicious activity,” says Jacobsen.

CGI has a Software-as-a-Service solution built on the newest technology, that can identify suspicious activity. Today, CGI is one of the leading suppliers with their HotScan360 solution helping companies prevent fraud and protect customers' money and data through a comprehensive fraud, AML, TM and KYC solution. More than 64 per cent of all currency transactions in the world flow through and are monitored by the HotScan360 solution.

“Companies must ensure that they can be an effective organisation while still balancing, managing and controlling risk. New technologies such as AI can help the largest banks around the world identify and prevent suspicious payments,” Jacobsen says.

The solution is developed in close collaboration with some of the world's leading financial companies, and more than 80 international customers are using HotScan360.

The software applies advanced algorithms and is constant-

ly improving its ability to identify risks of suspicious activity through built-in self-learning functionality.

“If you are a bank and facilitate real-time payments, it is important that you have an infrastructure that can discover new transaction patterns immediately. No manual workforce can follow the speed of the fraudsters,” Jacobsen concludes.

About CGI CGI is among the largest independent IT and business consulting services firms in the world. With approximately 77,000 consultants and professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from IT and business consulting to systems integration, outsourcing services and intellectual property solutions.

CGI supports 15 out of 20 of the top banks worldwide.

Sponsored content All Danish accounting solutions for SMEs are already using Nordic API Gateway. In addition, lenders are eyeing the aggregated access point to improve their credit score algorithms. ”Instead of basing credit score on rules of thumb, loan-givers can get a more accurate picture of the lenders’ economy. This might make the difference when first-time buyers are applying for a car or home loan, so these new solutions have the potential to make a big impact for consumers,” Mai says.

Fintech will disappear because it’s everywhere

Rune Mai, CEO and co-founder of Nordic API Gateway

Fintech is Spreading to Every Sector – and This Scaleup Makes It Possible In five years, financial data and payment initiations will be so mainstream, it doesn’t make sense to talk about ‘fintechs’ anymore, says Rune Mai, co-founder of Nordic API Gateway, which delivers the infrastructure that makes it possible.

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efore ‘Open Banking’ became a reality, startups were already talking about a future in which fintechs would take bites of traditional banks’ business. Banks would lose their monopoly on financial data, the handling of accounts and even bank transfers. Nordic API Gateway is one of the companies making that transition possible.

“Financial data is one of the last silos. It has been protected by regulation – even banks couldn’t make use of it for new services. Now the silo is being broken down, and the market liberalised so that new services can be made for users. All kinds of companies will qualify to use the data, and our goal has always been to become the infrastructure that makes data flow as quickly and safely from A to B as possible,” says Rune Mai, CEO and co-founder of Nordic API Gateway.

The solution from Nordic API Gateway has already been integrated with the majority of banks in the Nordics.

In that way, companies get one aggregated access point to bank data and transactions on behalf of their customers.

This access point can then be used to streamline, automate and create new business models. Many companies from other industries are already interested in that access.

Financial data heightens the user experience Jyske Bank, Danske Bank and DNB from Norway are already customers of Nordic API Gateway. The scaleup has grown from 18 to 46 employees this year alone. More large banks are about to become customers. In addition, Nordic API Gateway is striking a deal with companies from a long list of other industries. These companies are interested in obtaining access to the banking infrastructure.

“It’s not because we have stopped focusing on financial companies; in parallel, we’ve focused on looking into other industries where the access offers a value-add. This can be ERP or accounting systems that can automate 90-95 per cent of their balancing by getting access to free-flowing data,” Mai says.

Companies that don’t immediately seem connected to financial data are currently trying to figure out how to benefit from Nordic API Gateway.

“Financial data is an obvious opportunity for retailers to build loyalty programs. If you can track amounts and number of purchases in the store, you can measure churn – and start giving personalised offers and rewards for shopping,” Mai says. He adds that the company is already working with a large retailer on a proof-of-concept.

Access to bank data and payment initiations have the potential to both minimise costs and create new possibilities. Housing administrations, crowdfunding platforms and payment gateways are looking into the possibilities. This has led Nordic API Gateway to take on a more active role in communicating the opportunities across industries. ”Most are surprised when we show them what payment initiation from account to account can do for them.

Some are nearly falling off their chairs. The opportunities for monetisation and convenience are huge,” he says.

For that reason, the co-founder believes that fintech as we understand it today will disappear in the immediate future.

“In five years, it will be mainstream to use account information, just like it’s mainstream to use data from a wealth of other sources today. There will still be ‘deep fintechs’ working on core-banking or financial AI, but those companies using only account data or payment initiations won't qualify as fintechs. The FSI will become incredibly busy because soon they will have to serve everyone,” he says.

Nordic API Gateway Integrates with all banks in the Nordics to give companies aggregated access to financial data and payment initiation.

Both business and personal accounts can be integrated, which is a unique feature in this field.

Founded in 2011 and, since then, has received €9 mio in investments from Danske Bank and DNB from Norway.

The scaleup has also developed the personal finance app Spiir, which is helping 320.000 users manage their budgets.

Soon the app will be launched in Norway, Sweden and Finland.

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The European Union’s Payment Infrastructure Is Changing, but Most Users Will Not Care By: Sebastian Kjær

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iven the ubiquity of the internet and the wide adaption of smartphones, a new arena for digitaldriven payment services has arrived. While this has created a broad ecosystem for consumers to dive into, infrastructure providers are moving in the opposite direction.

“The front-end is being increasingly fragmented as new solutions and services are surfacing, and we’re seeing consolidation on the back-end. Consolidation, with fewer and better players, is the key word,” explains Michael Juul Rugaard, partner in the financial consultancy Norfico.

Recently, the French giant Worldline acquired the Swiss company Six Payment Services in a $2.75B deal to grow its reach.

For its part, the Scandinavian competitor, Nets has been consolidating its interests with Concardis from the German and Polish online payment provider Dotpay/eCard.

The tech giants are coming At the same time, tech giants like Apple, Facebook, and Google are taking a swing at payments. This will, undoubtedly, play a role in the payment market, where Rugaard suggested they will aim at data and customer relations. More likely than not, they will also partner with the infrastructure providers instead of challenging them.

This might hit credit card companies like Visa and MasterCard hard, especially if

the new players decide to bypass the card schemes by initiating payments directly through accounts. After all, Europe’s revised payment service directive, PSD2 now allows this within member countries.

“If Apple Pay chooses to replace card payments with PSD2 access in the core belly of their solution, it might threaten Visa and MasterCard. Of course, it isn’t something that will happen overnight, as the payment terminals are currently built for the card infrastructure.

But, over time, the new solutions might change their infrastructure provider without consumers even noticing,” Rugaard says.

Most users will not care Sure, infrastructure giants might consolidate, the physical credit card might move into your smartphone as an e-Card, and PSD2 might offer new payment opportunities. But, for most users, those changes won’t even be noticeable – let alone worthy of care.

“When MobilePay first launched in Denmark, all transactions were funded by a credit or debit card. Today transactions from Danske Bank and Nordea are using account-to-account payments. And, for most people, it doesn’t make any difference. They still experience the money being transferred and 100 kroner vanishing from their account,” Kristian T. Sørensen, partner at Norfico, says.

When people are asked how they want to pay in the future, they will say Apple Pay or MobilePay, not Visa or Dankort.

Let’s Talk About the Next Big Thing in Payments Credit cards are increasingly being ditched for smartphone payments. In the near future, all of your transactions might be completed by using your voice. Now that the advanced data that enables invisible payments is here, let’s talk about its potential – its virtues and its vices.

By: Ian Rummler and Jakob Lindmark Frier

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ith the widespread popularity of Google Assistant and Amazon’s Alexa, voice assistants are making their way into our daily lives. Soon, you will be able to pay for your groceries without having to carry your wallet. This is the future forecasted by Google, KPMG, and the Danish fintech startup, Swiipe.

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Although mobile payments have been widely adopted, they’re still a relatively new phenomenon. Banks are aiming to be wherever their customers are, and, with the increasing prevalence of voice assistants and voice-controlled smart speakers, paying with your voice is the logical next step.

But paying with your voice doesn’t simply mean telling Google or Alexa to order your laundry detergent. Swiipe, KPMG, and Google are looking to the human voice as a method of biometric authentication. This would mean a world that is free of pin codes, and an alternative to face scans and fingerprint sensors.

The question becomes: how mature is this technology?

And, more importantly, how secure is it?

“When you notice that users would rather talk than type, it's a natural progression. And it's interesting to see how voice gets adopted in different markets. The Nordic market seems to be a bit more averse to talking to their phones in public. But it's still picking up extremely fast.

We've invested so much here at Google because we see that’s where users are going. We can already see it being implemented in bigger markets. It might take some time before voice payment technology is fully available in the Nordic regions, but it's coming,” Rikke Hagemann, head of the Northern Europe mobile team at Google, says.

The new generation of Nordic consumers – generation Z – were born digital. It’s hard for them to imagine an analogue world, where cash is king. Pin codes will soon be a relic of a bygone era. It is a part of the human nature to seek out easier, faster, and more seamless solutions. Knowing this, voice is a natural evolution.

“One of the biggest roadblocks is simply human adoption. Once people realise how easy it is, they will begin paying with their voices. It's really just a shift in mindset. It takes time to adopt a new behaviour. You can see this through how mobile payments have evolved and have seen widespread adoption. The quality of voice technology is extremely important, and the more people use it, the better it becomes. Every user takes part in training the technology; the quality will only get better every time it's used,” Hagemann says.

Several companies and virtual assistants already offer voice payments. In fact, American users are already sending money and paying bills with the sound of their voice. According to a report conducted by the international consultancy company, Capgemini, 51 per cent of American consumers are already using voice-enabled virtual assistants via a smartphone (e.g., Siri, Cortana, and Google Assistant), smart speakers (such as Amazon Echo or Google Home), or

Rikke Hagemann, Head of Mobile Team Northern Europe at Google

Anders Riis, CEO of Swiipe

a screen-based device. Twenty-eight per cent of voice assistant users have also used voice recognition to complete transactions.

face being scanned. Consumers seem a bit afraid of fingerprints as well. We see that voice is a more secure and elegant solution,” Riis says.

With voice, we can also start instrumentalising the way we pay. When you use the vein recognition in a finger to pay, you can only pay with the card, or whichever method is tied to your fingerprint or your face. With voice, you can say: “Pay with my debit card,” “Pay with my credit card,” “Pay with my bank account,” or “Send me an invoice.”

“This is very convenient, because you don’t need to put down your bags or scan anything at all. Voice will take out much of the friction that we see in other biometric payment solutions,” Kenneth Ipsen, senior client advisor at KPMG, says.

The main hurdle with a cardless or device’s voice payment solution is connecting the user’s biometric identification with the payment to the existing hardware, making the payment possible. “We probably need some pilot banks accepting this type of authentication first, along with special approval from the FSA. There are a lot of legal and governmental hurdles. But the technical and identification components are pretty mature,” Riis says.

For Riis, biometrics will probably be not only the primary method of paying, but the only way of paying.

“I wouldn't dare to set up a timeframe for this adoption, because there are so many factors affecting implementation. But I wouldn't be surprised if we’re all paying by voice commands within 5 to 10 years. It revolutionises account-to-account payments, so there would be no need for credit cards, and you could essentially pay with your bank account everywhere,” Riis concludes.

Biometrics could be a big challenger to credit card schemes Voice recognition could mean that you no longer need to carry your phone or your credit card. While it might take some time to adopt and implement, in the future, your vocal cords could be your primary method of payment. The Danish startup Swiipe and the tax giant KPMG are exploring this possibility.

“The hardware for point of sale voice authentication is ready. It's already possible to identify your voice, and the way sentences are structured. There's a potentially high level of security because you can use different phrases and commands unique to each user. The tech can also identify when a voice is being played from a recording, so there's no need to worry about that,” explains Anders Riis, CEO at Swiipe.

Statistics show that only 1 in 3 million people can hack your voice, however they would also need to know the specific phrases tied to your biometric identification.

We have already seen the emergence and widespread adoption of biometric authentication, like fingerprints and face scanning on our phones – primarily for getting past locked screens. But this is all device-based. Linking your identification to your voice would mean hands-free, device-free payment.

“And most people have some kind of aversion to their

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Sponsored content

The Future is Biometric Payment with facial recognition: The technology is maturing in terms of speed, accuracy and security. However, not everyone is comfortable with cameras in the stores, and the technology has not yet caught on.

Voice recognition: May well become a thing of the future. Consumers are used to using smart speakers and assistants in their phones, and the voice can also be used for payments, possibly in combination with a PIN.

Payment by finger veins: The tiny blood vessels in the fingers are unique, and a live finger's bloodstream is almost impossible to fake. Thus, secure technology can be used for payments if a payment card is virtually attached to the finger.

“Biometric payments will become more widespread in the coming years. But in the future, payments will be completely invisible,” says Jesper Kildegaard Poulsen from Nets.

By: Mads Allingstrup, Nets

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hose days when you ended up in queue behind a guy paying for his groceries with a mountain of small coins will become less and less frequent. In recent years, payments have matured from being slow and analogue to the modern, fast and convenient contactless payments we know today.

However, in the future, payments will take place even faster - so fast that the payment itself will be invisible.

That is Kildegaard Poulsen’s vision for the near future. He is head of Creation Lab at Nets, and in recent years, he and his team have experimented with a vast selection of emerging technologies that could be used for payments.

Among other things, Nets runs a long-term trial in the canteens at the Copenhagen Business School (CBS), where staff and students can pay by inserting a finger into a scanner.

It is not the fingerprint itself, but the fingervein structure that is being scanned. The vein structure in a person is unique, and the finger must have blood circulation to work.

“Our fingertips is a great example of how we can become our own payment card without compromising on security. On the contrary, security is, in fact, even higher,” says Jesper Kildegaard Poulsen.

Finger vein scanning is a step towards a world that will unfold in the years to come. Noone knows exactly what direction progress will take. But the trend is clear: plastic payment cards will increasingly become a thing of the past, while biometrics is becoming more and more common.

“We experiment with payments that happen imperceptibly through facial recognition and even via voice. The technology can go down many paths from here, but we certainly face a future where payments will become simpler and safer than today,” says Kildegaard Poulsen.

The initial experience with finger vein scanning at the canteens at CBS has been positive - users have very few concerns about the using the technology, and they continue to pay with their finger once they have started.

“But it does matter that it is Nets that is behind the tech. Success in the field of biometrics is all about trust, and it is vital to consider trust as a key element right from the start,” Kildegaard Poulsen says, adding that he believes biometric payments will become common within five years.

Sponsored content

Claus Methmann Christensen, CEO, Clearhaus

Three Payment Trends That Will Shape European Fintech

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he ever-evolving world of payments is probably one of the most exciting fields in the fintech industry. Technologies and regulations are constantly changing to keep up with consumer demands and new regulation - impacting all areas of the payments value-chain. Payments expert and CEO of the Aarhus-based merchant acquirer, Clearhaus A/S, shares his views on the current and future trends that could potentially shape European fintech.

PSD2 will be a catalyst for change Whether you see it as an opportunity or a challenge, the new Payment Service Directive (PSD2) will shake things up. One of the PSD2 topics, Strong Customer Authentication (SCA), will become mandatory in September 2019 - forcing all entities involved in a transaction to implement SCA, e.g. using 2-factor authentication. Payment service providers will turn to 3-D Secure features such as Verified by Visa and Mastercard SecureCode, as they are the easiest ways to fulfil the new requirements.

“Back in early 2018, when PSD2 had just come into force, we foresaw the challenges it would create for our

partners and other PSPs across Europe, as it requires heavy manpower investments. That’s why we developed a modern SaaS 3-D Secure MPI for all PSPs to use. The 3-D Secure MPI is acquirer agnostic, which means a PSP or payment gateway can use it no matter who their acquiring partner is.” says Claus Methmann Christensen.

“Just like we opened up our solution for all to use, we expect more collaboration in the industry the closer we get to the PSD2 deadline. There will be more funding and partnerships between fintechs and traditional banks - creating better, more competitive solutions for consumers.” he adds.

The fight against fraud will heat up Although the new SCA requirements set by PSD2 will make it extremely hard for fraudsters to misuse stolen cards or card information, we shouldn’t expect them to hang up their boots anytime soon.

Fraudsters will simply find new ways to make money.

“Since defrauding consumers will become increasingly difficult, we believe that cyber-criminals will turn their attention to payment companies and merchants. They will resort to other tactics like AML, tax fraud, sanctions evasion fraud

About Claus Methmann Christensen An innovator at heart, Claus has an M.Sc. in Informatics and has been working with internet technologies and digitalisation since the 90’s. He started specialising in online payments in the mid 00’s; gaining work experience at companies like Nets and various other startups.

His deep understanding of the online payment industry has given him the skills to take Clearhaus from a small startup to becoming a competitive player in the merchant acquiring space with over 50 employees and 9,000 customers across 33 European countries.

- like Mastercard’s MATCH list -, regulation and law enforcement” says the payments expert.

Payment Institutions & PSPs will need to have sophisticated BI systems in place as a standard offering going forward, to remain competitive in the marketplace.

He adds “as a merchant acquirer, we’re doing everything in our power to protect our merchants against fraud. Our in-house risk-mitigation system ‘Riskr’ has saved our merchants 2.3M EUR in fraud-related losses, by blocking cards associated with a history of fraudulent behaviour.”

Mobile will take over Consumers’ back-pockets are getting lighter, as they continue to replace physical cards with digital wallets. Mobile payments aren’t just another fleeting fad, they’re growing in usership and they’re here to stay. “Just look at Denmark’s own MobilePay. It’s usership grew from nothing to 4.1 million in 6 years. As we process thousands of Danish transactions everyday, we soon expect one in every four online transactions to go through MobilePay Online.”

Big tech also wants a slice of the “payments pie”, and they pose tough competition for local bank-led European players. The world’s second-most valuable company - Apple - has strengthened its roots in Denmark as 18 Danish banks recently announced their support for Apple Pay. Apple holds roughly 50% of the Danish smartphone market and Apple Pay is integrated in all new iPhones. This gives the American wallet an edge over its local counterparts. “Apple Pay’s smart typing-free, biometric identification makes its checkout the fastest in the market today and also fully compliant with PSD2’s SCA requirements.

We strive to be on the forefront of payment technologies and support not only Apple Pay, but also Google Pay - which we are currently beta-testing”, says Claus Methmann Christensen.

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There Is a Catch to the Cloud Cloud computing is on its way to be the dominant infrastructure model and it is just getting started – but there are still hiccups to address. To address the complications, companies have to take on cloud management with Software Intelligence.

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t’s a win-win. As financial institutions are seeking to utilise cloud services to provide better services for customers, they are looking to partner with fintech start-ups to accelerate innovation, clever use of digital business models or get access to talented tech engineers. Fintechs are looking for collaboration partners to gain access to financial services and APIs to build and grow their niche products. It seems like there are endless opportunities for collaboration in the evolving world of the cloud when companies go digital.

But there is a catch. A catch that can be a deadlock to a start-up and can make cloud computing much more complex than simplifying it.

The partnerships are often established on the backbone of large and complex landscapes consisting of hundreds of applications developed for robustness and compliance and held together by a complex integration architecture. Determining where to fuse fintech services and where to carve out applications for cloud enablement is a complex and risky process. Moreover, the complexity is only going to increase in the coming years as fintech and cloud services continue to develop further if existing complexity is not addressed. ”A question that financial institutions should ask themselves is this: How do we keep the risk and quality of our business under control as we need to run through agile digital transformation processes, enabling cloud migration and fusing in more and more fintech services? Often, a fact-based approach that measures your existing systems and software is a good starting point. We call this Software Intelligence”, explains Jack Ekman, managing partner in Omnium Improvement.

Software does not have to be a black box Business intelligence is routinely used to gather, transform and present large sets of financial data to drive

fact-based decision making and risk management in the financial sector. Software Intelligence provides the same insight at the application level and can help a company assess its software systems.

By measuring software agility, software resilience and cloud-readiness and combining it with a thorough understanding of business impact, it is possible to create a fact-based quality and risk overview of complex application landscapes. It basically provides a roadmap helping management identify the right places to fuse in fintech and identify the existing applications that can be modernised and cloud-enabled.

“Many existing applications are in effect black boxes, even when seen from within the organizations that originally built them. Software Intelligence helps development teams do more with less, as they become more efficient and get a much better understanding of the software they are modifying. Also, companies approve significantly in their ability to assess risk and compliance,” says Ekman.

The result is a digital roadmap and a risk map which allows management to make the right decisions during digital transformation processes. From a fintech point of view, Software Intelligence makes it easier to find the business processes and integration points, allowing for an easier fusion of the two worlds.

“With Software Intelligence, we often see how the combination of technical insight and business impact presented at management level makes it easier and more intuitive to make fact-based decisions regarding digital transformations. Sometimes it’s almost like the data starts to speak on its own; sparking innovative decisions,” says Ekman.

Left: Anders Fausbøll, Right: Jack Ekman

Omnium Improvement Omnium Improvement was founded in 2016 as a management consultancy with a deep technical understanding.

The company mission is to help clients solve Denmark’s most complex digital challenges.

Omnium Improvement works with digitalization processes from boardroom level to bit level, combining classical consulting skills, a technically rooted focus on the architecture of a digital business, and clear communication.

Omnium’s consultants combine experience from top tier management and IT consultancies with business experience from large financial and public organizations in Denmark. In early 2019, Omnium entered a partnership with Software Intelligence specialist CAST - a world-leading SaaS provider of software analytics.

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Incumbents Must See Digitalisation as a Silver Lining Fintech initiatives and customer expectations of digital offerings will challenge any established financial institution over the next three to five years. To tackle the transformation, banks and insurers need help before it is too late. With vast experience from both the banking and technology sector, NOR Associates are equipped to help institutions through this process with a hybrid approach.

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ncumbent banks and insurers are often operating on ageing technology stacks and legacy systems. However, they have now realised that they can derive value by leveraging technology to streamline operations, increase efficiency and generate revenue.

Customers – especially in the Nordic region – demand a fully digitised and real-time service, that supports the latest new trends. Composed of hybrid technology- and banking specialists, the consultancy firm NOR Associates specialises in guiding banks and insurers to leverage digital initiatives in the battle royale between fintechs and incumbents.

“We’re focused on the whole process of digital transformation in financial services - having the end-to-end perspective. Our people are hybrids with years of experience from the financial industry and deep technical background, and this is unique in the Nordic market. We are experts in digital transformation, and we stay with the clients throughout the entire process until the initiatives are rolled out,” says Lars Elmegaard-Fessel, CEO and co-founder of NOR Associates.

Old fears that fintech companies will completely take over financial services have been replaced by a belief that the future will include partnerships between incumbent institutions and fintechs. Most institutions have established innovation divisions responsible for driving digital change and transformation. Additionally, engineers are developing new digital products and features in collaboration with digital hubs.

Although innovation initiatives are important additions to the traditional business, many don’t perceive them

as new business areas. “This is contrary to other geographical areas, such as Germany where an API platform has received a banking license and now offers a banking-as-a-platform service to digital companies,” says Elmegaard-Fessel.

Open banks will thrive Regulations have brought new business models to the financial industry. Neobanks emerge and big tech firms are entering financial services through the launch of their initiatives in payments and through partnerships to offer other products. According to Vincens Riber Mink, Partner and co-founder at NOR Associates, established financial institutions must explore new business opportunities in ‘platformification’.

“With Open Banking, monetising large parts of the technology platforms is now a race where the winner takes all. Any Nordic bank willing to identify itself as a fintech and shaping its strategy accordingly is well underway and could make the decision to expand its business with a banking-as-a-platform service, thereby making it possible for digital companies to distribute the services like portfolio calculations, trading algorithms and bulk payments to a broader range of customers,” says Riber Mink.

“A digital journey is not solely a technological exercise.

It is also a matter of change with an entire organisational journey which includes: culture, organisation, processes, people, operations. Secondly, the technology part of the journey is highly complicated and significant, and to do the technology right; you need to understand the organisational part. You will fail if you have technology people in one corner and business people in the other. Ideally, you have people with both competencies and experience. The people at NOR are this rare combination,” says Kenneth Steengaard, chairman of the board at NOR Associates.

Vincens Riber Mink, CTO and co-founder at NOR Associates

Lars ElmegaardFessel, CEO and cofounder at NOR Associates

Making a Move Nordic banks are generally technologically advanced and can attract talented people. In other words, banks can take the next step. According to Elmegaard-Fessel, it’s not an either-or situation. Traditional banking can co-exist with open APIs, as long as a suitable customer service model is in place.

“Ultimately, it is a strategic choice. If one bank moves first, others will follow. Nordic banks will then adapt to a reality where holistic customer service must be balanced against the ability to efficiently customise and operationalise the technology platforms built over the last 30 years and make them accessible to the outside world. This is a task which needs to be structured carefully,” says Elmegaard-Fessel. Whether institutions have decided to pursue full digital transformation or are simply optimising selected areas, NOR Associates specialises in guiding them through the journey

Facts about NOR Associates Focusing on technology advisory and bespoke software development in the Nordic financial services industry.

NOR Associates consultants are trained specifically to deliver highly specialised capabilities that are beyond the means of standard consultancy firms and offer digital advisory and implementation services in areas requiring extraordinary execution capabilities combined with a deep understanding of financial services.

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Brace for Blockchain Impact By: Sebastian Kjær

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ince bitcoins spike in late 2017, cryptocurrencies have seen a harsh winter with prices dropping across the board. No more headlines in mainstream media about the prices surging every day, no more hyper funded ICO’s and no more “blockchain is overthrowing traditional banking within a few years”.

But during the crypto winter, some of the world’s leading brands have started picking up the blockchain technology. Nike, Facebook, Range Rover, JP Morgen, Walmart to name a few. And as the bitcoin has slowly started to regain its momentum this spring, so has the enthusiasm about the technology.

“Despite political turmoil, I believe in the future because of new technologies. It can better our economy, democracy and overall lives. But people don’t care about the blockchain. They care about cheaper and better solutions,” Brian

Mikkelsen, CEO at The Danish Chamber of Commerce, said at the European Blockchain Convention in Copenhagen back in May. Many of the celebrated brand’s use cases for blockchain still mainly consist of ideas and promises, but that might be where it all has to start.

“You have to start with a use case, preferably a simple one, and then make it more advanced during the roadmap.

And you also need to get partner aboard the solution in order to gain from cooperation. Think big – start small,” Christian Lassen, Nordic Leader for IBM Blockchain, says.

This is still the early days. Blockchain’s promise for getting rid of intermediaries everywhere grant financial inclusion across continents and even better democracy through decentralised, trustless networks have yet to become reality.

But hundreds of projects have used the crypto-winter to undisturbedly think big and actually start real-world projects.

Company: MakerDao

Company: TradeLens (Backed by IBM and Maersk)

Use case: Remittance

Company: Propellr Use case: Tokenization of real estate

Use case: Value-chain & Shipping Value proposition today: Stable cryptocurrency for remittance across selected countries in Europa, Afrika, USA, South America and soon Asia. Low fee and transferred in a matter of minutes.

Value proposition today: A database on a blockchain for unified, digital shipping - cutting the expenses for paperwork and trusted intermediaries.

International money transfer has historically been expensive and slow. Studies snow remittance fees average at 7 per cent – and in some cases run as high as 25 per cent of the transferred amount – while taking several days to execute.

The shipping industry is littered with intermediaries who connect shipping companies, freight forwarders, ports and authorities. Up to 20 per cent of the cost of shipping a container is spent on documentation.

MakerDao wants to do better with its digital currency ‘Dai’.

Currency pegged to the value of American dollars (giving it the stability of FIAT valuta) while still having the benefits of cryptocurrency on a blockchain (speed, low fees and transparency).

Maersk and IBM have jointly developed the blockchain platform TradeLens to solve this. The blockchain creates a safe, inedible record for the whole supply chain to trust without expensive intermediaries, which has the potential to make the whole value-chain paperless, frictionless and trusted.

This means MakerDao has become a valuable tool for remittance with more than $80M Converted to digital Dai-dollars.

MakerDao’s current solution allows an American user to exchange dollars into Dai, then crypto-transfer Dai to an Argentinian user, who can exchange it back to Argentinian pesos through a local exchange. All sub 1 per cent fee in a matter of minutes.

A test-service has already been build in order to make the service automated and seamless – essentially allowing the US and Argentinian users to do the same thing without having to care about Dai. When this service goes public it will look and feel like a traditional bank transfer – just faster and cheaper thanks to MakerDao’s crypto infrastructure.

One of the big challenges for this unified blockchain platform to become global is convincing huge companies to work together on the same platform – especially when it's co-owned by one of the leading players in the shipping industry.

100 shipping companies, freight forwarders and ports was convinced during the first year, while two of the major ocean carriers – CMA CGM and MSC – only joined the platform in late May. While there is still a long way to go before the platform becomes industry standard, it is already being used – processing 10 million events on their blockchain every week.

Value proposition today: Financing and investing in real estate through tokenization on the blockchain On one hand, real estate development is a costly endeavour which can result in hefty pressure from traditional banks if the new condos aren’t sold for the right price. On the other, it has traditionally been an investment space with a high entry barrier.

Both of those can be solved by tokenizing real estate: A process of presenting ownership of real-world assets digitally on the blockchain.

This allows developers to essentially crowdfund their real estate while lowering the barrier to real estate investing by selling smaller, digitized pieces of real estate instead of whole houses.

The company Propellr does it on the blockchain to ensure transparency and fluidity of the real-estate pieces. At the same time, this allows for automisation of interest payments for investors.

Last year the first $30M dollars Manhatten real estate property was tokenized. A statement that the technology and framework is very real – and ready to be applied in the real world.

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Democratising Clean Air One Block at a Time A combination of blockchain, solar, microgrid and renewable energy technology, the beautifully designed little village by SPACE10 clearly illustrates a compelling and realisable solution to global energy poverty.

By: Ian Rummler

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reated and designed by SPACE10 - a research and design lab on a mission to create better and more sustainable ways of living – SolarVille is a 1:50 scale model of a self-sufficient solar community that could represent a reality where citizens can trade solar energy in real-time through blockchain technology. Though this is not possible in Denmark due to strict regulations, the project is a clear reminder that we must rethink our energy supply as we enter a future in which global co2 emissions must be cut by 50 per cent by 2050.

With the boom of Bitcoin, blockchain was all the rage, but the hype seemed to fade after cryptocurrencies plummeted. However, we shouldn't forget what the tech is capable of, and SolarVille displays this potential with a prototype of a self-sufficient village featuring a community-driven microgrid where imaginary citizens can trade renewable, affordable energy within their community.

Without a centralised, traditional energy system, the process of buying and selling energy becomes much faster, more efficient and more economical. The vision is also one that seeks to eliminate energy poverty. With current tradi-

tional, centralised energy infrastructure, there are approximately 1.1 billion people who remain in energy poverty. By cutting out intermediaries, combining solar panels and utilising micro-grids, blockchain and smart IoT solutions, the tiny model village presents a bright future and a viable solution to global energy poverty.

The blockchain enables all of these energy transactions to be secure and decentralised. It also records all of these transactions and can intervene when conditions aren’t met.

The result is a more transparent and reliable system of trading and distributing energy.

The sales and purchases of stored solar energy occur automatically, resulting in a fully automated miniature smart city that provides a clear – yet tiny – picture of a potential future. For example, some households generate renewable energy through solar panels, while others automatically purchase their neighbour’s excess energy directly without the use of a centralised power grid.

Trails of miniature LEDs and a display on the side of the exhibition show how this energy microgrid could work, with constant peer-to-peer trades from different members of the tiny community.

INFOBOX Partners in the project are: Blockchain Labs for Open Collaboration (BLOC) Blocktech WeMoveIdeas India Temporal SachsNottveit

Greenify Your Own City By: Ian Rummler

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lobal Fintech company OwnCity, based in Los Angeles and Copenhagen, is building a crowdlending platform where citizens can make green investments in energy efficient retrofits of buildings in their own local communities. Investors are then able to see the tangible environmental and economic changes as a direct product of their investments, whether it be their children's school or their own office building.

In the EU, buildings account for approximately 40 per cent of all energy consumed. Thus, increasing the energy efficiency of buildings has a significant impact on climate change. The technological solutions and capital are already in place, but awareness seems to be the main challenge to implementation.

“The beauty of capitalism is that as soon as you tie some of your own money into something, then you start to care about the cause. You are both financially and emotionally invested,” says Jens Brandt Nellegaard, CEO of OwnCity.

In the future, the democratisation of green bonds could have a huge impact. While bonds are becoming a prominent mechanism for retrofitting buildings and real-estate projects, not every project is attractive to big developers or Energy Savings Companies (ESCOs).

In the current green bond market, there is an abundance of middlemen and bureaucracy to make sure that the bonds

Jens Brandt Nellegaard, CEO of OwnCity

issued are green and that the underlying project is not a hoax. If we can democratise this process, then we can finance climate retrofitting at a low-ticket size, so small- and medium-sized projects have a better chance of happening and inspiring real change in communities.

With the right IoT devices and monitoring of the buildings, these middlemen are not necessary. Moreover, it can be done at a low cost.

“These types of transparent, standardised and data-driven green bonds are the goal when we reach a point of scale where we can talk about the formation of a new asset class – one we can call energy efficiency. The last important ingredient is liquidity, as payback periods of these projects can be rather long,” says Nellegaard, of OwnCity.

Energy efficiency is a whole ecosystem of solutions, but it's not just about saving the planet. There are obvious financial incentives for retrofitting cities and communities. Ideally, the utility savings from the retrofitting of a building would be enough to pay back the investors for greenifying each building.

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Will Quantum Computers Save Us From the Next Global Financial Crisis?

Quantum computing has a number of potential applications in finance and it is drawing more and more attention, both in the financial sector and among researchers.

By: Jakob Lindmark Frier

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ifty years ago, few people could have imagined that we would have microcomputers in our pockets with the same processing power as the computer that put a man on the moon.

However, today, smartphones are ubiquitous, and as time has passed technology has assumed an essential role in all of life’s spheres, from telecommunication to science. But despite these developments, there are still problems that a regular computer cannot solve.

There are many challenges that we would like to solve, but the lack of processing power makes it difficult. During the financial crisis that shocked the world in 2008, poor risk management was a major problem. A quantum computer would allow the financial sector to conduct discoveries in a much shorter time span.

Maybe you have heard of the binary system that computers use. A classic bit can either be a 1 or a 0. On or off.

But a quantum bit can have both values at the same time, and quantum bits can work together.

“As we build more powerful quantum computers, you will be able to make more risk calculations in less time than you can today. Within a period of five to ten years we will be able to make greater risk assessments. In ten years you will then be able to make more precise and comprehensive analyses that give a better picture of how the financial systems work together,” says Jan B. Lillelund, CTO, Executive Architect at IBM. Quantum computers scale in a different way to ordinary computers. Each time you add a qubit you double its computing power, whereas in a traditional computer you have to double the number of transistors to double the computing power.

Quantum algorithms outperform traditional computers The Monte Carlo simulation is the standard method for dealing with systems with intrinsic randomness. Financial institutions use the method to determine the probability of an event and account for future risks. Because of the ‘unknowns’ in the system, it is impossible to make a prediction of how the system or process will evolve, so what is done instead is to statically sample realisations of the system.

“The precision of the simulated result can be increased by increasing the number of samples used, and if the distribution from which the samples are drawn is wide (large uncertainties in the system) it becomes computationally hard.

However, quantum algorithms exist, offering a quadratic speed-up in the calculation of expectation values by Monte Carlo sampling. Thus, a future quantum computer with

As we build more powerful quantum computers, you will be able to make more risk calculations in less time than you can today Jan B. Lillelund, CTO, Executive Architect at IBM

sufficiently numbered and sufficiently high-quality qubits would be able to outperform present supercomputers in risk analysis based on Monte Carlo simulation,” says Ulrich Busk Hoff, postdoc at DTU Physics.

Foreseen applications for quantum computing in the financial sector are portfolio optimisation, finding arbitrage opportunities, performing credit scoring, and risk analysis.

The common denominator for those applications is that

they deal with uncertainties – uncertainties due to incomplete knowledge about the market. Because of this, the realm of financial prediction has an intrinsic randomness to it that can only be dealt with by statistical analysis. The race is then about making these analyses a bit faster and a bit more detailed than the competitor’s. Ultimately, this is a race on computing power.

“Generally, the problems in finance are optimisation and belong to the class of computational problems that cannot be handled efficiently on a traditional computer.

That means that the computational time required scales exponentially with the size of the input. In some cases, the problems can in principle be solved on a traditional computer, but the time would take unfeasibly long – even for the most powerful super computers,” says Hoff.

The advantage of quantum computing is that allows us to transform some of those hard problems into tractable problems. One of the first, and most well-known, such quantum algorithms is “Shor’s algorithm”, which turns prime factorization into a tractable problem. The difficulty of prime factorisation is the underlying principle for RSA encryption, which is widely used for secure online communication.

Quantum computers are not expected to replace classic ones. They will almost certainly require classic computers for interfacing and programming. It is unlikely that quantum computers are going to be in ordinary homes in the future. Rather, they will be located at nodes of a quantum network where they can be accessed remotely – much like the Quantum Experience already made available by IBM.

63 Somewhat simplified, this picture shows how a neural method and artificial intelligence works. We ask it: "What does this remind you of?", similar to when people recognise everyday objects when looking at clouds. This neural network is trained on a data set, with a lot of animals (particularly dogs), so those are the motifs the artificial intelligence recognises. Had it been trained on architecture, it would probably "see" pavilions and bridges everywhere. The network then responds something like "I think this part of the image looks like a pair of ears, and maybe a bit of fur there". Thus, the technique provides an overall glimpse of the main features noticed by the neural network.

Image manipulation: Kristian Tølbøl Sørensen, Alexandra Instituttet Photocredit: Johny vino / Unsplash

The Wave of Automation The revolution will be automated and democritised. Artificial Intelligence is here and it is making financial services easier, cheaper, faster and more personalised.

By: Ian Rummler and Jakob Lindmark Frier,

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he emergence and increased accessibility of Artificial Intelligence (AI) means big things for fintech. Banking- and finance-related complexities and problems that humans have had trouble addressing are now easily solvable through the use of software and algorithms. The banking and finance sector is being revolutionized, as AI “toolboxes” are much cheaper to acquire and implement. With the help of AI, banks, NBFCs and fintech startups can create products that are more personally tailored to customers, at a lower price.

Through detailed analysis by algorithms and AI, banks can better cater to each customer and cut costs at the same time.

Bill Gates once said, “Banking is necessary, banks are not.” According to Anders Kofod-Petersen, vice-director of the Alexandra Institute and a professor of AI, he was right.

“We have needed banks until recently, because doing clever banking requires personnel. But if we can replace this personnel with algorithms, we don't actually need banks anymore.”

For example, the process of calculating credit and processing loan approval becomes much faster with the help of AI tools. It's a simple problem for a machine, but a very difficult one for a human. There's also a difference between calculating someone’s credit rating and being able to accurately predict whether that person can pay back their mortgage. With the help of AI, these answers can be obtained in less than 12 hours.

“You can't get to know all your customers, but with the toolbox you can calculate this sort of thing pretty easily and personalize services with greater ease,” says Kofod-Petersen.

Fintechs are adapting rapidly to this changing landscape of more accessible open-source AI by offering

customer-friendly products and services that streamline the banking process. If banks don’t catch up in their utilisation of AI, fintech startups will win big, as they will cut operation costs, meet customer demands and expand market reach.

“Clever algorithms are winning. The discussion about whether you need human insights for this sort of thing is over: you don't,” says Peterson.

For historical reasons, many financial services have relied on people-solving tasks; however, these tasks can now be handled by software. There's an ongoing debate in investment: You can pay some banking guy who can outperform the market, or you can put in funds that follow an index. Currently, the probability that an investment banker can outperform the market is about the same as the probability that a monkey with darts can outperform the market.

Today, AI is a toolbox, just like a toolbox you'd buy at any DIY shop. However, this toolbox solves digital problems. Recently, many of these tools have been made accessible because there's a lot of software that anybody can access. So, the AI toolbox has become a lot more accessible and much cheaper. It boils down to this: Five years ago, you had to build your own toolbox; today, you can find it online.

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Photocredit: Colourbox.

AI and Legislation Are Shaking Up Bank Operations Technology developments within the financial sector are boosting both customer and investor expectations of new services and products. At the same time, the sector faces increasing legal requirements from the EU in the wake of the financial crisis ten years ago. The development is a challenge to the entire industry, and not least to the traditional way in which banks compose their boards of directors.

By: Mads Raahede, Partner, Financial Services Lead, KPMG

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ccording to a global KPMG survey of financial sector CEOs, most companies in the financial sector use or plan to use AI. Many organisations, however, are not properly managing the risk: One small error generated by uncontrolled AI can have significant consequences if repeated countless times in a lightning-fast automated system. This can be difficult to stop and control. The challenge is exacerbated by the ease with which bots are developed and used, which has also made the use of them more widespread. Most financial companies donâ&#x20AC;&#x2122;t know how many bots are being used at their company. Without this knowledge, it is virtually impossible for management to assess the risk associated with technology.

Technology assists in compliance At the same time, it is becoming increasingly more challenging for financial institutions to keep up to date with the latest legislative requirements. This explains the increased use of intelligent monitoring technology in the industry. Via the use of SupTech (Supervisory Technology), legislators can quickly detect non-compliance and issue millions in fines for breaches.

Being up-to-date and compliant with the flood of new legislation has thus become a competitive parameter. More-

Technological reality versus traditional management structures

members and managers who can assess where risks may occur and how to address them. Many problems can be avoided by having the right competencies, and by making sure that companies can control the regulatory technology intended to keep them compliant when developing AI, algorithms and bots.

The combination of a broadly composed board of directors and the right technology solutions and automation can enable financial institutions to develop in line with the technology development, customer and investor expectations and the flood of new legislative requirements.

Legislators and customers impose new requirements on companies to demonstrate well-defined strategies for handling a wide range of risks, both the classic, financial types of risks but also other types of risks, for example, governance, ethics, data security and GDPR. This changes not only the bankâ&#x20AC;&#x2122;s approach to compliance but the entire management structure.

Financial companies today, therefore, find themselves at a crossroads where new technologies alter procedures and strategies. This places new demands on not just the organisation, but also on the boards of directors, which may not necessarily have the competencies required to understand the algorithms. There will be a greater need for board

Mads Raahede, Partner, Financial Services Lead, KPMG

over, since the requirements are extensive in scope, the use of regulatory technology, RegTech, is needed both for implementation, monitoring of company compliance with legislation, and subsequent documentation and adjustment where required by legislation. Some global investment banks are already using RegTech as part of a long-term development strategy in which they transition to being a data company. At KPMG, we believe that this is the way forward for financial companies.

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An Intelligent Mortgage Advisor Is the Human Side of AI Festina Finance applies artificial intelligence (AI) to streamline the mortgage application process, and the Copenhagen-based firm’s first partnership with a UK based building society is transforming the end-to-end customer journey.

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n the UK today, mortgage sales are dominated by face-to-face mortgage advice, paper-based documentation and little in the way of innovation.

Over the last three years, mortgage lenders have started to investigate how a range of technologies could speed up completion times and improve the way customers get advice. A crop of firms now offer “robo-advice”, but in reality, these are just automated fact-finding forms for customers to fill in rather than genuine AI. As a result of this, a common misconception has built up within the UK mortgage industry that AI is not yet advanced enough to handle the complexity of the mortgage advice process, in particular, the selection of a suitable product.

That’s all changed with Festina’s recent partnership with Hinckley & Rugby Building Society.

The mortgage lender is using Festina’s AI-based system to transform its mortgage process, improving the experience for customers and the quality of advice provided, as well as dramatically speeding up application-to-offer times.

This is an example, argues Jesper Lauritsen, CTO of Festina Finance, of the human side of AI – especially in financial services – and the role it can play in radically improving customer interactions and experiences.

“Our approach to AI has been to see it as a complementary tool when designing a business process and customer journey. The software collects information about the customer's financial situation and asks relevant questions on their views and understanding of mortgages and the overall economic outlook. The software then adopts what the human advisor does and continuously optimises the data set based on the knowledge of the human counsellor,” Lauritsen says.

Currently, Hinckley & Rugby uses it as a tool for its in-house branch mortgage advisers, but the next step will be to support the customer through a self-service, fully-advised mortgage process, without the aid of a human adviser.

AI is not a matter of magic Festina’s ambition is to use AI to transform some of the time‐consuming work into improving the customer experience and to maintain compliance.

However, Lauritsen points out that there is still some work to do in terms of educating the general public, including the wider financial services industry, about the benefits that AI can provide.

“The challenge is that AI is like magic to many people. They don’t see what lies behind the technology. So, from the beginning, we wanted to create a tool where the human advisors can decode and explain the recommendations made by the AI

The software gives both the customer and the building society advisor a specialist AI‐helper with integrated process support.

“It has improved our efficiency and the flow and appropriateness of the scripts used within our process when we go through our advisory process with customers. The AI tool is a second validation of the advice that is very valuable, as we can point out specific steps we need to emphasise or optimise in the process. We monitor the advice given by human mortgage specialists and compare results to the systems AI outputs,” explains Dean Waddingham, Chief Customer Officer in Hinckley & Rugby.

According to Waddingham, Festina Mortgage Advisor helps the human advisors by taking them through a process that is much more tailored to the individual in front of them.

“With a very high percentage of accuracy, the Festina Mortgage Advisor comes up with a recommendation for a product that is consistent with what we would expect. This means that we get enhanced confidence in the quality,” Waddingham concludes.

to the customer. This makes the solution relevant across the organisation and on all levels,” Lauritsen says.

Festina Mortgage Advisor is part of a bigger financial advisory system called Festina Advisor, which is used by banks to advise on loans, mortgages, investments and retirement planning and is deployed as a holistic financial adviser. Festina Advisor is involved in more than 1000 cases each day and learns from each session, especially when there is a discrepancy between the recommendation given by the advisor and the decision made by the customer.

The software registers the actions of the human advisor and, as the dataset grows, the algorithm becomes more accurate. The extensive dataset allows clients to use the intelligent mortgage advisor to train junior counsellors and ensure they stay compliant.

“How to deal with a vital decision that will have a significant impact on how your economic situation will progress or how your family situation will be in the future is a very private matter. Some prefer to talk to a financial expert they trust. Others prefer to handle the process themselves and investigate the details on their own. And some will turn against the advice given. Regardless of the customer’s needs, we want to understand how we can provide the most valid outlook through the use of AI,” Lauritsen says.

A tailored process Hinckley & Rugby’s implementation of Festina Mortgage Advisor uses AI to support its in-house mortgage advisers.

Training the Festina Mortgage Advisor with adaptive questioning Festina Finance is a Danish Fintech company working in the field of holistic financial advice. Our AI-based system Advisor helps 40+ financial companies around the world provide financial advice.

The key to optimising Festina Mortgage Advisor is to obtain the customer's personal preferences for mortgages via adaptive questioning. The customer will answer questions as part of the mortgage advice process, and each question is tailored to the answers already provided by the customer, thereby ensuring that each individual customer is only asked relevant questions. The AI engine applies its “intelligence” to each answer to build a model of the customer’s knowledge and preferences. The more answers provided by the customer, the more the precision of the model improves.

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Photocredit: Adobe Stock

Bias Drives Fintech Gender Gap The Nordics are leaders in gender equality, but not in the fintech sector. Itâ&#x20AC;&#x2122;s time to discuss unconscious bias, and bridge the gap in fintech, not just because itâ&#x20AC;&#x2122;s the right thing to do but also because it's better for business.

By: Ian Rummler

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W

hile the Nordic countries are leaders in gender equality on a social and political scale, this does not extend to the fintech sector. Fewer women are working in tech generally, and the numbers are even more disparate in fintech – which sits at the intersection of three male-dominated fields: finance, technology, and entrepreneurship.

“I actually know less than 10 women working in fintech and only a couple of women who have founded/co-founded a fintech company,” Louise Ferslev, CEO and founder of MyMonii, says.

Not only is it important to discuss unconscious bias and bridge the gap in fintech because it’s the right thing to do, it’s also better for business.

From the outset, the playing field starts to get reduced when female founders seek investors and venture capital (VC).

Statistics show that female founders do not receive VC funding at the same rate as their male counterparts, making fintech a much less welcoming and hospitable environment. According to a 2018 report by The Nordic Web and Danske Bank, only 1 in 10 investments in the Nordic region are injected into a company that has at least one female founder – creating a disincentive to those who are considering to enter the space.

“Startup business is risky, and many women choose to not enter the space to avert risk. They're simply being rational,” Camilla Kerlauge, CEO and founder of Spenderlog, says.

This problem is acute in Denmark, where – according to the same report – only 0.8 per cent of VC funding goes to female-founded businesses.

“It's still only about an abysmal 2 per cent in other places, but it is certainly better,” says Sofie Blakstad, CEO of Hiveonline).

The obvious question to raise is: how do we fix this?

Diversity is better for business Even if you're more interested in the bottom line and making ends meet than gender equality, statistics show that companies with better diversity numbers fare better and earn more money in the long run. As in any other sphere, diversity of thought adds new perspectives and innovative approaches to longstanding problems.

“Given the lack of diversity, I believe that huge market opportunities are not being addressed – both in terms of missing out on profitable ideas and solving important problems. Adding to that, I think it's no coincidence that most of the humanitarian fintech companies that I’m aware of are run by women. Women genuinely see market opportunities that men do not and vice versa,” says Kerlauge.

According to a report from KPMG, despite their lower numbers, females are leading the way in fintech. Compared to the industry average, fintech startups founded by women are more likely to be successful. The study, which looked at 91 fintech companies across the United Kingdom, demonstrated that those founded (or co-founded) by a woman yielded 113 per cent higher returns for investors.

Quite simply, Denmark will suffer if it doesn't catch up.

“It is ultimately a question of being competitive. In Denmark,

we run the risk of losing ground to the Nordic nations and, on a Nordic level, the lack of diversity will hinder us in the long term in the global market,” says Thea Messel, founder of Unconventional Ventures.

The investor circle is the greatest obstacle for equality As a matter of psychology and biology, we relate better to those who we perceive to be familiar and similar to ourselves. This shows itself in a variety of ways, including hiring practices and investments. Yet, the discriminatory practices in Nordic fintechs are not a matter of malicious intent, but rather unconscious bias that can be overcome with an openness to education and self-reflection.

This discrimination is perhaps most apparent through the line of questioning women often confront when they pitch their business plan. Kerlauge says: “In many cases we are pushed much harder on negatively-loaded questions than our male peers while we are pitching. Male investors often ask how my children are coping with their mom working in a startup. And they're not doing it on purpose, it's just a bias. The fact is I've met more male investors with prejudices than without.”

Through education and reflection on unconscious biases, fintechs – and especially investors’ circles – can become fairer.

“From my experience, it’s insanely difficult as a female to get into the same space as males. We couldn’t really believe it in the beginning, that we were being met with prejudice. It's not a question of being cruel; most people just don't fully recognize their own biases. My best advice for a female founder would be to find the investors who are aware of their own biases and can manage them. Today, we have fantastic investors at Spenderlog but it took us a while to find them,” Kerlauge says.

Camilla Kerlauge, Founder of Spenderlog

How, then, can we level the playing field?

Truth be told, entrepreneurs are not protected in the same way as employees in large corporations. As an individual in a startup, you are your own human resource department.

Large corporations also tend to have more diversity, because there are different roles and different levels of seniority.

As a chief executive officer, there's often no one to turn to for. So, irrespective of whether you’re a minority, being a founder can be lonely.

Mentorship and female role models are vital to level the playing field and create a platform for new voices in the fintech space. According to Blakstad, mentors, role models, peer networks, and representation are necessary to bridge the gender gap.

“Women in Fintech need role models, because (very simply) it’s hard when you don't see people who look like you encouraging you and saying ‘you can do it!’ One of the best things you can do is ask for help – not just from women, but from men as well. If you ask, people are usually willing to help and it will likely make you feel less isolated,” Blakstad suggests.

Louise Ferslev, CEO & Founder of MyMonii

Sofie Blakstad, CEO of Hiveonline

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Sponsored content

Ulrik Falkner Thagesen, CEO in e-Boks

With the Digital Finance Revolution Comes Great Responsibility for Sustainable Development The digital revolution has transformed the world’s financial systems at every level and digitalisation has affected every area of life, not just financing. Incumbents in the financial sector must deliver on a vision of creating more sustainable digital societies by protecting and safeguarding citizens’ rights and the environment.

C

ompanies across the world have committed to solve many of the world's biggest problems and eliminate world poverty and hunger, reduce inequalities, ensure good education and better health for all and sustainable economic growth.

193 countries – including Denmark – adopted the UN plan "Transforming our world - The 2030 agenda for sustainable development". The plan includes 17 world goals for sustainable development. Most of the goals have the common denominator that technology will play a crucial role in solving the problems to be tackled.

“We are living in a world in rapid transition, and one of the major drivers is digitalisation. As with so many other areas undergoing rapid and transformative innovation, de-

ciding whether this is a good or a worrying trend, depends on the values and the governance we apply,” says Ulrik Falkner Thagesen, CEO in e-Boks. e-Boks is a secure digital mailbox which can be used by private individuals and businesses to receive electronic mail.

The company provides an essential part of the societal infrastructure that provides the backbone for modern democracy – not only in the Danish society where more than 90 per cent of the population uses e-Boks but also in Europe. In totalmore than 18 million users globally receive or store highly important, private and confidential information every day in e-Boks – and the number of new users expects to grow yearly with more than 15%. The impact increases and the need to address a sustainable future becomes even more urgent.

“It is our vision to create better digital societies, and

keep contributing to the sustainable development of society through the digital transformation experienced across Europe in recent years – leaving no one behind,” Thagesen says and adds: “With the fundamental rights of the citizen as our cornerstone, the business of e-Boks fully relies on the continued trust and confidence of our clients and users. e-Boks has policies, codes of conduct and standards for how we conduct our business, which also applies to our suppliers and partners.”

Human rights at the core of the business Everyone has the fundamental right to respect for his or her private and family life. The Global Goals spells out the

Sponsored content need to protect the dignity and autonomy of the individual by adhering private and confidential information, including the storing and sharing of data; the right not to be subject to unlawful state surveillance; and the right to control the spreading of information about individuals private lives.

This is something that e-Boks does not take lightly.

“At e-Boks, the individual’s right to privacy is non-negotiable. It is a driver for how we design our systems and products; it underpins our governance structure. It is a key criterion for when we enter new markets and geographies. By protecting the rights of the individual, we contribute to the societal infrastructure that forms our modern democracy,” says Thagesen.

The Nordic countries form the most digital region in the world and Denmark has a long tradition of supporting and addressing human rights. It can be easy to forget that the democratic rights of the individual should never be taken lightly. The truth is that many people in the world are struggling to exercise their fundamental rights, for example, the one billion people in the world who, according to the World Bank, live without proof of identity.

They struggle to access basic services – including access to healthcare and finance – and may miss out on important economic opportunities, such as formal employment or owning a registered business.

Every time we open one million digital mailboxes, we strengthen one million people´s legal rights, protect their fundamental freedoms, secure their legal identities, and enable their secure and transparent access to public and private institutions. In this way, we contribute to the social infrastructure that forms modern democracy, say Thagesen and adds: At the moment there is a lot going on in the area of standardisation, and a number of countries are moving from closed national systems to open international stan-

An e-Boks hour

Saved water in litres

1

digital documents sent

No. 1 most trusted and liked company in Denmark

Saved trees

trees saved

Documents

51.142

7

Mobile Logins

3236

10.375

Web Logins

dard solutions. In Europe, all markets are heading towards eDelivery and eIDAS, and regions outside the EU are also starting to refer to them.

In 2018, e-Boks adopted the CEF e-Delivery technology that allows the secure exchange of sensitive data within the EU. This means that we will be able to offer citizens,

of paper saved

90%

of the Danish population uses e-Boks

2.8 billion

employees

467

24.172

8000 tons

71

Invoices for Payment

April 2019

liters of water saved

60,000

468

320.513

e-Boks in numbers 2018

485 million

Signed Documents

Saved paper in tonnes

16 million users

11.5%

growth in revenue

256

Payslips

Data in Megabytes

businesses and authorities an easy and secure way to exchange data across national borders through our platform.

Killing the printers – saving the environment According to the World Wide Fund for Nature (WWF), more than one million tons of paper in the world is used – every day. Much of this paper usage, even if recycled, is wasteful and unnecessary and puts enormous pressures on the environment – on forests, water and air quality, waste streams, biodiversity, and climate change.

“As we grow our business, the environmental footprint of our partners and users is reduced correspondingly. Today, thanks to the massive adoption of e-Boks in the Nordic public and private sector, and with business-to-business and business-to-consumer users following close behind, we contribute to saving 8,000 tons of paper, 2.8 billion liters of water, and 64,000 trees from being cut down” says Thagesen and adds: Digitally, we can provide access to paper-free documents, minimizing both the use of paper and the physical transportation of letters. We can store safely - throughout a lifetime - without taking up any physical space. Clearly secure digital communication presents a great opportunity for protecting our environment.

That said digitalization is not a free lunch. Data centres around the world consume vast amounts of energy. The amount of energy consumed by the world’s data centres is set to triple in the next decade, putting an enormous strain on energy supplies and challenging our ability to halt global warming. Our ambition is that we by 2030 can rely on 100% carbon neutral data from our data centre suppliers,” Thagesen says. *e-Boks is committed to SDG 12: Responsible Production and Consumption and SDG 16: Peace, justice and strong institutions

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Finance Lags behind Other Sectors, but It Could Be the Solution for a Greener Future A Chinese app that gamifies carbon footprint tracking has already shown that fintech has the potential to cut carbon emissions. According to the director of the Sustainable Digital Finance Alliance, a new wave of green fintechs could help achieve the United Nations’ sustainability goals.

By: Sebastian Kjær

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ildly popular in China, the app ‘Ant Forest’ enables users to earn green points by walking, using public transportation, paying bills online, and other low-carbon activities that – over time – feed into a virtual tree. Eventually, the virtual tree in the app is converted into an actual tree in the world, further reducing carbon emissions.

Undeniably, the app serves as a promotional programme for the Chinese payment service Alipay, but it also does a public good by nudging users’ behaviours. In this way, Ant Forest has become the world’s largest unofficial carbon market. Broadly speaking, the developers have managed to scale green fintech like no other, and that’s what makes it a compelling case – and “part of the reason why we initiated it,” explains Marianne Haahr, director of Sustainable Digital Finance Alliance.

Indeed, the non-profit organisation, Sustainable Digital Finance Alliance helped give birth to the programme, in partnership with Ant Finance and the United Nations. Combining the internet, finance, and a low-carbon lifestyle has attracted (and hooked) 400 million users. As of August, 2017 the programme had planted more than 10 million trees.

According to Haahr, green fintech projects like this can really make an impact: “Money is what makes things happen. Money

builds roads and determines whether companies live or die. And we want money to focus on more than just a narrow, financial return – but also recognized green and societal returns.”

The financial sector is lagging behind on sustainability “At this point, the sustainability goals have been around for several years, and many sectors have started embracing them – emitting less CO2 in their value chains and doing good for society. However, if you look at the financial sector, it has moved relatively slowly,” Haahr advises.

Her organisation’s mission is to get the sector to move faster. As a case in point, Haahr pointed towards green bonds, which only account for 1 per cent of the bond market today.

“There’s plenty of capital available, which could be used for green projects through bonds. It’s all about re-allocating the capital. And if we don’t do this, we will never meet the Paris Agreement or the United Nation’s sustainable development goals,” Haahr says.

Nevertheless, Haahr regards green bonds as a success story. After all, they have scaled relatively fast, and, with the help of fintechs and tech companies generally, the growth could continue to accelerate.

“Today it’s a little more cumbersome to design a green than a traditional bond, because you have to collect more data than you’re used to. You don’t just have to look at the earning and asses if it’s realistic. You also have to know the green return over the next five years and assess the data proving it – otherwise it won’t be a green bond,” Haahr explains.

Data remains a major barrier to green investments becoming mainstream. For Haahr, fintechs can play a pivotal role in overcoming those barriers through emerging technologies, such as blockchain, automation, and the internet of things.

A new wave of fintech is poised to make an impact Marianne Haarh, director of ”Sustainable Digital Finance Allianc

Fintechs are already bringing new business models to the market. It stands to reason that green add-ons

could be incorporated with relative ease. Crowd-investing in real estate could become crowd-investing in green real estate. Technologies and new payment infrastructures allow scaling of sustainable energy in novel ways. And the accessibility of tech allows projects to fertilise for change from below.

“If you look at the carbon wallet, it’s a fintech which corrects a regulatory mistake. Carbon isn’t taxed to any large degree. As individuals, we cannot monetise our carbon savings or trade them in the marketplace, so the wallet offers individuals access to a carbon market by granting rewards for carbon savings. It is not a punishment for polluting behaviours as a carbon tax, but a rewards system for climate positive behaviours. It all happens in a gamified universe, with personalised feedback loops as guidance – and it helps you change,” Haahr says.

Above all, fintechs need to drive a change in mindset. “Saving is for sure something we would love someone to make a solution for in Denmark.

If we just moved all of our savings into the sustainability goals, we wouldn’t have a financing gap,” Haahr points out.

”Sustainable Digital Finance Alliance” The overall objective of the Alliance is to leverage digital technologies & innovations to enhance financing for sustainable development.

The organization was founded by ANT Financial Services and UN Environment to harness digital technologies for sustainable finance.

Today Sustainable Digital Finance Alliance is spun out as a non-profit organization.

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Fintech in Emerging Markets Is Not Disruptive – It’s a Vital Change The emerging markets have vast demographics, where many don’t have access to the financial services industry. However, at least a handful of Danish fintech start-ups have set a goal to change that using innovative fintech developments in these growth markets.

By: Sebastian Kjær

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s cutting edge technologies, like blockchain and artificial intelligence, are gaining momentum in Europe and the Nordic region, things are different in emerging markets.

In many countries, the same fundamental, financial infrastructure is not even in place - or is too expensive for the masses to access. 1.7 billion adults don’t have access to bank accounts, which makes it almost impossible for them to enter the financial services market.

However, re-configuring and implementing existing solutions in new and smart ways can make them affordable for growth economies. At the same time, new technologies, like blockchain, brings grand promises for improving processes, preventing corruption, and building new low-cost platforms, ecosystems, and infrastructures.

While the traditional financial industry should not be held

accountable for inequality across the globe, it does need to be introspective about this issue. Examples like m-Pesa in Africa, Alipay in China, and PayTM in India, and how they transformed payments landscapes through mobile platforms, show just how much of a difference technology can make. Since 2011, services like those have been a part of reducing the global levels of unbanked adults by 20 per cent.

Technology instead of foreign aid Instead of investing in foreign aid, tech-companies have the potential to leapfrog emerging economies forward. And while financial inclusion through technology is started as a journey to reduce global inequality, it also represents a massive business opportunity for technology providers.

In the future of banking, banks can address an additional US$380 billion market in annual revenues by targeting micro-enterprises and bringing both unbanked and underbanked adults into the formal financial system, per a report from Accenture.

This is a challenge that banks should be more than happy to embrace in the coming years. And a handful of Danish start-ups are already taking on the challenge.

HiveOnline: Financial tools for small businesses based on trust While most advanced economies take transferring and handling money for granted, it still represents a transformative way forward for many countries without the same financial infrastructure. Low-cost mobile banking represents an opportunity to make this happen and to achieve financial inclusion, along with supporting new business opportunities for developing countries where services are neither available nor affordable.

The blockchain start-up Hiveonline is building financial infrastructures from the ground up to serve the

underserved - primarily in Africa. The Danish company’s blockchain infrastructure reflects modern thinking and is most likely how a banking system would look like if it was to be rebuilt today. With this infrastructure, Sofie Blakstad, founder and CEO of HiveOnline, is bringing financial inclusion through business management tools to one of poorest countries in the world, Niger, alongside the NGO ‘Care’.

The blockchain-based app Hiveonline has developed is taking the pain out of managing projects as a small busi-

ness. Finding work, managing deliveries, and getting paid are all managed seamlessly with the app. What’s more, these are all implementable at a lower cost compared to infrastructure in advanced economies.

At the same time, the solution allows entrepreneurs to build a trust score to prove their reputation to new customers, partners, and stakeholders within the ecosystem. A trust score is kept on Hiveonline’s incorruptible blockchain, which encourages early payment and provides a guarantee of reliability to customers and potential partners.

GrowthBond: Hotwiring traditional capital market by funding advertising It takes money to make money. And for digital companies, a lot of money is spent advertising on digital platforms like Facebook and Google. Ferdinand Kjærulf, the founder behind Growthbond, saw this first hand when he previously helped launch ‘Airhelp’, which first gained momentum when they got the funds to invest heavily in online advertising.

Moreover, worldwide, more than 70 million small- and medium-sized enterprises can’t access capital to fund their growth through advertising. Despite the fact that small businesses create the vast majority of jobs, 70 per cent of banking applications are denied and only a fraction succeeds in attracting investments from business angels or venture funds. Micro-loans have been added as a third way for small businesses - especially in emerging markets - but this solution is also time-consuming and only available for the lucky few.

In the end, the small businesses that succeed in raising capital spend a large portion of it on digital marketing. So instead of wasting time looking for capital to expand their business, GrowthBond has created a solution that allows business owners to skip the capital raising step and apply for 20,000, which can only be spend on digital advertising.

GrowthBond makes the process lean and fast by requiring businesses to connect their Facebook and Google accounts, along with their payment gateways to the platform. This allows GrowthBond to calculate the businesses return on advertising investment, which makes it easy for investors to assess their return when investing. And after raising advertising-capital through the platform, the small business is paired with an expert in online marketing to make the capital work more efficiently.

While the solution is aimed at every small business around the globe with an active Facebook page, emerging markets might be able to benefit the most from the platform. In some of those markets, Facebook accounts for 80 per cent of all internet traffic, and 60 per cent of the populations can be reached through the social platform.

The platform has already gained financing from both the UN and EU to enrol its service in Kenya, Gambia, and Palestine. Furthermore, the start-up has secured lending capital from 90 private investors through the crowd financing platform Lendino.

Ultimately this has the potential to create a better and more efficient capital market, where businesses’ marketing and sales data is available to investors in real time. Furthermore, it can make capital available for businesses in Africa, Asia, and the Middle East.