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.
For 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.
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 Financial Hub
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.
“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 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 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.