"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" - Thomas Krogh Jensen. Foto: Kasper Løftgaard.

Why Fintech Matters

Today, 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.