Monday 10 December 2018

Fintech players can bank on the Nordic countries' cashless society

In Sweden retailers are no longer obliged to accept cash payments
In Sweden retailers are no longer obliged to accept cash payments

Tom Holgersson

Money, money, money really must be funny," sang ABBA, one of Sweden's most iconic exports back in the 1970s. These days, what us Scandinavians find most peculiar in financial matters is the need to carry cash when venturing outside the Nordics.

Europe's first modern banknotes were issued by the Bank of Stockholm back in 1661. Now the country seems set to be the first in Europe to dispense with banknotes. Observers are predicting that, for all practical purposes, Sweden will be a cashless society within five years.

Here in Stockholm, we settle everything from coffee to cabs by phone or card. Retailers are no longer obliged to accept cash payments. Kids use debit cards. Slots for coins and notes have long been designed out of vending machines. Less than half of Sweden's 1,600 bank branches stock cash, and even churches request their flock donate by text.

The revolution has been enabled in part by iZettle, an app allowing anyone with a smartphone or a tablet to accept credit card payments on the go. It has brought Stockholm's homeless street traders bang up to date with 21st century ecommerce.

Swish, another Nordic innovation, allows Swedes to send money to friends and companies using only their mobile phone, so the app is perfect for splitting the bill at a restaurant or paying for a bargain at a flea market.

Then there's Swedish unicorn Klarna, which provides payment services for online stores, allowing consumers without credit cards to purchase simply by inputting their email and zip code. Having conquered Scandinavia, Klarna has its sights set on the US.

It's clear that Nordic fintech is in serious grow mode. Over the past five years, Stockholm has attracted 18.3pc of all European fintech investment, placing it second only to London.

Other Nordic nations are also at the leading edge. Investments in Danish fintech companies increased from 35.9 million DKK (€4.8m) in 2014 to a billion DKK (€134m) in 2015, and when the US organisers of Money 2020 brought the world's largest event for payments and financial services to Europe last year they chose Copenhagen.

It's also clear the industry is hungry for innovation. When Enterprise Ireland brought buyers representing some of the region's largest banks to Dublin last month, artificial intelligence, cybersecurity, identity recognition, data analytics and regulations and compliance were among the Irish capabilities that whetted their appetites.

About 15 of Enterprise Ireland's fintech client companies are already engaged in the Nordic market, including names like Fenergo, Corvil, Rockall Technologies and Fexco. But we believe there is potential for twice that number to win business here.

New entrants will find Scandinavians like to communicate directly and get straight to the point. They provide open feedback and criticism. But this should be viewed as a sign of serious interest, not disrespect.

When presenting your business case, support presentations with facts and figures. Avoid exaggerating and be aware that Nordic business colleagues will wait until the presentation has finished before asking any questions. Finally, don't forget your bank cards.

Tom Holgersson is market advisor at Enterprise Ireland's Stockholm office @entirl

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