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Fintech Disruptors Report 2016 – Nordic Edition

The Fintech Disruptors Report: Nordic Edition provides a fresh perspective on the pioneering role the region is playing in the fintech revolution. Including new insight on the industry’s response to the disruption of the smartphone era, the report is a valuable guide for anyone that wants to explore the breadth of innovation and talent across this dynamic region. Register here to get a free copy.

UPSTART Banking – The consequences of the financial crisis of 2007-09 were far-reaching and are still being felt today. The implosion of global banking and the consequent loss of trust in institutions has opened the market to non-bank competitors. This has been supported by favourable regulation aimed at introducing more competition into retail financial services, and cheaper access to consumers through the smartphone revolution.

Uprising – Interviews with over 30 incumbant and start-up businesses across the region reveal the breadth of the Nordic fintech ecosystem. Success in creating Covera new generation of global fintech brands will depend on support from the financial services industry and other export-focused institutions.

Partnership – The report underscores the degree to which traditions of collaboration and co-operation within the banking sector have fostered the development of a vibrant financial services industry.

Simplicity – Easier access to consumers through digital channels – specifically smartphones – is driving the trend to straightforward products. While this may be impractical for multi-channel institutions, the research highlights the opportunity for banks to simplify the user experience, rationalise product lines and improve returns.

Trust – Trust in Nordic banks remains strong, but so does local enthusiasm for technology and innovation. In order for banks to maintain a loyal customer base, they will need to place an emphasis on customer-first product experiences and continue to support innovation and collaboration.

Agility – Smartphone app use has radically altered consumer demand for innovation, with new products launched more quickly, tested in the open market and continuously refined. Organisations interviewed for this report underline how banks are adapting to this cultural change with innovation initiatives that include venture capital investment, internal development and acquisitions.

Relationship – The focus on user experience by fintech entrants, including those quoted in this report, is drawing attention to the opportunity to redraw the relationship between financial services providers and their customers. For banks, this will mean seizing the potential to leverage deep pools of data for greater customer insight so as to understand how to monetise their services transparently in a way that fosters the longer term relationship.

Transparency – Price transparency enabled by the first internet wave at the beginning of the century in the form of price comparison sites such as, has been complemented in the age of the mobile internet by an influx of new entrants with straightforward pricing and simple business models. For banks, a response will require a root-and-branch commitment to transparency to help restore trust and re-build the connection with customers.

Read the full findings in our 2016 UPSTART Banking Nordic Edition report.



Blockchain – New byword for trust?

The blockchain shows how our understanding of transactional trust, conferred by human third party process for centuries, could be transformed by an automated system. Affording greater transparency and encouraging greater participation in the financial system on a global scale.

Leanne Kemp, chief executive of Everledger

We caught up with Leanne Kemp, CEO of London based startup Everledger, which is applying blockchain technology to authenticate ownership of diamonds. A system the company hopes can help stem the flow of blood diamonds by verifying that stones on the market comply with industry
standards of provenance.

What is your view on the blockchain technology and its future potential?

It was only a quarter of a century ago that Sir Tim Berners-Lee created the WorldWideWeb and changed the world forever, giving access to communication and content globally. The blockchain represents an opportunity to re-think legacy systems that for the most part have been taken for granted as the way things must be done, rather than what could be done. It provides a
tectonic plate shift in the way we conduct commerce between parties and our future expectations of transparency around transactions and objects: an ideal way to ensure transparency and integrity when two parties in business don’t trust each other.

The blockchain is suited to recording and understanding an object’s reputation by providing a chain-of-custody record of provenance. Arguably, the future potential is quite possibly limitless, particularly in the areas where we are focusing at Everledger: using a global, distributed ledger that cannot be tampered with as a compliment to traditional methods of recording information, all of which have been shown to be vulnerable.

What does the opportunity for blockchain innovation look like in different parts of the market?

It can – indeed it will – transform the way information is stored, shared and verified. Let’s look at the potential of smart contracts as an example. Transactions that pass through multiple intermediaries and countries adding time and cost to the process are, through the blockchain, designed to be self-executing and self-enforcing because the interaction is solely betwe
en the parties.

Another example: even though many diamond-fueled wars have ended in Africa, conflict diamonds remain a serious problem. Everledger supports a system of warranties that enable mining companies to verify that their rough stones adhere to the Kimberley Process. The provenance of these diamonds, from legitimate sources, is then easily accessed by governments – and consumers – offering them the transparency they demand & rightfully deserve. Increased use of the blockchain will increase consumer confidence; enable the implementation of a system of frictionless duties and taxes; and bring about a reduction of fraud and financial risk.

Do you expect that the Everledger product will evolve for new customer segments outside of fraud prevention/insurance? 

Yes. Our focus on decreasing fraud and risk for insurance companies is one element of our business. We work in cryptographic certification from the source of a valuable item through to its purchase. We started with the major certification houses who create the diamond’s ‘digital fingerprint’ by recording the 4cs and over 40 meta data points in the Everledger digital vault. In the six months since we began, there are already over 850,000 diamonds stored. We also partner with mining companies in Africa, whom we support with a cryptographic certification to prove their stones are not conflict diamonds so they comply with the Kimberly Process. Our relationships with jewellery retailers allow their customers to have instant verification of the value and authenticity of their purchase. And, of course, we have more planned for our future with other articles that face similar industry challenges and social impact globally.

What challenges are you envisaging in terms of maturity and adoption of the technology by the industry?

We recently won a Meffys Award for FinTech Innovation. It was a great honour to be recognised by the Mobile Ecosystem Forum because we are the first blockchain company to be chosen. It’s just the start for the technology and, as with others breakthroughs that affect regulations, business systems and human behaviour, adoption will take time. We’re seeing global leaders in technology, like IBM and MIT, turn their focus to developing platform initiatives – even as an open source environment. In finance, 25 banks are now part of the R3 blockchain consortium working to determine a framework for using blockchain technology in markets. This is progress, but there are challenges such as the legacy of ‘bitcoin anxiety’ and the need to increase the number of non-tech people who understand and embrace its potential for their business.

During 2016-2020, many businesses and industries, including insurance, will face a pivotal moment. The need to experiment, adapt and implement emerging technologies like the blockchain is considered by many to contain some of the greatest change agents since the introduction of the Internet. Adoption of these new technologies is accelerating toward the tipping point. There will be game-changing breakthroughs that will challenge businesses in many ways. Change and disruption are upon us.