NEOBANKS OF THE WORLD: ICELAND
Meet the world’s least
POWERFUL BANK If asked to name one country where trust in banking reached rock bottom, Iceland during the 2008 global economic crash would surely top most lists. Reykjavík was rocked by unprecedented scenes as people took to the streets in protest at a triple whammy of a collapsing currency, soaring unemployment and the country’s stock market being more or less wiped out. And who was to blame? You’ve guessed it: the banks that had spectacularly and ruinously overreached themselves. But rather than use huge taxpayer-funded bailouts, as happened in many countries around the world, the Icelandic government went for the jugular. The country’s three major banks – Kaupthing, Glitnir and Landsbankinn – were allowed to fail as prosecutors were let off the leash to go after reckless bankers. The result? Many senior banking executives were jailed and the country's former prime minister Geir Haarde was also put on trial, although he was subsequently cleared of criminal negligence. Fast-forward more than a decade and www.fintech.finance
Haukur Skúlason was there when trust in the Icelandic banking system got badly burned during the financial crash. He stuck around to clear up the mess, but it gave him a very different perspective on what a bank should be. It should be more like Indó… two bankers who lived through those bitter days, Haukur Skúlason and Tryggvi Björn Davidsson, are launching another bank. Only this time, they’re determined to do things differently. Iceland’s first Cloud-native digital bank, Indó, has ambitions (if that’s the right word) to become ‘the world’s least powerful bank‘. This antithetical concept means it’s strong on trust, simplicity and transparency. But, more than that, given the horlicks that banks the world over made of things before, it’s giving its depositors a veto over the investment decisions it makes.
Explaining why he and his partner Davidsson decided, in 2018, that the time was ripe to set up their own neobank bank, Skúlason says customers were then, as they are now, being failed by complacency among the incumbents. “Basically, we’ve had the same kind of banking system for 30 years, three large incumbent, universal banks, pretty much all doing the same thing,” he argues. “You get the same kind of services, rates and products from every one of them. They themselves grew from mergers and acquisitions within the old savings bank system, going back 50 or 60 years, and we basically had the same type of bank in 2018 that we’d had in 2010: banks that are big by Icelandic standards bogged down by IT legacy problems, probably overstaffed, and focussed on being reactive to what happens, instead of proactive in developing new things. “So, we saw an opportunity to introduce the solutions and the technology that are emerging in Europe and the US, into Iceland, and offer better products and better services, at a much lower cost – then transferring the savings to our customers.” Issue 6 | ThePaytechMagazine
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