Nordic Fintech Magazine

SPRING 2024

Six Inescapable Trends Stretching the Boundaries of Limitless Payments p. 30-33

From Open Banking to Open Finance: The top 10 Lessons for Seamless Transition p. 12-13

Tidal Trends: The Next Big Waves in Fintech p. 12-13

Executing Digital Banking Transformation with Fintech Partnerships p. 54-55

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4

NFM’S NORDIC FINTECH DISTRIBUTION COMMUNITY Nordic Fintech Magazine exclusively works together with selected Nordic Community Partners for insights and distribution, giving us unparalleled reach with audiences across the Nordics and Baltics

Editor in Chief: Chris Crespo Journalists: Jakob Frier, Paulo Delgado Sarah Häger, Dharmesh Mistr, Jim Marous, Ewan MacLeod Layout: Henrik Hillerup Production: Ditte Gerner Dyhr Published by Nordic Fintech Magazine

5

Thank you to all the Fintech heroes contributing to this magazine!

6

Content

p. 8 Perpertuum Mobile, a Region that Sustains the Pace of Success

p. 10

The Cross-Border Payment Dilemma

p. 12

From Open Banking to Open Finance: The top 10 Lessons for Seamless Transition

p. 14 How alternative finance is closing the SME funding gap in the EU by helping businesses grow

p. 16

p. 18

Enable Banking and CapitalBox Partnership Brings Open Banking to B2B Lending

The Future of Identification: How Digital IDs are Shaping Financial Security and User Experience

p. 22

A Closer Look at Three Nordic and Baltic Fintech Ecosystems

p. 26

European Instant Payment Regulations: Reviewing Challenges and Solutions with Expert Thomas Riedel

p. 28

Banking Circle’s Agency Banking Solution: Lowering the Entry Barrier

p. 30 Six Inescapable Trends Stretching the Boundaries of Limitless Payments

7

p. 36

Founder Diaries: Zeroing in the Priorities Shaping Fintech

p. 38 Digital Trust or Bust: Fintech's Quest for Innovation with a Conscience

p. 42

Identity Rebooted

p. 44

The essential role of networking in finance and fintech when you’re growth rich, but time poor

p. 46 David Slaying Goliaths

p. 48

Tidal Trends: The Next Big Waves in Fintech

p. 50

It’s time you created an Advisory Board

p. 52

p. 54

Fintechs to Watch: Wave Makers Stirring the Nordic and Baltic Seas

Executing Digital Banking Transformation with Fintech Partnerships

8

Editorial

Perpertuum Mobile, a Region that Sustains the Pace of Success

9

I

n the first quarter of 2024, Nor-

interconnected future financial ecosys-

dic Fintech Magazine embarked

tem. Embedded finance further exem-

innovation, we also value the careful

on an extensive journey across

plifies this integration, advancing how

consideration needed for its practical

the Nordics and Baltics to take a

financial services are seamlessly incor-

application and broader acceptance.

plunge right into the pulsating heart

porated into various customer jour-

Indeed, novelty brings excitement and

of financial innovation. In our quest, we

neys. This phenomenon is not confined

the potential to transform longstand-

have travelled near and far to places

to traditional financial companies, but

ing practices. However, we understand

like Lithuania, Norway, Denmark, and

spans across diverse sectors like retail,

that in our industry, successful inno-

Stockholm, where in line with our

travel, and healthcare, showcasing the

vation has always depended on the

mission of unlocking transformational

ever-expanding link between financial

resilience and reliability of a robust in-

ideas, we continue to tap into, and ex-

services and adjacent industries.

frastructure. This infrastructure, having

While we embrace the rapid pace of

pose some spectacular thought lead-

Our region's dynamism in Fintech

served over 33 million people across

ership from this innovation rich region.

is also evidenced by the vibrancy of

our regions for years, is secure, sturdy,

With over 2200 Fintechs sculpting the

industry events, from the exhilarating

and dependable. It forms the essential

financial services landscape, the Nor-

Fintech Day in Lithuania to the large-

backbone that supports the mission to

dics and Baltics remain a force to be

scale Stockholm Fintech Week and

reckoned with in the race for influence

upcoming cutting-edge Norway Fin-

in the global Fintech stage.

tech Festival, the region is alight with

Throughout our activities in this first

conferences. These gatherings are not

quarter, we've engaged with thought

just networking opportunities but also

leaders and visionaries that are not

fertile grounds for sharing ideas and

just able to think bold, but to also think

expanding collaborations that fuel the

beyond. These interactions fill us with

sector's growth. And Nordic Fintech

excitement, optimism, and a profound

Magazine, has been and will continue

sense of admiration for the ingenuity

to be there at the center of the action

and resolve with which Nordic and

to cut through the noise and bring

Baltic Fintech entrepreneurs are

you front row access to the sharpest

orchestrating transformative shifts in

thinking in the industry.

the industry.

An intriguing narrative that we’ve

In this issue we’ll cover trends that

stumble upon as we try to understand

have captured our attention for their

the forces shaping Fintech in 2024 is

potential and their gravitas as pillars of

the rise of financial services innova-

the ecosystem. We start off by looking

tions emerging from unconventional

at the emergence of identity services

quarters, notably retail. We observe

and trust. The deep-seated trust in

developments that are responses to

government, systems, and institutions

unmet needs in integrated solutions

lies close to the heart of our region.

encompassing data management,

This trust made way for the wide-

artificial intelligence, and payment

spread adoption of digital identities,

systems, revealing a trend of self-driv-

enabling access to a vast array of ser-

en innovation among non-traditional

vices, from public sector offerings to

financial players.

financial transactions. We will explore

The pace of change in our ecosys-

Chris Crespo Chief Editor & Head of Content at Nordic Fintech Magazine

the foundational role digital identity

tem is relentless, with AI playing a

plays in Fintech and the accelerating

transformative role in both the back-

effect that trust based services can

end and frontend of financial services.

make financial services more acces-

have in the development of novel

Up to 46% of new code is now gener-

sible, convenient, and adaptable. This

financial solutions.

ated by AI, resulting in a 55% increase

ensures that finance not only fulfills its

Shifting our focus to payments, we

in overall developer productivity and

fundamental purpose but also extends

witness an evolution spurred by the

highlighting a significant shift towards

its reach to offer improved, more ac-

recent Instant SEPA regulation, mark-

automation in software development.

cessible services for everyone. In this

ing a stride towards instant payment

The integration of generative AI is to

issue, we celebrate both the vision-

solutions across Europe. This change,

revolutionize the sector, streamlining

aries who introduce new possibilities

coupled with the advancements in

foundational processes and unleash-

and the dedicated individuals who

open banking and account-to-account

ing potential for new value propo-

have built and maintained the nec-

payments, and regulatory shifts like

sitions, business models, and prob-

essary foundations that enable these

PSR and PSD3 hint towards a more

lem-solving methodologies.

advancements.

10

The Cross-Border Payment Dilemma In a recent discussion with Thomas Jul, CEO of Inpay, we explored the challenges faced by international organisations when moving money across borders. We talk about the operational and regulatory complexities that arise when transferring funds across jurisdictions and the impact these can have on business operational efficiency and costs.

By Chris Crespo

G

lobal commerce hinges

common problems, Inpay has devised

business relationships, Inpay has

on the ability to transfer

a “smart routing” approach that

managed to stand out in the highly

money efficiently and

allows it to transfer money across

competitive marketplace of financial

securely to suppliers,

jurisdictions with unique precision

services, building trust and loyalty

customers, and partners. Regional

and efficiency. Reflecting on the

among its customers.

international payments in areas like

significance of this innovation, Jul

the EU have benefited enormously

states, "smart routing is a strategic

Delivering against bespoke

from the common regulatory

asset that combines technology,

customer needs

frameworks and infrastructure that

network and compliance allowing

Inpay’s growth can in many ways

enable transactions to happen

us navigate the diverse landscape

be attributed to its laser-focused

quickly and with full traceability.

of global payments with speed and

belief that any successful payments

Yet, businesses worldwide struggle

reliability.” Opening new corridors

provider needs to absolutely

with a variety of obstacles in cross-

across the world requires a thorough

understand and solve the specific

border payments beyond regional

understanding of local regulations

problems of the sectors it serves.

jurisdictions. “Transferring money from

and the local financial landscape.

Sector-specialism has therefore

Germany to Spain can be done as an

“Smart routing is the backbone of

become baked into the way it

Instant SEPA payment, but moving

our operation, through which we fine

operates.

money from Germany to Bangladesh

tune each transaction to meet the

‘’Our product and commercial

can take weeks” says Thomas Jul,

specific needs and regulations of its

teams aren’t split by the product

CEO of Danish headquartered

destination” Jul adds.

they are selling’’, states Jul ‘’…but by

payment frontrunner Inpay. These

Under Jul’s strategic guidance,

the sector they are serving. This is

challenges originate from varying

Inpay has carved a specialist niche

critical in making sure we provide

regulations, complex compliance

in the often-crowded world of cross-

our customers with the expertise

demands, and disparate technologies.

border payments. The company

needed to solve their very specific

In less developed regions,

distinguishes itself through a

pain points.’’

transactions can become hampered

dual-focus approach, combining

by inefficient banking infrastructure

technological innovation with a deep

specialised service can work

and opaque financial processes,

commitment to customer relationship

regionally too. As Jul states ‘’We knew

leading to delays and uncertainty.

building. “We don't believe that a

that our banking customers in the

This problem is particularly acute

transaction is transactional, we think

Middle-East had a very different set

in sectors where time-sensitive

it's the start of a partnership.” Jul

of demands to those in Europe. For

operations are common.

asserts. By transforming transactions

a start, we know that to service that

into the foundation of sustainable

market as well as we could,

To circumvent these all-too-

This belief in the power of

Thomas Jul CEO of Inpay

11

with Inpay's technological capability,

of their financial transactions. By

enables it to open new corridors

addressing the unique needs of

demonstrating its commitment to

organisations operating in challenging

solving what may seem 'unsolvable'.

environments, Inpay empowers

Inpay sets itself apart with

them to manage transactions with an

exceptional completion rates for

unprecedented level of confidence

transactions, a crucial metric for

and precision, enabling them to focus

measuring the efficiency and reliability

on their core mission.

of payment platforms. Jul highlights that, unlike many in the industry

The Role of Strategic Partnerships in

where completion rates often falter,

Cross-Border Success

Inpay consistently achieves over 99%

“Inpay heavily relies on partnerships

completion each month. This industry

to navigate the complex global

leading performance is particularly

payments landscape”, Jul emphasizes.

impressive considering the complex

The company partners with a variety

nature of transactions it specialised

of entities, including traditional

on, which traditionally have a higher

banks, PSPs, and regional/global

likelihood of failure.

license holders, to enhance its network's reach and efficiency.

we absolutely needed feet on the

in addressing complex payment

ground, and we absolutely needed

scenarios. Originating from the

Four Eyes are Better than Two

These partnerships are crucial for

face-to-face contact. So that’s

founder's challenge of donating to

One of Inpay's standout features is

maintaining high completion rates

what we did, with a local presence

Myanmar during a crisis, Inpay was

the implementation of the 'four eyes

and for Inpay's ability to deliver funds

established in Dubai specifically to

born out of the necessity to navigate

principle,' which allows customers

seamlessly and at speed across

cater to this.’’

the intricacies of international money

to mandate a dual-approval process

borders. “By working closely with

This customer-driven approach

transfers, particularly in situations

for transactions, reinforcing security

partners who possess complementary

can also be seen in the way Inpay

where traditional banking fails. This

and oversight. This principle, akin

capabilities and licenses, Inpay

understands and addresses

origin story highlights a key focus

to two-factor authentication in

ensures compliance, safety, and

complexities in the shipping and NGO

on 'complex corridors', that demand

digital security, ensures that every

transparency in its transactions." Jul

sectors, where a set of very specific

more than standard transaction

financial transaction is subject to

adds. This collaborative approach

needs exist. The company's swift,

processes due to regulatory,

thorough verification, enhancing the

not only expands Inpay's operational

transparent, and secure payment

logistical, or compliance complexities.

accountability and transparency that

capabilities but also reinforces

solutions mitigate the adverse

“Inpay excels in these complex

companies require. “Partnerships

its commitment to solving the challenges of international payments.

effects of delayed transactions in

cases by starting with a clear

are significantly strengthened with

the shipping industry, where timing

understanding of the customer's

the introduction of the 'four eyes

is often directly linked to significant

needs and the specific challenges

principle', a meticulous process that

Envisioning the Future of

operational and financial outcomes.

they face." Jul explains. In the

necessitates dual approval for every

Cross-Border Payments

"A container ship can't wait outside

case of NGOs like the Red Cross,

payment for customers that want it."

Inpay, under Jul's leadership, is

harbour for three weeks” stresses Jul,

which struggle to transfer funds to

Jul explains.

actively redefining the standards of

as he explains how delays in cross

remote or restricted regions, Inpay

This initiative by Inpay is especially

border payments have significant

connects the dots while addressing

pivotal in the context of organisations

prioritizing customer relationships,

repercussions in efficiency, costs, and

the deep causes of the problem.

with operations in regions where

leveraging technological

supply chains.

This involves rigorous compliance

traditional banking and payment

advancements, and nurturing

checks, including KYC processes,

systems are either inadequate or

strategic partnerships, Inpay is not

financial challenges in cross-border

and innovative solutions like creating

entirely absent. Here, the challenges

only solving present-day challenges

payments, including high standards

a whitelist of approved recipients to

are not just logistical but deeply

but also shaping the future of global

of accountability, the need for

ensure funds are delivered securely

linked to regulatory compliance and

commerce and finance. “Looking into

comprehensive documentation, and

and transparently.

the imperative need for transparency.

the future, the old world of SWIFT

Moreover, Inpay’s commitment

with many links on each payment

NGOs also encounter distinct

the demand for secure, transparent

Inpay's approach is to strategically

cross-border financial transactions. By

transactions. Inpay's response to

develop its network to tackle such

to speed in transaction processing

chain will be replaced with networks

these challenges is comprehensive,

complex scenarios head-on. By

does not compromise its dedication

of partnerships that work together to

offering services that provide the

prioritizing hard-to-solve cases,

to security and detailed financial

deliver money globally as quickly,

necessary speed, transparency, and

Inpay has positioned itself as a

oversight. This balance ensures

safely transparently as you would

security.

partner capable of providing bespoke

that organisations that need to

expect in a local transaction” Jul

solutions that standard payment

move money across borders, meet

concludes.

Thriving on Complexity

processors might not offer. This

their operational demands swiftly

Inpay's foundation is deeply rooted

customer-centric approach, coupled

without sacrificing the integrity

12

From Open Banking to Open Finance: The top 10 Lessons for Seamless Transition

By Sarah Häger, Chief Commercial Officer at Enable Banking

As the financial industry evolves from Open Banking to Open Finance, the journey is fraught with technological, regulatory, and strategic challenges. However, this transition offers unprecedented opportunities for innovation and growth. Drawing from my experience with Nordea Open Banking, here are ten invaluable lessons that can illuminate the path to successful Open Finance implementation.

13

1

2

3

4

Embrace the Technological Shift

Define Your Scope with Precision

Learn from the Pioneers

Open Finance ushers in a technological revolution, moving from batch processing to real-time data access. This leap forward enables the creation of innovative products and solutions, transforming how we think about financial services.

Imagine offering products that leverage real-time financial data, enhancing customer experiences and operational efficiency.

Setting clear objectives is crucial. Begin by outlining your commercial goals and regulatory requirements under the Financial Data Act (FiDA).

Integrating these aspects from the start ensures that your strategy remains flexible and robust against evolving regulations, preventing the need for a complete overhaul down the line.

Inspiration for Open Finance can be found beyond the banking sector. Initially, we looked towards tech giants like Oracle and Microsoft. Today, innovators like Nordea, BBVA, and Deutsche Bank provide valuable blueprints for API marketplaces. Examining their successes and approaches can offer insights into creating a competitive Open Finance ecosystem.

5

6

7

Evangelize Internally to Foster Innovation

Celebrate Progress to Sustain Momentum

An internal evangelization strategy is essential to spread knowledge and enthusiasm about Open Finance across departments. Collaboration between various expertise areas can lead to groundbreaking solutions, ensuring that the initiative‘s benefits are fully leveraged.

Given that the implementation journey can span years, recognizing milestones is vital to maintaining motivation.

Acknowledging achievements helps sustain engagement and enthusiasm, crucial for navigating the long-term challenges of Open Finance adoption.

9

Secure Continuous Management Buy-In The importance of management‘s understanding and support cannot be overstated.

Early and ongoing education ensures long-term commitment, enabling informed decision-making and resource allocation. This foundational support is key to navigating the complexities of Open Finance implementation.

8 Adapt Your Roadmap Flexibly

Prioritize User Feedback

The regulatory landscape and market demands are ever-changing. An agile approach to your implementation plan allows for timely adjustments, ensuring your projects remain relevant and compliant. This flexibility is crucial for staying aligned with both regulatory expectations and user needs.

Listening to users from the outset guides product development in a direction that meets market needs while avoiding regulatory pitfalls.

Early and continuous engagement with users is instrumental in refining your offerings and ensuring they resonate with your target audience.

10 Develop a Strategic Launch Plan

Identify Your Early Adopters

"Don‘t just build it and they will come.“ A comprehensive launch strategy is necessary to capture early market interest and valuable feedback. This involves a mix of community management, customer support, and targeted marketing efforts to ensure your product reaches its intended audience effectively.

From the MVP stage, consider who your product is for and how it can meet their needs.

This proactive approach allows you to begin commercialization efforts early, targeting users who will benefit most from your initial offerings and setting the stage for broader adoption as your product matures.

In conclusion, transitioning from Open Banking to Open Finance is not just about compliance or technological upgrades; it‘s about reimagining the future of financial services. By applying these lessons, we can navigate the complexities of Open Finance, creating products that are not only compliant but also highly valued by customers. The journey ahead is promising, and with a strategic approach, we can unlock the full potential of Open Finance for businesses and consumers alike.

14

How alternative finance is closing the SME funding gap in the EU by helping businesses grow Mantvydas Štareika is the CEO of CapitalBox, a leading fintech lender for small- and medium-sized enterprises (SMEs) throughout Europe. Headquartered in Finland, the pure fintech company has offices in Sweden, Denmark, the Netherlands, and Lithuania. CapitalBox’s financing solutions are flexible and accessible, and provided by mixing lending tools to make financing both secure and responsible. In this interview, Mantvydas chats about his journey to CapitalBox CEO, how SME lending is being upended by fintech, and where the industry is heading.

Interview with Mantvydas Štareika, CEO of CapitalBox

What is CapitalBox, and where do

working my way up to CEO. Coface

and expanded our C-suite. On top of

you fit into it?

provides credit insurance to busi-

that, we’ve also introduced collater-

Essentially we provide SMEs with

nesses, and it was a crash course in

al loans ranging from €500,000 to

loans that meet them exactly where

credit lending and crisis management

€3,000,000. Finding a way to offer

they are in their financing journey,

via the recession and banking crisis

collateral lending was a major priority

and with the amount of capital they

of the late 2000s and early 2010s. As

from the moment I arrived, and to see

require to not just stay afloat but grow.

CEO I focused on consolidating and

it implemented and chugging along

We’re able to dispense loans within a

relaunching entire divisions to opti-

at the one-year mark is a big accom-

matter of hours, accept more diverse

mise the company from top to bottom.

plishment for me personally and for

criteria as collateral, and provide more

I integrated AI and data information

the company at large.

personalised attention to our clients.

systems. I later joined SME Bank as a

SMEs are often overlooked by tradi-

board member and as CEO, and that

Tell us more about this emphasis on

tional banking institutions because of

was my springboard into CapitalBox in

collateral lending, and where that

the element of risk involved. These

January 2023.

fits into the underfunding gap you

banks are often weary of giving SMEs

described.

the capital they need, and that’s led

So you’re a little past the one year

Everything we do, as far as I see it, is

to an enormous SME funding gap in

mark. What have you accomplished

about addressing this underfunding

Europe. That gap amounts to roughly

in that time? How has the company

gap, including collateral lending. Clos-

400 billion euro in the E.U. alone. To

changed during your tenure thus far?

ing that gap is the overarching goal.

say there’s a market for alt lending to

Hitting the one year mark is a crucial

SMEs make up 99 percent of European

serve this is putting it lightly, and that’s

milestone for any executive. You’ve

companies, so no matter how you slice

exactly what CapitalBox is doing.

had time to try out certain things

it, SMEs are indispensable to the Euro-

and let ideas percolate, but it’s still,

pean economy. The natural next ques-

What was your professional journey

relatively speaking, early days. I’m

tion is, of course, why is the backbone

prior to CapitalBox?

very proud of the expansion efforts

of the European economy underfunded

It was an interesting one, to be sure.

I’ve spearheaded in the last year,

400 billion euros? Our initial approach

My educational background happens

including launching a new branch in

with CapitalBox focused on digital sales

to be in law. I entered fintech in 2007

Denmark with a team of Danish market

and small loans for working capital.

when I joined Coface, eventually

experts. We’ve done some recruiting

Mantvydas Štareika, CEO of CapitalBox

15

About CapitalBox As a leading European fintech lender for small- and medium-sized enterprises, CapitalBox provides timely, trusted, and tailored alternative funding solutions to businesses that form the backbone of the European innovation economy. Founded in 2015 as part of Multitude Group’s growth platform, the pure fintech lender provides fully automated online business loans up to €2 million that can be delivered in minutes following a successful application.

CapitalBox’s unique business risk assessment methodology, ability to deliver capital quickly, and emphasis on personalized service make financing newly feasible for underserved businesses across the continent. Headquartered in Finland, the lender has offices in Sweden, Denmark, the Netherlands, and Lithuania, with plans to expand into more countries in the near future.

To find out more, visit capitalbox.com

We've since realized the need to offer

This acquisition reflects our ongoing

one wants and likes our fully digital

Mantvydas

larger investment loans securely, which

expansion into invoice financing in a

onboarding and experience, but that

Štareika,

led us straight to the introduction of

tech-savvy, SME-friendly way. More

doesn’t mean we’re off the hook with

CEO

collateral lending. Collateral lending

broadly, we have an API-based model,

human interactions. WIth more com-

creates the security necessary for us to

and we’ve embraced AI and machine

plicated loans, particularly collateral

Combining well-honed entrepre-

scale and offer more to businesses. As

learning. Loan applications are re-

loans, we’re very deliberate with inter-

neurial instincts with proven legal

I mentioned before, there’s a bit of risk

viewed by a sophisticated AI-powered

acting directly with applicants. And at

acumen, Mantvydas Štareika is an

aversion when it comes to tradition-

system first, and in most cases can

every step of the process we make it

international business and finan-

al banks lending to SMEs. Even when

be approved and thus dispensed in a

very easy for applicants to say, ‘Let me

cial services expert with extensive

these institutions do dispense loans, it

matter of minutes. SMEs have shorter

talk with a real person,’ no matter how

experience in sales, marketing,

is often at lower amounts. SMEs tend

financial runways and need cash fast,

simple or complex the loan.

international mergers, and growth

not to have an overwhelming amount

so speed is crucial. With all our loans,

of collateral assets compared to, say,

we use machine learning to evaluate

Where do you see the digital finance

CapitalBox in December 2022,

a major corporation. The loan amounts

account metrics beyond a simple

industry heading in the near future?

Mantvydas served as CEO and

that collateral lending makes possi-

credit score and include criteria such

Personalisation is already essential and

head of the supervisory board at

ble are the loan amounts necessary

as social reach. We also offer reve-

only getting more important. We’re

SME Bank, the first neobank in

for growth. By expanding the criteria

nue-based financing for ecommerce

moving from an era of personalisation

Lithuania. While there he spear-

around collateral lending and actually

businesses that requires sophisticated

being focused on needs to personal-

headed financial licensing efforts

dispensing these loans, we’re address-

technology. Essentially a business

isation being focused on preferenc-

across the Baltics and Finland,

ing the lending gap in a real way.

collects the loan every day, and the

es, thus creating a more satisfying

and the company now holds

exposure jumps up and down based

customer experience. Fraud detection

licenses to operate in ten Euro-

CapitalBox is characterised as a pure

on its turnover. By doing so we address

is getting better thanks to AI, which I

pean countries. He held multiple

fintech lender. Where does this ap-

the incredibly specific and mutable

find promising. Open banking, which

senior roles at Coface, eventually

proach fit into your specific applica-

needs of a given company, and that

is the process that allows custom-

leading the Baltic States divi-

tion and lending process?

happens through being a pure fintech

ers to share their financial data with

sion as CEO. Mantvydas holds a

Being a pure fintech company, we’re

company ourselves.

third-party providers, is increasingly in

master’s in business administra-

popularity, which is driving develop-

tion from the Stockholm School

How do you balance the AI integra-

ment of new services in the sector. A

of Economics. He lives in Vilnius, Lithuania, with his family.

faster, more efficient, and more accurate than we could be if we weren’t. The funny thing is that initially

and strategy drive. Prior to joining

tion with customers feeling support-

high tide raises all boats. It bodes well

we positioned ourselves as a lender

ed by real people on your side?

for the entire sector.

rather than as a tech company. That

That’s a question we’re always ask-

has started to shift, particularly since

ing ourselves. We don’t want to be a

we acquired Omniveta in March.

faceless machine to our SMEs. Every-

LinkedIn

16

Enable Banking and CapitalBox Partnership Brings Open Banking to B2B Lending Enable Banking, a Finland-based fintech providing open banking API connectivity for over 2,500 European banks, has just concluded a partnership with CapitalBox, a leading provider of growth finance for SMEs. The partnership will bring robust and thoroughly-tested open banking capabilities into the B2B lending space.

By Paulo Delgado

O

pen banking is now ma-

No standardised regulations

ture enough to operate in

Although we sometimes loosely use

the B2B lending sector,”

the word “regulation” when referring to

says Sarah Häger, Chief

PSD2—the Revised Payment Services

Commercial Officer at Enable Banking,

Directive that entered into force in

and a veteran of open banking who

2016—it’s really a directive, meaning

worked with Nordea Bank to set up its

that individual European countries

open banking capabilities for seven

must decide how to implement it as a

years before moving to the fintech.

law (regulation) on a national level.

“The trend has changed,” Häger tells

This approach led to a widely varied

NFM. “Open banking for B2B is here

approach to open banking in each

now. Businesses in the lending space

European state, and none of it has

don’t need to wait two or three years

been driven by clearcut regulatory

to make use of it.”

standards. The term “open banking” isn’t even used anywhere inside the

Why business open banking solutions lagged behind consumer ones

PSD2 text.

Instead, PSD2 led to a market-driven

Several factors converged to delay

approach of making banking more

open banking solutions for corporate

open, and each country and bank

accounts, including a lack of stan-

implemented open banking in its own

dardised regulations, ambiguities in

way—or didn’t implement it at all until

PSD2 itself, technological hindrances,

enough pressure mounted.

and market pressure.

17 Different APIs APIs—application programming

banking after PSD2, in many cases.

“One of the reasons for slower adop-

pect that has informed European open banking since PSD2, banking depart-

interfaces—are the industry standard

tion in the B2B lending space is that

ments are now themselves clamouring

for obtaining information from any

it wasn’t possible to scrape corporate

for better APIs.

closed system, whether that system is

accounts in the same way you could

Corporate customers are asking

a bank’s internal system or a weather

scrape consumer accounts,” Häger

banks for API access, and more and

service so you can access the weather

tells NFM.

more TPPs are starting to operate in

on your phone.

An API provides standardised

the corporate space.

PSD2 left the door open to

This combination of factors has tilted

programmatic calls that incorporate

omit corporate accounts

the scale in favour of corporate open

security, are well-documented, and

Another reason banks didn’t rush to

banking.

follow industry best-practices.

create corporate account APIs was

However, APIs must be individually

because of an ambiguity in the first

Enable Banking and

programmed by the company offering

version of PSD2 which made it appear

CapitalBox partnership

them, such as the bank or financial

that access should be provided only

Enable Banking provides developers

institution that holds a customer’s

for consumer accounts. The PSD2

with a single API connector to access

account. It requires resources to create

amendment of 2021 corrected this

the APIs of over 2,500 banks. Instead

easy-to-use, well-documented, avail-

ambiguity, closing the door on any

of writing individual code for each of

able, and robust APIs.

hesitations from banks to implement

those banks, a company can partner

corporate account access APIs.

with Enable Banking and offer open

Additionally, the lack of regulatory

banking features 2,500X faster—liter-

standardisation means that one bank’s APIs will typically follow a different

Early market pressure for consumer access

Open banking is now mature enough to operate in the B2B lending sector.

Sarah Häger, Chief Commercial Officer at Enable Banking.

That’s precisely what CapitalBox did.

Meanwhile, a growing number of open

To answer the call for a B2B lending

banking use cases continued to ap-

solution that works as seamlessly as

pear since 2019 for consumer lending.

retail lending, Enable Banking teamed

“Market influence from large players

up with CapitalBox to provide busi-

such as Klarna, Trustly, and Tink added

ness lending services powered by

to the pressure because these players

open banking. Companies availing

focused on consumer access, not on

themselves of CapitalBox’s services

corporate access,” says Häger.

will now be able to apply for growth

In fact, demand was so high for

finance using far simplified processes

consumer solutions that banks were

that they’ve become familiar with in

struggling with providing access to

the consumer space, making the loan

these accounts, leaving them few

process easier—and much faster.

resources to dedicate to corporate access as well. format than another’s. For a third party

ally.

The good news is that the consumer

CapitalBox already has a streamlined lending process in place, fully incorporating KYC/AML, and offer-

to access each bank through its API, it

pressure eventually spilled over into

ing a completely digital experience

must individually write programming

the corporate world. Just as the iPhone

for applicants. The Enable Banking

code for that specific bank. Consid-

changed what consumers expect

partnership adds an additional level of

ering that Europe has thousands of

from their mobile devices and spilled

sophistication through open banking

banks, that’s a lot of APIs to write code

over into business use cases, ulti-

to that process.

for.

mately changing an entire sector, so

"Through our partnership with

The lack of APIs coupled with their

did greater consumer access to open

Enable Banking, we're not just revolu-

complexity has slowed both corpo-

banking start influencing B2B.

tionizing B2B lending; we're democra-

rate and consumer adoption of open

Today, corporations are demanding

tizing access to growth finance for

banking. However, the consumer

open banking from their banks be-

SMEs. This collaboration signifies a

side moved faster because of market

cause of their experiences using it on

pivotal moment in reshaping the

pressure.

their personal bank accounts.

landscape of business lending. By

Before APIs, TPPs (third-party provid-

Two key drivers for

lending process with Enable Banking's

ers) offered scraping solutions

the changing trend

cutting-edge open banking capabili-

Even before PSD2, open-like banking

Two key elements are driving the push

ties, we are empowering businesses to

services relied on screen scraping in-

for open banking in the corporate

seize opportunities with unparalleled

stead of API access to perform actions

space, Häger tells NFM:

speed and ease. This alliance exempli-

integrating CapitalBox's streamlined

1. Banks have recognized that open

fies our commitment to driving

Screen scraping is a clunky, er-

banking is a significant driver of indi-

financial inclusion and fostering

ror-prone, and often frustrating pro-

rect revenue, increasing CLV (customer

sustainable growth in the market." -

cess. However, before banks had any

lifetime value).

Anne Trampedach, Denmark Country

on consumer accounts.

API infrastructure in place to access consumer data, screen scraping remained the only way to achieve open

2.Corporations are now demanding open banking solutions.

In keeping with the market-driven as-

Manager.

18

The Future of Identification: How Digital IDs are Shaping Financial Security and User Experience

The advent of digital IDs, which offer a robust solution for verifying consumers' legitimacy, is meeting the challenge of establishing trustworthy online interactions and securing financial services head-on. Digital IDs can streamline user access while upholding critical security protocols, addressing the crucial need for uncomplicated, protected digital financial engagements.

By Jakob Frier

19

I

n today's era of online transactions

preferred grocery store, each detail

services that may not have a direct

and purely digital interactions, estab-

contributes to the distinctiveness of

monetary value,” says Jukka Yliuntinen,

lishing trust is crucial when engaging

your identity.

Head of Digital Payment Solutions at Giesecke+Devrient (G+D).

in business or accessing various

Our digital identities comprise a

services. The question then arises: how

collection of unique, inherent data, dis-

In the fintech industry, where ser-

do we verify the authenticity of the

tinguishing us as individual users from

vices are connected to financial assets

other party or even confirm their human

everyone else.

and delivered through digital platforms,

identity?

Identity is a complex concept

But how significant is this in the digital realm?

it's essential to possess a digital identity system that is not only strong and safe

encompassing physical traits, demo-

“Knowing who is accessing the

graphic details, social attributes, pref-

services and, at the same time, the

erences, and beliefs. From something

user knowing that it is the right and

ered a service of its own, but it is an

as official as your passport number

authentic service provider is essential

extremely important enabler for fintech

to something as personal as your

for any type of business and even for

innovation and services, and with the

but also user-friendly.

“Digital identity may not be consid-

20

growing volume of fraud and increas-

When the Digital ID concept is well

Live Presence Battle Fraudsters

ing awareness of data privacy, the role

designed and executed, it provides

Digital IDs can be set up in various

of digital identity will be even more

customer satisfaction, and, in the best

forms, and within financial services,

important,” Yliuntinen says.

case, it can be an even differentiator.

they need to offer strong reliability for

Users are more prone than ever to

everyone involved. Using usernames

A Balancing Act

easy-to-use services with the least

and passwords may not be the best

Identity forms the foundation of any

friction.

way, as poorly implemented digital IDs

digital system. Organisations must un-

“Consumers are more prone than

derstand at least a facet of customers'

ever to easy-to-use services with the

identity, if not a precise identification of

least friction. When KYC with on-

who they are.

result in loss of business, a bad reputation, and unhappy customers.

The financial service sector has

boarding is done fluently, for example,

typically well-implemented security,

“A digital ID system simplifies user

enabled from your home using a digital

including KYC processes that result in a

interactions and makes it simpler for

channel and then applying the created

strong digital identity.

users to choose alternatives, as well as

digital identity with biometrics, you are

“For the fintech sector, digital

providing a way for individuals to prove

on par with customer expectations,”

onboarding is quite commonplace

who they are to any organisation, not

Yliuntinen says.

already. When thoroughly designed

only financials,” says John Erik Setsaas,

Yet, this ease of use must uphold the

and implemented, it provides a digital

Director of Innovation in the Financial

essential security measures, as financial

identity that can be used securely for

Crime Prevention unit at Tietoevry

services, including fintech offerings, are

any further services, whether payment

Banking.

obligated to safeguard financial assets.

transactions or logins to services,”

Should there be any weaknesses in

Yliuntinen says.

Financial service providers face stringent Anti-Money Laundering (AML)

digital identity management, the reper-

National eIDs, which facilitate entry

obligations, extending to numerous

cussions could be drastic, leading to

to accounts and can be used to secure

other services. Generally, the repetitive

severe outcomes from identity theft.

credit cards or loans, are becoming a

process of registering for new services

“Therefore, good customer expe-

prime target for fraudsters.

and supplying detailed information

rience needs to be balanced with

each time has become a tiresome task

security and some ‘positive friction’, for

a single eID, the more enticing it be-

“The greater the value obtainable via

for many of us.

example, in terms of having an addi-

comes for those intent on committing

“A consistent UX, both for signing

tional step in the payment acceptance

fraud,” Setsaas explains.

up, signing in, and signing documents

process can be useful,” Yliuntinen adds.

According to him, BankID is fre-

across services, is part of improving the

quently targeted by scams, such as

user journey,” Setsaas.

imposters claiming to be from banks or law enforcement, tricking victims into transferring money to "safe" accounts, using BankID for fraudulent confirma-

John Erik Setsaas, Director of Innovation in the Financial Crime Prevention unit at Tietoevry Banking.

tions, and leading to the loss of funds.

“Despite violating terms and conditions, over 20% of individuals admit sharing their BankID details. Since people often aren't careful with their PINs and passwords, it could be easy to use their information to take out a loan pretending to be them,” Setsaas says.

To avoid fraudsters, Tietoevry has introduced a 'live presence' feature that requires people to verify their identity with a facial scan for sensitive transactions. This scan is matched against a securely stored reference image.

Relying on a mobile device's biometrics isn't secure because the data collection is outside their supervision.

Limitless Opportunities Digital services, including Digital IDs, are evolving to offer better accessibility

21

for diverse customers and democratise financial services, such as the visually impaired, who may use voice commands instead of traditional graphical interfaces.

By incorporating such inclusive features, Digital ID supports secure remote

Jukka Yliuntinen, Head of Digital Payment Solutions at Giesecke+Devrient (G+D).

access and simpler digital onboarding and improves the overall user experience for all customers.

“The leading enablement is user movement. We see many related services using this to improve their services, such as becoming a verified user on an online marketplace,” Setsaas says.

Digital identity solutions and technologies can provide limitless opportunities and room for innovations.

“Having digital identification that provides digital signing capability makes it easy to perform such tasks by simply providing your fingerprint or any other authenticator. Another area where further innovation can occur is when the basic digital identity (such as name, address, and age) can be added with new attributes, such as one’s creditworthiness or other financial status,” Yliuntinen explains.

The Trust Frontier

fintech and other actors to use such

While most digital ID solutions can

Setting up a Digital ID system is a mul-

common infrastructure.

be easily incorporated into business

tifaceted endeavour that involves tech-

“This enables cost savings on digital

operations, the pay-per-transaction

nical challenges, establishing relation-

identity infrastructure and larger reach

cost may pose a financial challenge.

ships, managing risks, and negotiating

as digital identity is acknowledged in

Additionally, the digital ID provider's

liabilities with different stakeholders.

multiple businesses and public and

ability to track login times could be

It is crucial to ensure a robust foun-

private sectors,” says Yliuntinen, and

a concern, depending on the level of

dation by strongly verifying the user or

points to the self-sovereign identity

trust involved.

entity from the outset.

(SSI) concept where identity holder

Consequently, many fintechs opt to

“This is why, e.g., governmental-level

can self-manage what type of identity

independently verify identities using

identities, whether physical or digital,

information will be shared in different

technology that scans official docu-

require one-time face-to-face meet-

environments is very much preferred

ments like passports or driver's licenses

ings where identity can be proven and

model and gradually being applied.

and employs selfie-based liveness

used in different channels afterwards.

“To fully benefit from SSI and make it

detection for robust user verification.

Beyond the solid KYC process, it is

a reality, the whole ecosystem must be

important that digital identity is secure,

applied. Beyond the financial service

somewhat worse than using a digital ID,

especially in the financial sector, as

sector and public authorities, multiple

it is not a big showstopper for signing

your brand is very much about trust,”

other activities are ongoing in the field

up new users. Future authentications

Yliuntinen says.

of digital identity, spanning from big

“Even though the user experience is

will be done within the fintech app,

Most financial sector organisations

techs to payment schemes, and

typically using local biometrics for con-

have developed digital identification

fintechs may need to consider which of

venience. Many neo-banks are good

solutions, which usually apply only to

these initiatives will provide the best

examples of this. This also works for any

this single service provider.

value for them in terms of cost, reach,

nationality of identity document, if it has

National digital identity schemes are

NFC, making it a global solution, and no

gaining momentum and are already

need to integrate with many digital IDs,”

well established in many countries,

Setsaas says.

providing an excellent opportunity for

security, and user experience,” Yliuntinen concludes.

22

Riga Old Town, Latvia

A Closer Look at Three Nordic and Baltic Fintech Ecosystems The Nordic and Baltic regions continue to establish themselves as major hubs for fintech development, distinguished by an advanced digital ecosystem, high mobile penetration, and a profound trust in public institutions. These elements have catalyzed rapid advancements in financial services that have progressed at different speeds across the region but with a consistent upward trajectory.

In this article we take a look at the Fintech scenes of three fast developming Nordic and Baltic ecosystems: Lithuania, Norway and Latvia.

By Chris Crespo

23

Vilnius Old Town, Lithuania

Bergen Harbour, Norway

Investment and Sector Growth

the year before. This shift shows a

extent of its ambition. This transfor-

Despite a recent slowdown in sectoral

cooling down of investment previously

mation has enhanced the knowledge

growth and a contraction in investment

seen across the region but also indi-

and expertise among industry stake-

pace, the fintech landscape in the

cates the Nordic and Baltic markets

holders, regulators, and consultants

region remains robust and dynamic.

are entering a new stage of maturity,

beyond the European average. With

Fintech investment globaly decreased

honing in on sustainable and impact-

the fintech sector rapidly advancing

by a steep 48% in 2023 compared to

ful financial solutions. With evident

and diversifying in terms of business

the previous year. The trend was also

discernment in capital allocation and

models and associated regulatory

reflected across the Nordic and Baltic

a strong focus on sectors like block-

challenges, Latvia is now positioned

region in 2023. The current investment

chain, data analytics, artificial intelli-

to lead in demonstrating effective risk

climate, more selective yet strategic,

gence, climate fintech, payments and

management practices and fostering

prioritizes fintechs with proven growth

regtech, the region continues to justify

the development of innovative finan-

and profitability potential. We see

its position of global influence in the

cial solutions. The number of Fintechs

this in ecosystemst like Lithuania,

Fintech arena.

in this market continues to increase

which saw a stark decline in the total

With over 2,500 fintech entities

annualy supported by government

amount of fintech funding, from €67.9

spread across the Nordic and Baltic

initiatives like visas, tax incentives

million in 2022 to only €5.5 million in

markets, the region is a fertile ground

and a friendly, open, and accessible

2023. Despite this significant shift,

for innovation, collaboration, and

regulator.

the Lithuanian fintech ecosystem

cross-border partnerships. We con-

Norway is another great example,

remains vibrant with many companies

tinue to see great growth ambitions

having grown from less than 30 fintech

still primarily funding their operations

across the region. A great example

startups in 2016 to over 180 by 2023,

through revenue.

can be seen in the Latvian Fintech

the expansion of the Norwegian Fin-

Norway has seen a smilar trend in

ecosystem where the Fintech sector

tech scene, indicates a robust devel-

the decline of fintech investment. In

constitutes 25% of the 600 startups

opment of the sector. The country has

2023 it reported a decrease of 29% in

seen across industries, a significant

been actively working to increase the

the total number of deals compared

portion of the startup ecosystem.

number of fintech companies within

to the previous year, while avilable

Latvia has recently undertaken a

its borders through various initiatives

funding has also suffered a significant

significant reform of its financial sector,

including a Regulatory Sandbox that

loss estimated to be 78% lower than

setting a precedent in Europe for the

allows companies to test their

24

financial innovations in a controlled

the growth of the Fintech sector and

environment under the suppervision

make Latvia an appealing destination

of financial regulators, innovation

for international Fintech professionals

clusters like NCE Finance Innovation in

and companies.

Bergen which bring together startups,

Norway is also fostering its fintech

established companies and academic

workforce by capitalizing on its highly

institutions to collaborate on financial

digitalized banking and public sector,

technology projects and investment in

and leveraging advancements in tech-

technology and infrastructure.

nologies like AI, machine learning, and

Aside from fueling its home grown

Oslo, Norway

blockchain. The country's educational

market, Lithuania has also gone to

and training programs are evolving to

great lengths to attract foreing Fin-

meet the sector's demands, ensuring

techs by offering a supportive regula-

a skilled pool of professionals ready

tory environment, a fast and efficient

to innovate in the fintech landscape.

licensing process, and supportive

This strategic focus on workforce

government policies. Lithuania has

development helps maintain Norway's

successfully attracted notable fintech

competitive edge in the fast-growing

companies, including Revolut, Shift4

fintech industry.

and Google Payment, leveraging its

Lithuania's fintech sector is also

favorable regulatory environment

known for its strong talent and em-

and supportive government policies.

ployment growth. The countrys robust

These companies chose Lithuania for

ecosystem with over 270 fintech

its efficient licensing process, proac-

companies, employs more than 7,400

tive fintech promotion, and strategic

people. The government's proactive

location in the EU market, enhancing

approach in facilitating a favorable

Lithuania's reputation as a vibrant

environment for fintech startups has

fintech hub.

been crucial in attracting international talent and strengthening the local

The Region’s got Talent

employment market in this field. The

These ecosystems are not only

country has established itself as a

critical in the creation of jobs but are

fintech-friendly hub with initiatives like

also magnets for international talent,

the "Startup Visa" program, which eas-

essential for the ongoing develop-

es the immigration process for non-EU

ment and diversification of fintech

entrepreneurs, and a commitment to

services. Several countries within the

digital innovation. These measures,

region report challenges in atracting

along with a collaborative ecosystem

the necessary talent to continue to

that encourages investment and de-

fuel their sector growth, and this is not

velopment, make Lithuania an attrac-

because of a shortage of technical

tive location for fintech professionals

talent emerging from their local higher

and companies globally.

education institutions, but because of a rapid surge in demand that surpass-

Harvesting Local Innovation

es locally available supply.

The rise in blockchain and cryptocur-

Latvia, for example, is investing

rency-focused companies signifies

(regtech) as a regional competitive

in specialized education programs

an innovative leap in transactions and

advantage, driven by the EU’s rigorous

and initiatives like the Baltic Centre

financial solutions and the willingness

regulatory landscape. The regulatory

of Excellence in Financial Services,

from the sector to explore more foun-

environment, particularly with frame-

aiming to bridge the knowledge gap

dational changes that challenge not

works like MICA, the AI Act, and the

and foster industry growth. Latvia

only what services should be provided

evolving PSD directives, has not only

is actively working to attract fintech

but also how. Data, too, has taken cen-

fueled innovation but has also built in-

talent through supportive govern-

ter stage, with companies leveraging it

vestor confidence and market stability.

ment policies such as startup visas for

to gain actionable insights, developing

Latvia can be seen taking the lead

foreign founders and friendly stock

solutions that ensure data privacy, and

in this trend as it continues to foster

options policies. These measures, cou-

empowering user control.

innovation while ensuring high com-

pled with efforts to create a favorable

A trend, quite unique to the region

pliance standards, particularly after its

regulatory environment, aim to boost

is the rise of Regulatory technology

financial sector overhaul and focus

25

environmental sustainability into finan-

the Nordic and Baltic fintech land-

cial services. This alignment with green

scape rapid growth is influencing the

finance principles not only addresses

broader European financial ecosys-

global climate challenges but also

tem. The region continues to solidify

reinforces the regions’ leadership in

its status in the global fintech arena,

sustainable financial innovation.

driving strategic alliances, securing

The gradual shift from competition

significant investments, and leveraging

to cooperation among fintechs and

technology for financial inclusivity and

financial institutions signifies a mature

environmental responsibility.

understanding of market dynam-

Furthermore the unique public-pri-

ics, focusing on collective strength

vate partnerships that continue to

and customer-centric solutions.The

propel many of these ecosystems

success of collaborations between

forward, provide valuable lessons in

large financial institutions and agile

collaboration and innovation-driven

fintechs are testament to the region's

development. The masterful orches-

forward-thinking approach. These

tration between regulators, central

partnerships not only speed up market

banks and the fintech ecosystems

entry but also infuse the sector with

of the Nordics and Baltcs, serve as

fresh, innovative capabilities.

exemplary models for global financial services evolution. Their ability

Cultivating strong Alliances

to leverage regulatory frameworks

Nordic and Baltic fintechs are enhanc-

for market advantage, coupled with

ing their partnership capabilities to

a relentless pursuit of transformative

extend their global reach and enhance

solutions, positions these regions at

their market offerings. By collaborat-

the forefront of the financial industry’s

ing with diverse stakeholders, these

revolution.

fintechs are not only expanding their

Unity across the region makes for a

operational footprint but also enriching

strong case for combinatorial collabo-

their value propositions. This strategic

ration, where players are increasingly

approach leverages regional strengths

becoming adept at finding their sweet

in technology and innovation, position-

spot and augmenting their visions with

ing these entities as the keyholders

the help of regional partners and

to the gates to a thriving european

collaborators. Of course each ecosys-

fintech space led from the Northern

tem remains independent from each

parts of Europe.

other, maintaining their unique identity.

Examples include Norwegian fintech

But unlike other regions that compete

companies, like Vipps, Signicat, and

for investment, talent and customers,

others, that have significantly marked

the Nordics and Baltics have found

their presence internationally. For in-

common ground in their ambition, their

stance, Vipps has successfully merged

values and their relentless pursuit for

with Denmark's MobilePay, creating a

simplicity, elegance, functionality and

major Nordic payment service provider

quality. Diverse in nature, cutlure and

with over 11 million users. This is a part

focus, Nordic and Baltic ecosystems

on creating a business-friendly regu-

of broader trends where Norwegian

thrive in the understanding that

latory environment to attract new play-

fintechs are not only thriving domes-

through collaboration, the size of the

ers and facilitate market entry.

tically but are also actively engaging

pie can increase for all.

The Nordic and Baltic fintech sectors

in cross-border collaborations and

excel in crafting regtech solutions that

expanding their market reach global-

align with legislative requirements,

ly, benefiting from Norway's digitally

enhancing operational efficiencies

advanced ecosystem and supportive

associated with compliance that free

investment climate.

up time and resources for companies to focus on core innovation.

Across the board, climate fintech is gaining prominence, reflecting the region's commitment to integrating

Lithuanian fintechs continue to expand their footprint across Europe serving now over 27,000 million europeans It is exciting to witness first hand how

26

European Instant Payment Regulations:

Reviewing Challenges and Solutions with Expert Thomas Riedel On 8 January 2025, every bank in Europe that offers SEPA transfers must be reachable through instant payments at no additional cost to customers, according to new EU regulations.

By Paulo Delgado

T

he new instant payment

PPI offers a comprehensive Instant

n The European Payment Initiative

regulation provides various

Payments Readiness Check that

(EPI) uses SEPA Instant Payments

challenges for banks, even

establishes a bank’s potential weak-

and hopes to offer an alternative for

for those already offering

nesses and provides a roadmap to

US-dominated card payments in

instant payments. Also, ambiguities in

address them before the compliance

Europe.

the regulations leave much to inter-

cutoff date.

pretation, putting banks on unsteady ground regarding their compliance.

One company that knows how to an-

NFM caught up with Thomas Riedel, Leading Product-Manager at PPI, to delve in-depth into the topic.

n Companies could pay employees on the last calendar day of the month instead of the last business day. n ●Together with SEPA Request-ToPay—a scheme that allows payees to

swer these questions and provide actionable solutions is Hamburg-based

Benefits of instant payments

request payment initiations across a

PPI AG, a publicly listed consulting

The benefits of instant payments ex-

wide range of physical and online use

and software company that’s been

tend to companies, retail customers,

cases—instant payments offer a fast,

serving the financial sector for over

and even EU-wide economic factors.

reliable, and secure alternative to di-

Some of these benefits include:

rect debits without the risk of refunds.

30 years.

27 Instant payment challenges for all

made to the rulebook to cope with

How PPI’s Instant Payments Readi-

banks—even those already offering

the regulation, but those won’t be

ness Check identifies a bank’s state

n Booking.

the service

available immediately, forcing banks

of preparedness for the instant

●n Clearing communication.

For those banks who don’t yet offer

into yet another tightly scheduled

payment regulations

●n Customer status reports.

instant payments, the challenges are:

implementation project.”

Drawing on 30 years of experience

●n Beneficiary notifications

as a financial consulting and software

●n Master data.

n 24/7 availability for all services,

Sanction screening is another

●n Balance checks.

not only instant payments, including

sticky topic. It’s clear that every bank

company, experts from PPI analyse

n Directory imports.

balance checks and sanction-screen-

within the EEA must check custom-

the bank’s ecosystem to identify all

●n And others.

ers against the EU sanction list on a

systems, areas, and interfaces affect-

ing services.

daily basis. Following this procedure

ed by instant payments. PPI’s experts

If a bank can’t implement the stan-

should ideally be a few hundred

prevents the necessity of a transac-

then provide an overview of potential

dard interfaces on time, PPI can adapt

milliseconds, even during peak load

tion-based sanction screening—at

issues, presenting solutions to tackle

the formats to the bank’s liking, using

times.

least if banks also check their cus-

them.

PPI’s parser and writer framework.

n Response-time for these services

●n Tight implementation schedule.

tomers against other sanction lists like

“With detailed knowledge of the

The rule comes into force on 8 April

OFAC, and the transaction is pro-

instant payment regulation, our ex-

PPI’s software offerings facilitate

2024, and the grace period for imple-

cessed completely within the EEA.

mentation ends on 8 January 2025.

For banks already offering instant payments, further challenges include: n Customers must be allowed to

perts estimate the effort and timelines

compliance and enhance operation-

However, the open question is what

for the proposed solutions and offer

al efficiency

to do if at least one of the parties lies

target-oriented decision memos to

PPI has successfully stress-test-

outside the EEA.

enable the bank to reach instant pay-

ed its systems to run 24/7 without

ment readiness in time, quality, and

downtime, even during changes in

budget,” says Riedel.

message formats. Whenever a final

One silver lining is that instant payments are as standardised as classical

confirmation doesn’t arrive on time,

define the maximum amount that can

SEPA credit transfers, Riedel says,

be sent through instant payments.

reducing any individual per-bank

transitions for banks starting from

PPI’s software can still process pay-

requirements

scratch

ments completely without any manual

n The orderer of an instant payment

PPI’s tech innovations to expedite

must receive a final response regard-

“The individual requirements of

In addition to consulting, PPI offers

interaction because it uses an auto-

ing the payment within 10 seconds.

banks for processing instant pay-

multiple tech tools and frameworks

mated investigation and finalisation

When the clock starts ticking for

ments are quite small, especially if

to make the transition process as

procedure.

these 10 seconds is still open to inter-

compared to the much more complex

smooth as possible. The PPI system

pretation, as is what the orderer must

processing of cross-border pay-

is easily customisable and already

enrichment of payments to comply

do if it doesn’t receive this confirma-

ments,” he says. “Since many regula-

configured with standardised inter-

with EU regulations on money trans-

tion on time.

tions apply EEA-wide, the majority of

faces for:

fers, and it ensures that every mes-

n Instant payment verifications must occur instantly and run 24/7. How

regulatory needs are already covered by the standard product.”

banks will achieve this is unclear. One

ages all customer and account data securely, which is a massive undertaking.

One of the largest challenges for

initiations.

sage is delivered. This is especially relevant when informing customers of incoming funds,” says Riedel.

option is that banks must provide APIs to a central data centre that man-

●n Bulk and single-payment

“The software also offers automatic

As for payee verification, PPI offers

Thomas Riedel, Leading Product-Manager at PPI

a central service with standardised request interfaces, allowing any of the bank’s systems to query it easily.

Multilingual support and offices

both types of banks is the expected

across Europe

throughput because the regulation

PPI has offices in Germany, Norway,

enforces that instant payments must

Switzerland, France, and Italy, allow-

cost the same as traditional SEPA

ing the company to interact with its

transfers. PPI expects an enormous

customers on a personal level.

increase in load, forcing banks to

“The ability to support customers

reevaluate their existing instant

locally is an advantage,” says Rie-

payments solution to ensure it can

del. “It removes language barriers

handle the additional traffic with zero

and provides expertise on national

downtime.

specialties.”

PPI’s software’s graphical user

Regulation-level blindspots

interface has also been translated

The regulation itself isn’t without its

into English, German, French, and

flaws, putting banks in a precarious

Italian.

position regarding compliance—one of the primary reasons to bring on a consultancy service such as PPI’s Instant Payments Readiness Check.

The first of the blindspots is the 10-second limit we discussed above.

“The main issue is that the regulation contradicts the current version of the EPC rulebook for instant payments,” says Riedel. “Adjustments must be

28

Banking Circle’s Agency Banking Solution: Lowering the Entry Barrier Agency banking is also known as “indirect access” or “sponsored banking”. It refers to when an FI or payment service provider (PSP) has a contractual agreement with a direct participant in a clearing system.

By Paulo Delgado

T

he process for getting direct

their own licence.”

Boel. “We’ve tested our payments sys-

access is incredibly involved,

Key benefits of the service include:

tem on our own bank accounts across

requiring liquidity, a healthy

● n Faster payments: Indirect partic-

payment zones for almost three years,

dose of governance paper-

ipants can use their own issued ac-

and the solution is mature and robust.”

work and verifications, and an account

counts, using their own Bank Iden-

with one or more central banks.

tifier Codes (BICs) and International

No Third-party Gateways

Bank Account Numbers (IBANs) to

Only two major networks serve the

also need the technological ability to

send and receive payments.

European SCT Inst infrastructure di-

process transaction messages, en-

● ● n Full payment transparency:

rectly—one provided by Swift and the

crypt them securely, perform valida-

Using their own BIC and IBANs for

other by Italian company SIA, which

tions, and so on.

payments presents the FI or PSP as

merged with Nexi Group in 2020.

In addition to the access itself, you

Some FIs might have the liquidity

the ordering party and their custom-

Banking Circle built its access direct-

and central bank accounts in place for

er as the sender.

ly onto Nexi/SIA's network, bypassing

clearing and settlement, but lack the

● n Aligned to European Parliament

any third-party gateways, allowing it to

tech and infrastructure for the mes-

regulation: Providing instant pay-

provide extremely competitive rates.

saging. Others might have the tech

ment options to send and receive

“We've built our gateways as close to

but lack the liquidity. Because Banking

payments for consumers and busi-

the source as possible, which gives us

Circle is also a licensed bank, it can

nesses within the SEPA zone.

more control over the value chain so we can keep the cost as low as possi-

provide both liquidity and the technical solution, eliminating the need for multiple vendors.

Given the choice between an instant

ble,” says Boel.

payment and a payment that takes

“Banking Circle can slot in at any

three days, it’s logical to assume that

Nordic Instant Payments—No Longer

level of the bank’s needs,” Boel says.

consumers will choose the instant

a Distant Dream

“Banks can send us an end-of-day file

payment. Experts expect an enor-

Instant payments across the Nordic

with transactions, or we can check for

mous increase in SCT Inst transaction

countries pose unique challenges. One

new transactions every fifteen min-

volume once the grace period is over,

attempt to standardise and implement

utes, or they can connect to one of

and banks must be prepared for that

them in 2017—called P27—showed

our webhooks for instant messaging.

load.

initial promise but eventually fell short

If they don’t have the liquidity, we can provide it. The only thing they need is

“Banking Circle significantly reduces the barrier to entry for banks,” says

of a rapidly changing ecosystem and regulatory landscape.

Michael Boel Head of Clearing and Product Execution at Banking Circle

29

Unlike Eurozone payments that all

mark’s central bank, and the company

payment scheme—which will open

occur in a single currency, payments

has passed all necessary functional

up the USD market for Banking Circle

between Nordic countries trigger a

implementation tests to enter Europe’s

clients.

forex event, adding a level of com-

instant payment scheme in April 2025.

plexity that ultimately prevents such

Although Sweden and Denmark’s

transactions from occurring instantly.

implementations are national ones,

However, the Swedish central bank’s

customers that use Banking Circle’s

RIX-INST settlement service offers two

Agency Banking service will be able

different models for settlement—the

to offer instant-like payments across

Standard Settlement Model(STM) and

borders, regardless of the currencies

the Single Instructing Party Settlement

involved. The reason they can do this

Model (SIP Model).

is because Banking Circle handles the

“Banking Circle has fully implement-

liquidity, forex events, and settlements

ed the necessary testing and com-

in the back-end, providing a seamless

patibility for RTGS (Real-Time Gross

experience on the user end. From the

Settlement) and the STM,” Boel tells

user’s perspective, their transfer hap-

NFM. “As soon as Swedish banks start

pens instantly.

We've built our gateways as close to the source as possible, which gives us more control over the value chain so we can keep the cost as low as possible.

Michael Boel, Head of Clearing and Product Execution at Banking Circle

Eurozone regulated FIs and PSPs are

demanding the service, we’re ready to Access to Instant Payments from Eu-

eligible for EUR indirect participation.

Similar to European banks, Swedish

rozone to GBP—and Soon Also USD

UK regulated FIs and PSPs are eligible

banks currently have a choice wheth-

Banking Circle is already well-estab-

for both GBP and EUR indirect partic-

er to implement instant payments or

lished in the UK, and is one of only 11

ipation. Sort code issuance through

not. However, as of November 2024,

institutions with direct access to the

Banking Circle is available within the

that choice becomes mandated for

UK’s banking infrastructure, which

GBP FPS (Faster Payments Service)

participants, already participating in

officially supports indirect access.

scheme.

the Getswish/SIP settlement models.

Using a single API or the banking

Hence the adherence and usage for

sector’s familiar SWIFT messaging

obtained a licence in the US and is

instant payment will grow in Sweden.

format, banks using Banking Circle can

working towards onboarding with the

In Denmark, Banking Circle is the

offer instant payments between EUR

Federal Reserve in order to implement

and GBP accounts.

FedNow payments—the US’s instant

offer indirect banking there, too.”

frontrunner testing partner for Den-

Additionally, Banking Circle has also

Banking Circle’s Agency Banking service means that Banking Circle takes care of all the complexities and back-end services. Banking Circle’s customers don’t need to invest in any new infrastructure to gain access to these new markets.

30

Six Inescapable Trends Stretching the Boundaries of Limitless Payments Innovation in payments is ramping up, we are swiftly moving from “scratching the surface” of innovation towards the fearless exploration of new solutions, business models, technologies and unlikely collaborations to solve legacy challenges. In a recent exclusive gathering of the top voices in payments in Copenhagen, speakers and participants engaged in insight rich conversations that presented varied perspectives from within and beyond the industry. We look at some of the messages framing the conversation around payments and that will continue to do so in the months and possibly years to come.

By Chris Crespo

J

ust Pause for a moment and

risdictional transactions remain

NGOs and entrepreneurs, gathered

take a breath! - That's how

hampered with challenges, including

to explore the frontier of payment

many of us feel when faced

disparate infrastructures, banking

solutions, including cross-border

with the overwhelming pace

systems, and regulatory landscapes.

and instant payments, as well as the

of change in financial technology. And

Nevertheless, pioneers in the fintech

evolving landscapes of open banking

nowhere is this change more palpa-

arena are dedicated to transforming

and Web3 technologies.

ble than in Payments. Almost every

the payment experience, making it

Attendees were treated to insights

quarter, we witness new players,

universally accessible and straight-

from industry household names like

cutting-edge trends, and inventive

forward.

Microsoft, Visa, Mastercard, Bank-

applications of technology bringing

In early April, Copenhagen hosted

Axept, Mobilepay, Inpay and others.

down traditional barriers in the pay-

Fintensity, the first of a series of inti-

These presentations revealed current

ment sector. These advancements are

mate and exclusive events by Nordic

trends and future directions in the

facilitating entry for non-traditional

Fintech Magazine, aimed at gathering

payment space. The event wasn't

banking and financial entities while

the mos prominent voices in financial

just about listening, though; it was

streamlining processes that have long

innovation, to discuss at length the

a chance for attendees to engage,

been cumbersome and inefficient.

trends, challenges and innovations

share ideas, gain actionable know

Despite the significant strides made,

that are upending discrete parts of the

how and foster connections that

the consensus is that we have merely

value chain. The first edition of Finten-

could drive the future of financial

begun to scratch the surface. While

sity, gathered 130 influential voices in

technology. Amongst the many

local payment systems have achieved

the payments sector from the Nordics

themes discussed, several mega-

remarkable levels of speed, conve-

and Baltics. Banks, Payment-Ser-

trends framed the conversations that

nience, and seamlessness, cross-ju-

vice-Providres, retailers, regulators,

took place throughout the day. The

31

32

following are but a few that created

grating technology to enhance the

urgency to improve the movement of

and enduring impression in the selec-

transaction experience. Discussions

money across borders, is spotlighting

tive group of participants.

around solutions like Klarna Checkout

the need for better solutions for inter-

and the potential of open banking

national money transfers. The need

Artificial Intelligene continues

signal a continued effort to refine pay-

for repeatable, effortless international

to make inroads. As in most

ment systems, making them not just

transactions and the ability to distrib-

functional but also engaging for users.

ute money to hard to access corridors

1

conversations these days, Generative Artificial intelligence (Gen AI) could not go amiss. The technology is no-

in remote jurisdictions are the focus Person to person transfers

of companies like Inpay and Visa who,

go Nordic. Vipps MobilePay's

tasked with improving cross border

tably reshaping the financial industry,

3

with frontrunners like Microsoft at the

success story in the Nordics, with mil-

payments, have developed strong

head showcasing how Gen AI can be

lions of users and widespread retail

value propositions that utilize their

used across the entire value chain for

adoption, showcases the potential

widespread network and robust part-

both front and back office fucntions.

of fintech to create comprehensive

ner ecosystems to improve speed,

Gen AI is streamlining operations,

and user-centric payment solutions.

security and transparency making

enhancing customer experiences,

Its easy to use service has become

cross border payments as simple as

and enabling the development of new

a unifying platform, bridging gener-

local ones.

products. With 46% of new code being

ational gaps and providing a suite of

written by AI and a notable increase

services like person-to-person trans-

in developer productivity, the col-

fers with chat functionality, collective

5

laboration between human creativity

fund boxes, gift cards, and expense

innovation in payment solutions is

and AI's capabilities is a driving force

sharing. Their approach to integrating

increasingly originating from beyond

for future innovation. Furthermore,

person-to-person transfers, collective

the traditional boundaries of financial

the adoption of AI in financial crime

funding, and payment services within

services. Collaborations and partner-

prevention, through tools like Lucini-

a single platform is indicative of the

ships between unlikely players, such

ty, underscores the growing reliance

sector's move towards cross-Nordic

as retail giants and their competitors,

on technology to mitigate risks and

transactions, bill payments, and the

are fostering a new wave of payment

improve efficiency, but also to trans-

vision of a singular, comprehensive

technologies. These developments

form business operations and address

wallet for all financial activities.

are primarily driven by the need to

Innovation from Beyond. A surprising trend is emerging where

circumvent high transaction fees and

financial and operational challenges.

Cross border payments gain

to meet specific customer require-

momentum. The shift towards

ments that conventional payment

Open Banking delivers

4

change. The evolution of

digital, evidenced by the staggering

providers fail to address. For instance,

payment methods has seen a shift

amount of B2B payments, is driving

major retailers are now engineering

from traditional modes to more

significant changes in how businesses

their own payment systems to facil-

user-friendly, digital alternatives.

and consumers interact financially.

itate seamless in-store experiences,

Innovations in this space, such as

This trends combined with the strong

integrating payment with advanced

Apple Pay and peer instant payments,

regulatory push for instant SEPA pay-

identification solutions. This not only

reflect a broader trend towards inte-

ments across the EU and the rising

caters to the operational needs of

2

33

unmanned and manned stores but

custodianship, cross-ledger support,

term, continued success of payment

also enhances customer understand-

and the fusion of digital and tradition-

organisations hinges on their ability

ing and service personalization. An

al payment systems, promoting in-

to foster collaboration, understand

illustrative example of this trend is the

stant and seamless transactions. This

cross-industry needs, and co-create

strategic alliance between Coop and

trend points towards a future where

enhanced customer experiences that

its major competitor, resulting in the

digital integrity and financial efficiency

resonate at the point of sale, reflect-

creation of innovative payment ser-

are inseparable, advocating for the

ing a holistic approach to financial

vices like Coop Pay and identification

fintech sector to pioneer in establish-

solution development.

solutions such as Coop Key. These

ing a secure, efficient, and innovative

initiatives, including the establishment

digital ecosystem.

As payment companies continue to test the boundareis of what, only a few years ago seemed impossible,

of their own Payment Service Provider

It is clear competitive dynamics in

(PSP) and ID provider Aera, signify a

the payment space are undergoing

the journey towards a more inte-

shift towards a more integrated and

a transformative shift, driven by a

grated, efficient, and user-friendly

retailer-centric payment ecosystem.

deeper understanding that financial

financial ecosystem is well underway.

This movement blurs the traditional

services are not just standalone tools,

We are witnessing a different type

boundaries between financial services

but means to and end of achieving

of change. One championed by new

and retail, signifying a broader trend

broader objectives for individuals

and unlikely partnerships, innovation

where adjacent industries become

and businesses. This realization is

coming from outside the sector and

disruptors and innovators in the pay-

prompting a reevaluation of how val-

technology that until recently seemed

ment domain.

ue propositions are crafted within the

like science fiction. With AI and digital

financial sector, particularly in retail

solutions leading the transformation

and corporate banking.

we can expect the financial world to

6

Web 4.0, the next digital leap.

Discussions like the ones held on

look very different indeed, if not from

net integrates artificial intelligence,

and off stage at Fintensity make it

the outside, certainly from the inside,

the Internet of Things, blockchain,

evident that payment services can no

where operations, processes, new

virtual worlds, and extended real-

longer be developed in isolation from

ways of working and innovative tools

ity, offering boundless interaction

the goods and services they facilitate.

combine to deliver financial experi-

within digital realms. Defined by

As a result, there's a growing need for

ences that feel simple effortless, and

the European Commission as Web

financial service providers to engage

intuitive. Or that given enough time,

4.0 this concept not only signals a

in ongoing dialogues with adjacent

will not even be felt at n

transformative era but also stresses

industries—such as retail, charity,

the importance of regulated innova-

shipping, travel, healthcare—that

tion to maintain a balance between

inherently embedd financial transac-

technological progress and necessary

tions within their customer journeys.

regulatory compliance. With a focus

This signals a strong need to not only

on GDPR, identity as a service (IDaaS),

develop payment products that are

and robust credentials management,

market-fit but also aligned with the

Web 4.0 aims to revolutionize financial

evolving demands of end-users and

structures through high-performance

the industries serving them. The long

The next evolution of the inter-

34

Access over 5,500 minutes of unparalleled thought leadership in finance, featuring insights from banks, insurance companies, fintechs, investors, and regulators. Explore the Nordics and Baltics' most comprehensive collection of fintech insights, straight from the visionary minds shaping the future of finance. www.nordicfintechmagazine.com

35

36

Founder Diaries: Zeroing in the Priorities Shaping Fintech We're already a quarter into the year, and fintech leaders in the Nordics and Baltics are pushing forward with their mission-driven efforts. Despite the multitude of distractions, these founders maintain a critical balance between the essential and the necessary, propelling them toward their goals while navigating the challenges of progress. We reached out to five founders to discover their priorities for 2024. Their responses were as diverse as they were insightful, yet all were united by the unrelenting dedication to realizing their vision, despite the hurdles and challenges they face. Here are some of the key priorities that are shaping the fintech landscape in 2024.

37

In 2024, as a RegTech founder,

“Changing the value the value

As a fintech founder in 2024,

In 2024, we at PayAnalytics by

As a fintech founder in 2024,

I'm steering Vespia towards

chain in corporate payments.

my priorities lie in continuing

beqom are focused on sup-

my strategic focus centers on

transforming AML compli-

At ZTL, we deliver an em-

to work towards our vision of

porting organizations across

leveraging the transformative

ance into a more accessible

bedded end-to-end payment

helping as many SMEs as pos-

the world in building equitable

capabilities of Request-to-

and efficient process. We aim

platform for businesses.

sible with financing, despite

workplaces, using statistics,

Pay (R2P) to drive innovation

to replace outdated manual

Our objective is to change

the macroeconomic situation.

machine learning and optimi-

and deliver tangible value to

methods and error-prone de-

the value chain in corporate

In these times, leveraging

zation. A key focal point is the

businesses and consumers

cision-making with AI-driven

payments by enabling ERP

technology and collaboration

European Pay Transparency

within the European market.

solutions. This approach isn't

system owners to go from be-

is crucial not only for solving

Directive – all organizations

My tactical mission for this

just about following trends; it's

ing a re-distributor of a banks

specific issues, but it also

in Europe need to get ready

year is to position Pinecone as

about genuinely easing the

payment service, to become

provides mutual benefits and

to explain their pay struc-

the premier choice for banks

workload for compliance offi-

the proprietary owner of the

competitive advantages to

ture, publish pay bands and

seeking integration with the

cers. Our focus is on crafting

payment service. As such, we

the companies solving these

ensure pay equity – the era of

SEPA Request-to-Pay (R2P)

straightforward, user-friendly

turn the ERP system owner

issues. For Froda, our main

compensation as a black box

system.

systems for fintechs, facilitat-

into “the bank”, allowing them

focus will be to continue

is over. As a result, we are ex-

R2P, characterized by its

ing easier account openings

to develop profitable business

to improve our embedded

panding our technology tool-

use-case-agnostic, cur-

and financial transactions. This

models around their corporate

financing platform and attract

kit to support organizations

rency-agnostic, and pay-

is especially crucial in emerg-

payment services.

more partners across Europe,

on their pay transparency and

ment-method-agnostic

in order to give as many Euro-

equity journey. In 2024 we are

messaging layer, serves as a foundational framework for

ing markets like Africa, Asia, and South America, where fin-

With more than 10 000

pean SMEs as possible access

focused on our core, bringing

tech growth is often hindered

corporate customers on the

to financing.

best-in-class compensation

new payment and e-invoicing

by limited AML expertise.

platform in Norway already,

technology tools into the

services in Europe.

Vespia is committed to break-

our focus is to leverage on

hands of compensation spe-

We have identified over 20

ing down these barriers and

our existing infrastructure at

cialists and managers.

potential use cases for R2P,

promoting financial inclusion

scale and go into production

indicative of its vast potential.

and innovation.

with several ERP partners in

Notably, R2P offers substantial

Sweden and Denmark during

advantages over open bank-

2024.”

ing and local schemes.

Julia Ront,

Andreas Bjerke,

Oliver Mohseni,

Margret Bjarnadottir

Sami Karhunen,

Co-founder and

CEO and Co-Founder at ZTL

Co-founder at Froda.

- Associate Professor of

CEO and Co-Founder

CEO at Vespia

Payment Solution

Management Science and

at Pine&Cone Oy

Statistics at University of Maryland, co-Founder of PayAnalytics

38

Digital Trust or Bust: Fintech's Quest for Innovation with a Conscience Fintechs must balance AI and tech innovations with ethics and transparency to protect consumers and earn trust. Streamlining identity verification and meeting regulatory standards are key as they innovate within the dynamic digital finance landscape.

By Jakob Frier

39

E

stablishing digital trust is

and alignment with customer values.

influx of innovative fintech applications

necessary and a gateway to

Building and maintaining trust requires

and unconventional financial services

expansion and enduring suc-

continuous efforts from institutions to

into the market is introducing new

cess for fintech companies. It

demonstrate reliability, integrity, and

levels of convenience, diversity, and

influences how much users believe in

commitment to customer satisfaction,”

adaptability, intensifying the pressure

the platform and the company's rep-

says Liudas Kanapienis, serial fintech

on traditional financial entities to adapt

utation. It opens doors to new collab-

entrepreneur and Co-Founder and

and maintain consumer trust.

orations and regulatory compliance,

CEO of the Lithuanian fintech Ondato,

“The level of trust toward financial

which can be a boon for potential

which helps companies enhance the

institutions varies. Traditional banks

investors.

KYC process.

often benefit from established repu-

Digital trust fosters confidence

Kanapienis emphasizes that trust

tations, while newer fintech players

between a company and its clients

doesn't develop overnight and

face the challenge of building trust

and business allies. It underpins lasting

consists of many elements, including

from scratch. However, recent trends

partnerships and a feeling of safety,

general communication, security, KYC,

show that consumers increasingly

which is significant in the finance

and AML processes, that financial

trust fintech companies due to their

industry. Offering robust security

institutions have in place.

transparency, user-friendly interfaces,

features can become a crucial selling

The shift towards digital platforms,

and innovative offerings,” says Roland

characterised by reduced personal

Eichenauer, Vice President of Sales

“Trust levels towards financial

interaction, heightened anonymity, and

and Business Development, Digital

institutions vary, influenced by fac-

a higher risk of fraud, has underscored

Identity & eID Solutions, at Nets Group:

tors like past scandals, transparency,

these challenges. Furthermore, the

point for a business.

“Striking a balance between innovation and compliance is tricky. Fintechs must navigate complex regulations while maintaining customer trust.”

Regulations as Trust Builders Trust is frequently depicted as an intangible, subjective attitude towards an organisation, yet societal structures significantly influence it.

Regulatory compliance is a foundation for trust in fintech services by demonstrating a company's commitment to legal and ethical standards, protecting consumer interests, and fostering a stable and transparent financial environment.

“Regulatory compliance requirements and guidelines are designed not to punish, but to protect and foster mutual trust in the financial market.

Regulations arise from specific historical events experienced or caused by financial institutions. So, the emergence of regulations fundamentally enhances the credibility of financial services,” says Kanapienis and references the history of the cryptocurrency market to illustrate his point: “At the outset, nobody from the financial market wanted to work with cryptocurrency companies or their derivative financial products, but when regulation emerged, everything changed. Both partnerships began to be formed, and consumers started to view it more reliably rather than as a lottery.”

40

“If financial service institutions can

isational and technical frameworks

activity in the cryptocurrency market

respond to regulations by efficiently

for governing AI and other quantita-

and the fact that perpetrators are

implementing checks and controls

tive models. Doing so is crucial for

being apprehended and prosecuted

to ensure compliance, it can poten-

fostering trust in their data-driven

through formal legal proceedings

tially elevate their models' quality

decision-making and predictive

highlight that the crypto industry

and ethical standards. Consequently,

capabilities,” Preuß says.

has captured mainstream attention

this proactive approach may en-

For consumers, prioritising

and is now regarded with the same

hance customer trust in the institu-

security is paramount, as failing to

seriousness as a fraud in conventional

tion's data handling and automated

do so could result in the misuse of

banking.

decision-making processes,” Preuß

personal information by third parties.

says.

Additionally, compliance with reg-

The increasing coverage of criminal

Dr. Björn Preuß, Chief Data Scientist at 2021.ai and assistant professor at

ulations necessitates the ability to

CBS, notes that data regulation is fre-

AI Shapes Confidence in Fintech

explain decisions, especially those

quently seen as a response to mistrust,

Advancements in technology both

supported by AI.

but it isn't the root issue. Regulations

challenge and facilitate the building

tend to emerge in response to specific

of digital trust in fintech services.

rate identity records and user data

challenges within an industry or due to

Eichenauer notes that emerging

is essential for providing informed

certain practices, such as the deploy-

technologies such as AI introduce

justifications for actions taken or

ment of AI in making critical choices in

new vulnerabilities and complex

denials issued,” Preuß adds.

the financial sector.

security challenges.

“On the other hand, these same

In any relationship, be it personal or

tions for enhancing security, im-

professional, the critical element is

proving transparency, and building

having trust in each other.

The simple presence of AI

“Trust can only exist when you reveal who you are and your mo-

technology doesn't automatically

tives. From the financial side, secure

impact trust in the financial services

and reliable digital identity verifica-

industry. But the way AI is integrated

tion is essential for KYC and AML

into business processes and how

regulations and financial security to

it's used to engage with customers

prevent losses. From the consumer’s

can significantly shape the degree of

perspective, it's also about ensuring

trust they have.

security so that no one else can

“If financial service organisations employ AI across various aspects

access their money except themselves,” Kanapienis says.

such as chatbots and credit rating

And the digital approach facili-

and approval systems, the trust in

tates and reduces friction for both

these models' accuracy and risk

parties to improve user experience.

management becomes paramount.

Consumers play a critical role in

Failure to instil trust in these AI-driv-

the digital trust ecosystem within

en processes could lead to scan-

the fintech sector. Their aware-

dals, prompting customer exodus

ness and understanding of privacy

from the company,” Preuß says.

settings, security measures, and the

In conversations about AI or quan-

overall management of their digital

titative models, organisations vary in

identities contribute significantly to

familiarity with these tools. Typically,

the strength of digital trust.

established organisations are more

Dr. Björn Preuß, Chief Data Scientist at 2021.ai and assistant professor at CBS

Putting Trust in Digital Identity

technologies offer innovative solu-

stronger trust with users,” he adds.

If financial service institutions can respond to regulations by efficiently implementing checks and controls to ensure compliance, it can potentially elevate their models' quality and ethical standards.

“To achieve this, maintaining accu-

“Engaged and informed con-

used to working within regulatory

sumers are better equipped to

frameworks, while newer startups

make safe choices online, thereby

may not have the needed structures

supporting the overall integrity and

and regulatory guidance.

security of the fintech ecosystem,”

“Speaking of organisational structures, it's clear that organisa-

Eichenauer says and continues: “From a consumer's point of view,

tions across the board must invest

a secure digital identity is key for

in establishing the requisite organ-

safely accessing financial services

41

online, protecting against identity theft and unauthorised use. Additionally, such identities give consumers power over their data, allowing them to decide what information to share and with whom.”

A Balancing Act In the context of trust, technological progress is a double-edged sword for organisations.

“Challenges such as increasing

Building and maintaining trust requires continuous efforts from institutions to demonstrate reliability, integrity, and commitment to customer satisfaction.

cybersecurity threats, the potential for algorithmic bias, and privacy concerns require fintech companies to protect

Liudas Kanapienis, Co-Founder & CEO at Ondato

user data, ensure non-biased and transparent systems, and manage

data respectfully. Moreover, they must

Engaged and informed consumers are better equipped to make safe choices online, thereby supporting the overall integrity and security of the fintech ecosystem.

Roland Eichenauer, Vice President of Sales and Business Development, Digital Identity & eID Solutions, at Nets Group

To remain compliant with regula-

balance the complexity of new tech-

tions and build trust, it is important

nologies with user-friendly designs

to focus on automating processes.

to maintain trust and functionality”

Depending on manual verification and

Eichenauer says.

paperwork methods is inefficient and

On one side, the rise of new tech-

can lead to a lack of clarity, particularly

nologies encourages innovation and

when documents are spread out in

the search for efficiency, even in tech-

different places. This can also lead to

nologies with risks. Conversely, if these

increased costs.

risks lead to negative consequences,

“To circumvent these challenges,

they can deeply damage trust in these

organisations must establish checks

organisations. Thus, it's critical to ac-

and controls based on model key per-

knowledge that adopting new technol-

formance indicators (KPIs) and employ

ogy can be linked to increased distrust

automated measures to prevent data

if ethical implications are ignored.

loss or model biases. This approach

“Technology can also offer solutions

streamlines operations, enhances

to the challenge of trust. Institutions

transparency, and ensures adherence

can mitigate risk exposure by leverag-

to regulatory standards, thereby bol-

ing technology, implementing robust

stering trust,” Preuß concludes. n

control systems, and enhancing data and model management practices,” Preuß says.

42

Identity Rebooted A diverse digital ID landscape across Europe complicates businesses, increases operational costs, and hinders cross-border operations. A new regulation, eIDAS 2.0, aims to provide a cohesive, secure framework that simplifies transactions, lowers costs, and improves the ease of doing business across EU Member States.

By Jakob Frier

I

n the EU, digital ID systems like

lation broadens its scope to include

Estonia's ID Card, Germany's eID,

additional trust services like electronic

Norway’s BankID, Italy's SPID, Den-

archiving, ledgers, and remote elec-

mark’s MitID, and Finland's TUPAS

tronic signatures alongside digital

have varied authentication methods and features, creating complexity and

signatures.

This expansion, coupled with

lack interoperability for cross-border

enhanced security measures and stan-

online services. This diversity hampers

dardised technical architecture, en-

seamless access to digital services

sures seamless cross-border utilisation

Citizen-Centric

and poses challenges for businesses

of trust services while imposing stricter

Gjøen has also collaborated as a

and individuals across different EU

requirements on service providers.

co-author on the European Com-

countries. eIDAS 2.0, recently adopted by

“A significant addition under eIDAS

mission's proposal for eIDAS 2.0 and

2.0 is the European Digital Identity

engaged in negotiations with the

the European Parliament and Coun-

Wallet (EUDI Wallet), which allows EU

Council's Member States regarding its

cil, aims to enhance efficiency, and

citizens to store and manage their dig-

implementation.

address current issues by empowering

ital identities and credentials securely,

According to Gjøen, the provision of

citizens with trusted digital identity

facilitating smoother digital transac-

the EUDI is based on the principles of

solutions, slated to come into force by

tions and interactions across the EU,”

user control, a high level of trust and

the end of summer 2024.

Sørensen says.

security, privacy by design, and a com-

“The regulation aims to address the

Each member state will be obliged

mon European certification scheme.

evolving needs of the digital single

to introduce a national digital identity

“Governments will be the anchor

market, focusing on enhancing secu-

wallet to address the low uptake of

of trust, responsible for ensuring the

rity, broadening the scope of digital

digital identity services provided by

identity of their citizens and binding

services, and improving cross-bor-

the first eIDAS. This wallet will facili-

that identity to the EUDI. eIDAS 2.0

der interoperability,” says Kristian

tate voluntarily secure, reliable, and

applies a user-centric model to digital

T. Sørensen, Co-chair of the Digital

smooth access to public and private

identity, giving citizens full control over

Wallet Expert Group at The Mobey

sector services.

the collection and use of identity data

“Fulfilling the ambition of a digital

through the wallet, limiting by default

internal market is not possible without

the use of identity data by all other

the availability of a unified approach to

participants in the ecosystem,” Gjøen

A Digital Internal Market

digital identity. To ensure widespread

says.

eIDAS 2.0 builds upon the original reg-

adoption, eIDAS 2.0 also widens the

The regulation facilitates the verifi-

ulation introduced in 2014, which saw

scope of entities obliged to accept

cation of claims across borders, min-

a poor uptake as only 14 EU member

it,” says Anders Gjøen, Strategy and

imises data exchange, and promotes

states implemented national electron-

business development at Norwegian

more effective digital services interna-

ic identity solutions. The new regu-

BankID.

tionally. For instance, a driver's license

Forum and Strategy Lead at Nets eID solutions.

Kristian T. Sørensen Co-chair of the Digital Wallet Expert Group at The Mobey Forum & Strategy Lead at Nets eID Solutions

Anders Gjøen Strategy & Business Development at Norwegian BankID.

43 physical signatures is expected to cut costs and minimise the risk of fraud,” he says.

Digital Revolution Unleashed The advent of the EUDI is expected to deepen the digital single market and make it a reality when it comes to the provision of services, public or private, requiring the use of electonic identitfication.

“In member states with little or no use/uptake of electronic identities, the digital identity wallet should encourage the further development of online digital services at the national level,” Gjøen says.

According to him, eIDAS 2.0 will likely see new and innovative services supporting the ability to request and present verifiable electronic credentials: “Combined with the advent of the digital euro, eIDAS 2.0 is likely to support the further use of digital payments. The wallet infrastructure may be leveraged to offer an alternative to global payment infrastructure providers for certain payment user cases.”

Universal access to digital identities ensures that all EU citizens can participate in the digital economy, fostering social inclusion and accessibility.

The adoption and effectiveness of the EUDI are expected to be flexible based on its user-friendliness and could be substituted with a verifiable

require a high level of certainty about

capability to cater to a broad array of

digital claim and various certificates

their customers' identities are expect-

applications, as well as its integration

and statements, particularly in sectors

ed to benefit from a more cost-effi-

with current systems.

like finance that currently depend on

cient process for the onboarding and

data exchange and localised solutions.

authentication of both new and current

like Norway, where digital identities

customers.

are already well-established through

For citizens, the wallet will offer

Gjøen emphasises that in countries

public-private collaborations, introduc-

an alternative to fully private identity

eIDAS 2.0 will provide access to

solutions and be the only solution

verified identities from all EU/ EEA

ing a new digital identity option that

backed by EU law.

member states, reducing the need to

diverges from existing systems may

integrate various national solutions, as

pose challenges to the acceptance

Enhanced trust in digital transactions

is currently the case. With its strong

and routine use of an EUDI for national

With a standardised digital identity

focus on security, the reliance on the

and daily transactions.

verification system, companies can

EUID is also likely to reduce fraud.

To succeed, the issuance of EUDI

easily authenticate customer identities

According to Gjøen, eIDAS 2.0

wallets in Norway should be based on

across EU countries, saving time and

could lead to industry-specific trust

sound business models and flexibility

resources that would otherwise be

frameworks, allowing for the secure

and in full compliance with the eIDAS

spent on multiple systems.

exchange of verified electronic data

Regulation.

“eIDAS 2.0 is expected to enhance

across industries. This would enable

The ambition for Europe is for all citi-

cross-border services by facilitating

financial institutions to depend on

zens to have access to secure, priva-

easier access to services for all EU res-

the reliability of data certified by their

cy-enhancing digital IDs by 2030.

idents. With universal digital identities

industry peers.

and the EUDI Wallet, businesses and

“The regulation aims to ease

consumers can engage in services

cross-border commercial activities by

across the EU more easily without

incorporating verified identity-linked

the need for repetitive and inconsis-

authorisations and enabling quali-

tent identity verification processes,”

fied electronic signatures. This move

Sørensen says.

towards digital verification and away

Businesses operating in the EU that

from paper-based processes and

44

The essential role of networking in finance and fintech when you’re growth rich, but time poor It’s the cusp of winter in Copenhagen as the eighth member of Female Leaders in Finance Marketing, a professional network of women in finance, joins its monthly meeting. She arrives to an animated conversation, where the group passionately discusses the views of one of the members, securing budget for external marketing is an internal marketing act first!

By Chris Crespo

T

he discussion? How to move

venture arose from the realization that

from brand awareness

there was a gap in the market for a

has become increasingly challeng-

towards generating busi-

space that combined discussions on

ing. Fluctuating budgets and team

ness leads that move the

fintech, women in the workplace and

sizes, coupled with rapid changes

needle in the face of industry-wide

marketing strategies. “Despite my

in the space such as regulations &

budget constraints. “Networking is no

experience in growing and leading

digital maturity of consumers, create a

longer just about swapping business

teams, it was clear to me that I missed

complex landscape. For a company to

cards—it’s about finding avenues for

sparring with others who were also in

grow and succeed, it must expand into

collaboration, sharing knowledge, and

finance and marketing.” says Lima. “I

new markets and segments, requiring

driving thought leadership” states Lima

wanted to develop, and so I took a bit

compelling localized positioning and

Curtis, the Founder “Female Leaders in

of a gamble and reached out to others

messaging strategies.” says Lima, dis-

Finance Marketing” a group of profes-

via LinkedIn, ‘cold call style’ and asked

cussing the high specialization in mar-

sionals in Copenhagen at the intersec-

if they’d like to meet for a monthly

keting and finance required to convey

tion of Finance and Marketing. "Es-

lunch.” she recalls.

messages effectively. “In product first

Within finance, the role of marketing

companies there can sometimes be

tablishing these relationships is vital, not just for individual and professional

The response was an unequivocal

reluctance to solution-sell, and instead

growth, but also for the advancement

yes, revealing that the initiative had hit

focus on features, adding another layer

of the entities we represent." she adds.

an unmet need amongst profession-

of complexity to the role of a marke-

als in the field. “I suggested sharing

teer. It’s critical that we enable buyers

knowledge and experiences in order

to buy by demonstrating the value

cross pollination of ideas relating to

to help each other gain more insight

and relevance of a product or service

her role, two years ago, Lima took the

into the space, tackle challenges and

to decision-makers so that they either

initiative to reach out to peers across

share best practices. To my delight, it

purchase, or are able to convince their

the industry with the aim to connect

was well received and Female Leaders

superiors to allocate budget.” She

female leaders in finance and fintech

in Finance Marketing was born” Lima

adds.

marketing. The motivation behind this

continues.

Experiencing a lack of sparring and

45 Lima Curtis, Passionate B2B Fintech professional

and practical tactics and strategies, to help and learn from each other.

Lima highlights “The diversity of knowledge within our network enables us to approach problem-solving from different angles. However, it was also important for me to create a space where such discussions can take place in a closed and intimate setting.”

Discussions typically revolve around 3 areas; the challenges women face in finance, what’s coming next in the finance / fintech space, and how to overcome specific marketing challenges. The topics are either suggested

by Lima, who also acts as chair for the meetings, or submitted by members, so the group can share perspectives and practical advice on how they can be solved together.

With topics as varied as leadership through uncertainty, the best tools and agencies and securing marketing budget the network has been going strong for 2 years, increasing its membership but still remaining a close tight knit circle of professionals with deep expertise and invaluable knowledge of their field. “The group has continued

In account-based marketing (B2B), this means crafting messages that res-

gaining momentum since the start,

onate with various stakeholders within

other members have invited people

financial organizations, each with their

within their network and the quality

unique priorities and pain points. In B2C marketing, rapid data analysis is crucial for increasing user uptake and retention rates. “Balancing these diverse challenges requires meticulous planning and execution, alongside optimizing budgets to align with commercial goals and pipeline targets” states Lima, who has lived through the complexity of these challenges in previous roles. “We’re lucky that other members of the group have deep ex-

By sharing knowledge, and learning from diverse perspectives, networks like ours not only help us in our own roles, but also help our companies as we bring back knowledge that supports them in an increasingly competitive landscape.

and variety of know-how grows with every new addition” Lima explains. In relation to the financial space the exchange of insight between those from the fintech space and those from more traditional financial institutions has helped members gain more in depth knowledge of the market, and how both can collaborate more effectively together.

“Networking is essential in any industry, but I feel the tech space is

perience and expertise in the area and have been able to provide actionable

Lima Curtis, Passionate B2B

moving so quickly, we can be growth

guidance and invaluable support.” she

Fintech professional

rich, but time poor” observes Lima. “By sharing knowledge, and learning from

continues.

The monthly gatherings have at-

diverse perspectives, networks like

tracted CMOs and Heads of Marketing

ours not only help us in our own roles, but also help our companies as we

from a wide array of companies such as SwedBank, BNP Paribas, Cardlay,

openness of a group of friends, but

bring back knowledge that supports

Lunar, Mastercard, and more. In the

with the format of a roundtable discus-

them in an increasingly competitive

meet-ups, which are run with the

sion, members share ideas, learnings,

landscape.” she concludes.

46

Lina Žemaitytė-Kirkman, Head of ROCKIT at Fintech Day 2024.

David Slaying Goliaths How Lithuania Became a Fintech Powerhouse, Unicorn Factory, and Inspiration to the World for Making Digital Signatures Mainstreamw

By Dharmesh Mistry

I

magine a bustling conference

unfolding: the story of David, not just

the nation’s unwavering commitment

hall, not filled with the usual stale,

slingshotting a pebble, but wielding a

to Fintech. Finance Minister Gintarė

corporate drone, but abuzz with the

laser blade and taking on the global

Skaistė echoed this sentiment, unveil-

infectious energy of innovation and

Fintech Goliaths. And let me tell you,

ing their ambitious 5-year strategy – a

this David is winning.

veritable blueprint for Fintech domina-

ambition. This wasn’t a scene from Silicon Valley, but rather the heart of Vil-

Forget about dry presidential speech-

tion. Five key pillars form its foundation:

nius, Lithuania, where Rockit’s Fintech

es. Lithuanian President Gitanas

nurturing homegrown talent, attracting

Day was unfolding. Here, in a country of

Nausėda himself graced the stage,

global players with streamlined pro-

just 3 million people, I witnessed a story

his passion palpable as he outlined

cesses and favorable business terms,

47

President Gitanas Nausėda launching the Fintech Day 2024 declaring that Lithuania is a Fintech Nation.

in an often male-dominated industry.

operates with the agility of a gazelle,

rigorous yet high-quality regulations,

And with an average age under 45,

nimbly adapting to changing market

ensuring unshakeable security and

their young and energetic workforce

dynamics and embracing new technol-

trust, and solidifying their position as

pulsates with the innovative spirit of the

ogies like blockchain and AI. The buzz-

the undisputed European Fintech Hub.

future.

ing energy and genuine enthusiasm of

becoming a haven for innovation with

Talk about setting the bar high!

Rockit’s Fintech Day wasn’t your typi-

the attendees were palpable

But Lithuania doesn’t just talk the

cal conference. Forget about self-serv-

– a testament to the thriving ecosystem

talk, it walks the walk. They boast the

ing sales pitches – this was a festival of

Lithuania has fostered.

highest number of issued Fintech

knowledge and inspiration. Renowned

licenses in Europe, a testament to their

experts like Morten Rongaard, the

Day, I couldn’t help but feel a surge of

efficient and welcoming approach. And

self-proclaimed “OG of NFTs”, painted

inspiration. Lithuania doesn’t just

the numbers speak for themselves –

a vivid picture of Web 4.0, while Linas

represent a small nation punching

over 7,000 individuals contribute their

Beliūnas, the charismatic Finfluencer,

above its weight; it’s a testament to the

brainpower and talent to nearly 280

took us on a mind-blowing journey into

power of audacity, a clear vision, and

vibrant Fintech firms across the country.

the world of AI-powered finance. But

unwavering dedication. They’re not

Even more impressive? They’ve birthed

the most impactful moment came from

just competing – they’re setting the

10 unicorns, global players like the

Liudas Kanapienis, founder of OnDato.

pace for the future of Fintech. As a

European arm of Revolut, proving that

His simple yet profound explanation

serial entrepreneur, I’m always rooting

size doesn’t equate to innovation.

resonated deeply: due to their limited

for the underdog. And in this case? I

But there’s more to the story than just

domestic market, Lithuanian Fintech

have no doubt that Lithuania, the

numbers. Lithuania is breaking barriers

startups are forced to think globally

unlikely David, is not just slaying the

by fostering a diverse and inclusive

from the outset, giving them a distinct

Fintech giants, but writing a whole new

ecosystem. Women hold their own,

advantage in the international arena.

chapter in the global innovation story.

comprising 45% of the Fintech work-

This “David vs. Goliath” mentality per-

force and a staggering 43% of exec-

meated the entire conference. Unlike

utive positions, a beacon of equality

larger, established players, Lithuania

Walking away from Rockit’s Fintech

48

Tidal Trends: The Next Big Waves in Fintech We consulted with four fintech visionaries to identify the top trends shaping the industry in 2024. As expected, several familiar trends appeared on nearly all their lists, each for unique reasons. However, some of their insights might surprise you, challenging and potentially overturning preconceived notions about the sector. Read on to discover the trends making waves across the fintech landscape this year.

Jim Marous Co-publisher of The Financial Brand, owner and publisher of the Digital Banking Report and host of the Banking Transformed podcast.

T

he following three trends –

risks while training existing teams. This

generative AI, embedded

will enable fintech firms them to offer

finance, and composable

tailored financial products, services,

solutions – are interconnect-

and recommendations, enhancing

ed and mutually reinforcing. Together,

customer satisfaction and loyalty.

they are driving the transformation of

AI-driven personalization also helps

the fintech industry, enabling compa-

fintech companies to optimize their

nies to create more customer-centric,

operations, reduce costs, and mitigate

efficient, and resilient financial services

risks. as they allow companies to deliver

for fintech firms and legacy banking organizations alike. As these trends

2. Embedded Finance: Embedded

flexible and adaptable systems

continue to evolve and mature, they

solutions enable the integration of

representing best-of-breed compo-

will shape the competitive landscape

financial services into various plat-

nents. This approach enables fintech

and determine the success of the

forms and apps, making them more

firms to quickly respond to changing

entire banking ecosystem in the years

accessible and convenient for users.

market conditions, customer needs,

to come.

This trend allows fintech companies

and regulatory requirements. By

and legacy financial institutions alike to

building and/or leveraging compos-

1. Generative AI Solutions: In 2024

reach a wider audience, tap into new

able architectures, fintech companies

and beyond, generative AI will be

markets, and create innovative reve-

can create modular, scalable, and

essential for fintech companies to

nue models. By partnering with both

interoperable solutions that can be

remain competitive and meet evolv-

non-financial businesses and legacy

easily integrated with other systems

ing customer expectations. By com-

banks, fintech firms will be able to

and platforms. This allows for greater

bining human and machine learning

expand their customer bases, increase

resiliency, innovation, and collabora-

algorithms, fintech firms will be able

brand visibility, and drive financial

tion potential within the fintech and

to analyze vast amounts of customer

inclusion.

banking ecosystems.

data to gain insights into user behavior, preferences, and needs. Generative

3. Composable Solutions: Composable

AI will also assist in optimizing oper-

solutions are becoming increasingly

ations, reducing costs, and mitigating

important in the fintech industry,

49

Gintare Baciulene – Head of Technology Sector Team at Invest Lithuania 1. Enhanced Integration of AI

of embedded finance. While embed-

We don’t need a crystal ball to pre-

ded payments and Buy Now Pay Later

dict further and wider integration of

(BNPL) solutions have already gained

AI applications in 2024. However, this

considerable traction and will continue

also means heightened challenges

to grow, I believe an emerging frontier

associated with AI-enhanced sophis-

lies in embedded insurance. I predict

ticated fraud, money laundering, and

that this segment, currently under-

other illegal activities. Consequently,

served and ripe for disruption, will

fintech companies will have to amp

experience accelerated development.

up the implementation of advanced

AI solutions to fortify their operational

3. Surge in Green Fintech Solutions

investments, and growing customer

frameworks and services. I predict the

Although currently constituting a mod-

demand for enhanced transparency on

head-spinning “race of AI” in the next

est fraction of the fintech market, I an-

product and service sustainability.

several years!

ticipate that the green fintech solutions

Hence, I predict that green fintech

will gain substantial momentum in the

solutions will go through rapid prolifer-

2. Expansion of Embedded Finance

forthcoming year. This growth is driven

ation and adoption, reflecting the

Increasingly user experience-focused

by several strong forces: regulatory

dynamics of strengthening focus on

clients already appreciate the conve-

requirements, sustainability-focused

sustainability.

nience, seamlessness, and affordability

corporate policies, venture capital

Reinis Znotins, Executive Director of the Latvian Blockchain Association

opportunities by converting typically

alization, prioritizing compliance and

its provision of predictive analytics,

illiquid assets, such as real estate,

establishing EU bases. Concurrently,

personalized financial services, and

loyalty programs, airline tickets and

EU member states hasten to integrate

fortified fraud detection mechanisms.

ownership of assets like solar panels

MiCA into national laws, supplement-

For instance, AI-driven chatbots

into digital tokens. This transformation

ing with local incentives to entice

streamline customer interactions,

not only boosts liquidity and acces-

Web3 entities. Latvia, for instance,

while algorithms analyze vast datasets

sibility but also democratizes invest-

proposes cryptocurrency payment

to customize investment strategies.

ment, allowing individuals to access

options for company capital and taxes,

Such innovations not only enhance

In 2024, three prominent fintech

previously inaccessible markets with

aiming to attract and nurture such

operational efficiency but also foster

trends emerge:

smaller investment amounts.

ventures.

a culture of innovation, reshaping the

1. Real World Assets (RWA):

2. MiCA regulation takes hold

3. Artificial intelligence remains a

The tokenization of real-world assets

An expanding cohort of crypto enter-

pivotal force in fintech.

is surging, revolutionizing investment

prises shifts focus towards institution-

Catalyzing a transformative wave with

financial sector profoundly.

Love Dager – CEO at Stockhoml Fintech

1. Embedded Everything

consumer facing, now that number is

We have gone from Embedded

almost down to ZERO. The established

Finance being the hottest new thing

players has a firm grip of the customer

to everything going embedded! More

facing apps and selling services to

and more actors are involved in each

make them more competitive is the

step and everyone is focusing on

way for fintechs.

their specific niche. This means more complicated tech stacks and also less

3. A tougher investment climate

competition in each niche – a smart

The rosy days are over, at least tempo-

move for startups.

rarily, leading to a more profit-focused fintech scene. Gone are the days of

2. The decline of Consumer (facing)

shoot for the moon, today investors are

investments, but if you meet the new

Fintech

looking for working products with ex-

tough qualifications, there’s plenty of

A couple of years ago 50% of startups

isting customers before looking at the

money out there.

and scaleups we worked with were

growth-potential. It is harder to get

50

It’s time you created an Advisory Board If you’re a FinTech founder or CEO, you already have an informal network of colleagues who unofficially provide you with advice, inspiration, insight and counsel. As a serial founder back in the day, I know what a lonely experience it can be in the hot seat running a start-up.

By Ewan MacLeod

T

hat’s why I have spent a lot

To this end, here are my recom-

they have a lot of specific insights

of time encouraging other

mendations for establishing your own

and experience for the marketplace

FinTech founders and CEOs I

Advisory Board:

that you are targeting.

Recruitment: Finding

n Thought Leaders

the right advisors

Individuals who spend a lot of time

attention as it should, certainly in

There are many executives across

thinking and talking about your tar-

Europe where the idea of working with

FinTech-land who would be delighted

get marketplace and who will have

advisors, coaches or mentors is often

to be asked to become advisors, but

a considerable number of followers

considered a sign of weakness, rather

identifying the right ones for you is im-

across the industry. They should

than strength.

portant. There’s no specific rule to the

also be able to open a lot of doors

number of participants but in practice,

all over the industry.

know to establish an advisory

board. A formal one!

This issue doesn’t get as much

When I was running the Venture outfit for a leading Nordic bank, I

I’ve seen great success around 5-6

would always pause at the ‘Advisor’

individuals.

slide during pitch meetings.

“These are your advisors?” I would

I recommend a mix between the following profile types:

ask. The founders would dutifully nod.

“How often do you speak?” I would

n Former Start-up Founders Those who have done it before.

There’s strong value in having a least one start-up founder who has

n Industry Veterans

successfully exited their company –

ask, followed by, “How regularly do

Those who have held (or hold) se-

not necessarily in the FinTech indus-

you all meet?”

nior positions in the banking indus-

try though. They’ll have experience

Often it would become clear that

try. These individuals can offer you

with a variety of issues – including

the slide was filled with ‘big names’ the

compelling insight into the banking

hiring the right team, dealing with

founders had met once for 10 minutes

landscape that you’re targeting,

lawyers and the exit process.

and who had approved the use of their

especially in the context of potential

name in return for a few thousand

business and commercial models

n Investors

share options. They never actually talk-

to consider and, of course, warm

There can be value in having an

ed, much.

introductions to target clients.

investor – perhaps specialising at a later stage than you’re currently at –

Whilst this isn’t necessarily bad news, this approach seriously under-

n Subject Matter Experts

who can give great perspectives on

values the power and potential of a set

Experts in the domain you’re target-

the trends and themes they’re see-

of experienced advisors to help you

ing. They might not be C-level exec-

ing in the wider marketplace. (They

drive the outcomes you want.

utives -- often they’ll have devel-

might also become a target investor

oped their career to the point where

at a later stage.)

51 Ewan MacLeod, founder of New Era Digital Partners.

n Prospects: Discuss the pros-

aiming high and using a mix of your

If you’re looking for value, pay each

pects you’re hoping to close; Ask

personal network together with direct

advisor a monthly fee. Here’s a rough

if they have any suggestions or

approaches. LinkedIn is a great place

yardstick: What do you pay your Chief

direction connections that might

to start. Who would you love to have

Operations Officer (“COO”), every

help

as an advisor? Bill Gates is likely to be

month? Divide that by 5 or 6 – and

n Roadmap: Review upcoming

busy, however, that Bank Executive

that’s what you pay each advisor, per

product features and ask for ideas

you met at that conference recently

month. For example: If you’re paying

and suggestions

might be keen to help.

your COO €10k per month, then divide

n Market Overview: Discuss the

Reach out and ask. Even if the

by 6 and pay your advisors €1,600

wider market – ask the advisors

individual can’t accept, just being

each per month.

what they’re seeing and hearing in

approached is nice and a good com-

the industry

pliment. It can also open the door to

at the last moment.

further dialogue. Some will be unable

The Advisor Role Guide Here is a rough guide to activities you

n Monthly CEO one-on-one

to accept ‘paid’ work – because of their

might expect an Advisory Board mem-

Meetings

company policies. Again, that doesn’t

ber to deliver in a given month:

Meet with your advisors once a

need to be a dead end. They might

month. This might sound like quite a

work on an unpaid basis. The fact you

commitment for a busy FinTech CEO

offered to pay is likely highly valued.

but if you use the time effectively, it

Equally, they might not be in a position

can be a fantastic chance to ‘down-

to currently help, but they might open

load’ to the advisor or discuss ideas

their own network to you with sugges-

or opinions.

tions of colleagues to approach.

n Management team one-on-one

thinking about their long-term future,

1. Be present at the monthly advisory board meeting (1 hour) 2. Meet with the CEO every month one-on-one (1 hour) 3. Meet with a management team member every month one-on-one (1 hour) 4. Participate in the Board Advisor

Many executives will naturally be Meetings

especially if they’re already reached

WhatsApp Group (on-going)

Share the love. Encourage your

the top of the tree. The potential of

5. Review documents, pitches, and

colleagues to arrange meetings

non-executive board work will be

materials and offer opinions (occa-

with members of the Advisory Board

playing in many minds. Therefore, an

sionally, acknowledge within a busi-

to discuss ideas and to get their

approach to becoming an advisor for

ness day, provide feedback within

advice on specific topics. This can

your FinTech could contribute toward

2-3 days)

also be especially useful for junior

that ambition. Do include the fact

n “Other” – Academic, Professional

6. Offer social media support when

colleagues who wouldn’t ordinarily

that you’re aiming to pay (and ideally,

There can be some value in having

needed (e.g. Like/comment on

get access to such senior executives

include an amount, especially if it’s

individuals from academic or pro-

LinkedIn, 1-2 times per month)

in traditional settings.

a cold outreach). Even if the target

fessional (e.g. lawyer, accountant)

7. Participate in one-off calls with key

backgrounds to give you a different

clients (occasional, on demand)

set of perspectives to consider. n Non-FinTech

executive is earning millions, the fact n WhatsApp Group

that you’re indicating their time is

Put your advisors into a WhatsApp

worth money is likely appreciated and

meetings or related events (occa-

group (Slack, Teams, etc.) and ask

will often move you to the top of their

sional)

them to participate on-demand. This

agenda.

8. Participate in annual company

alone can be a fantastic resource.

I was surprised to find a senior executive from the Advertising industry

Operating your Advisory Board

Add news articles to encourage

Getting started

on one FinTech Advisory Board I

If you’re paying your advisors, things

commentary or paste in an import-

Fundamentally, there’s no wrong

joined recently: The individual had

need to be organised to make sure

ant company post from LinkedIn and

answer when it comes to setting up or

limited FinTech experience, but their

you’re getting value from them. Here’s

ask them to comment and/or like.

operating Advisory Boards – as long

fully external viewpoint helped to

a rough guide to operating your Ad-

challenge, contrast and complement the other FinTech-focused

as you’re getting value regularly, that’s

visory Board based on the above role

n Contracts

the way ahead. My base advice is this:

guide:

Your advisors should be treated like

Start today. Reach out to some poten-

any other external resource: There

tial advisors and have some explorato-

n Monthly Advisory Board Meeting

should be a service contract out-

ry conversations – and good luck!

Compensation

Hold a meeting once a month with

lining expectations, compensation,

Ewan MacLeod is the founder of

Your Advisory Board should be paid. I

all the advisors together. You might

expense policies and so on. This

New Era Digital Partners (www.ned.

know this will raise a lot of eyebrows,

consider asking one of the advisors

should include confidentiality and

partners), a boutique advisory firm

but I think you need a service level.

to ‘chair’ the meeting or you could

NDA terms.

working with FinTechs, Banks and

Paying your advisors (cash, equity,

give this responsibility to the COO or

both) is the best way of guaranteeing a

another senior colleague. Here’s a

n Term Limits

service level.

sample meeting agenda:

Consider implementing term limits

advisors.

Government agencies to drive digital

n Company update: Brief them

for your advisors. Your needs are

Boards so let me make this obser-

on the company’s performance

likely to change over time, so en-

vation on compensation: The boards

over the past 4 weeks – topics

gage advisors on a 6 to 12-month

where advisors are paid – even a token

might include funding, new hires,

service agreement too offer future

amount – are the ones where every-

etc.

flexibility.

one turns up and value is contributed

n Client activity: Give them an

every month. Advisors that aren’t paid

update on client activity, revenue,

Recruiting Advisors

will routinely (or continually!) drop out

forecasts

To recruit advisors, I recommend

I’ve participated in many Advisory

transformation in financial services.

Ewan is contactable on LinkedIn at www.linkedin. com/in/ewanmacleod

ion on Mobey Forum visit

52

Fintechs to Watch: Wave Makers Stirring the Nordic and Baltic Seas

The Nordic and Baltic regions have been stirring the financial world for years.

Nordic and Baltic Fintech companies are relentlessly pushing the boundaries of innovation, garnering significant attention around the globe. We have selected a number of fintechs that are thriving, with new investments flowing in, expansive partnerships being formed, and steady influx of customers and consistent deal-making that highlights their increasing influence. These Fintechs are at the front of the line in the fintech revolution, crafting disruptive waves that ripple through the entire ecosystem. As such, they represent the vanguard of companies to watch as conveyors of the vibrant spirit and inventiveness that define the Nordic and Baltic fintech landscape.

flowing in, expansive partnerships

Chris Crespo

being formed, and steady influx of

Head of Content at Nordic Fintech Magazine

customers and consistent deal-making that highlights their increasing influence. These Fintechs are at the front

T

of the line in the fintech revolution, he Nordic and Baltic regions

crafting disruptive waves that ripple

have been stirring the finan-

through the entire ecosystem. As such,

cial world for years. Nordic

they represent the vanguard of com-

and Baltic Fintech com-

panies to watch as conveyors of the

panies are relentlessly pushing the

vibrant spirit and inventiveness that

boundaries of innovation, garnering

define the Nordic and Baltic fintech

significant attention around the globe.

landscape.

We have selected a number of fintechs that are thriving, with new investments

SuperHow, based in Lithuania, is a cutting-edge technology firm specializing in blockchain solutions. They provide expertise and innovative services to help businesses and organizations leverage blockchain technology effectively. Their offerings include blockchain development, smart contract creation, and consulting services to guide clients through the complexities of blockchain integration. SuperHow's team of experts focuses on developing customized blockchain solutions that enhance transparency, security, and efficiency for various industries. With a strong emphasis on research and development, SuperHow is committed to pushing the boundaries of blockchain technology to create robust and sustainable solutions for its clients.

53

Spektr turns ongoing due diligence into a revenue generator, not a cost burden. Spektr’s platform simplifies compliance with risk automation, real-time monitoring, and tailored client renewals, automating 90% of tasks.

Offering a faster, safer, and more budget-friendly approach to global due diligence, spektr seamlessly integrates compliance automation into financial services operations, empowering efficient management without coding or specialized IT skills.

Crassula is a fintech company that provides a comprehensive suite of financial technology solutions aimed at empowering businesses to launch and scale their own financial services. Specializing in Banking as a Service (BaaS), Crassula offers a white-label platform that allows companies to create and manage various financial products, including digital banking, payment processing, and currency exchange services. Their platform is designed to be highly flexible and customizable, enabling clients to tailor financial solutions to their specific needs and objectives. With Crassula, businesses can streamline their financial operations, enhance customer experiences, and accelerate their growth in the competitive fintech market.

Mobai is a spin-off company from the Norwegian University of Science and Technology. Mobai’s technology is developed by internationally acknowledged researchers with expertise in biometric systems and stateof-the-art attack detection at the Department of Information Security and Communication. Its Multimodal Biometric Authentication solution utilize a combination of face, iris and ocular recognition to provide strong security and privacy protection. It participates as key resources in governmental and industry standardization efforts, such as ISO/IEC SC37 WG3 Safe and available digital services for everyone is what Mobai strives for

Indó is a new place for your money. They are not one of the old banks but a savings bank and they intend to do better. Indó won't be big and cumbersome. It is small, green and love to keep things simple. That is how their service will be, free from bull$h!7. Indó helps people to save, but also to use money. Its users will have an impact on what they do and how they contribute to society. Do you want a return or fund charities? They are not going to be a bank and that's fantastic. Indó has a nerdy passion for technology and finance. The questions that motivates them is: Can banking be fair and transparent? Do banks always need to be at odds with society?

Indó was created to be different from banks. Its founders want indó to be simple, transparent and in harmony with society.

54

Executing Digital Banking Transformation with Fintech Partnerships Financial institutions are increasingly partnering with fintech firms and third-party solution providers to modernize digital banking experiences. These collaborations improve the speed and scale of innovation, often replacing core providers and saving money compared to creating solutions internally.

By Jim Marous

55 The top strategic priority in banking

outdated infrastructure, and a risk-

transformation continues to be

averse culture.

improving the digital banking

This has created an opportunity for

The increasing expectations of consumers and the rapid digitization of banking will continue to drive

experience for current and

partnering with startups and other

collaboration between fintech firms,

prospective customers. There is an

third-party solution providers that can

incumbent financial institutions,

increased focus on efficiently opening

leverage data, modern technology,

and onboarding new relationships,

and an agile mindset to assist legacy

We will see more collaborative

deploying data-driven personalized

financial institutions in delivering

relationships, against a context of

communication, and creating new

enhanced experiences.

continued change and innovation,

digital banking products and services.

The most frequent solutions where third-party partnerships are occurring

and third-party solutions providers.

replacing the traditional bilateral partnerships.

revolve around building unified digital

Turbocharging this collaborative

take on several forms, including:

platforms (49%), fraud management

innovation will be the increasing use

n Operational technology

(40%), digital account opening and

of Application

partnerships. Third-party technology

onboarding (39%) and digital lending

Programming Interfaces (APIs) that

to improve efficiency and

solutions (37%). There is also a focus

enable the sharing and co-creation of

effectiveness. These arrangements

on collaborating with third-party

solutions between banks and third-

can transform processes such

solution providers for leveraging

party providers. These collaborations

as new account opening or loan

data and analytics for improved

will enable banks, fintech firms, and

origination.

marketing communication and

other non-traditional providers to

recommendations (33%).

explore alternative products, methods

These third-party partnerships can

of service delivery, and even revenue

❙❚ Customer-oriented partnerships.

Each partnership or collaboration

Collaboration to enhance customer-

presents its own opportunities and

models, while providing a vastly

facing aspects of their business,

challenges, and an organization's

improved and seamless experience

with the banks or credit unions

commitment to innovation is an

for the customer. n

continuing to interact directly with

important foundation for growth and

their customers. Customer-oriented

success. Banks and credit unions

partnerships can also improve agility

must understand the objectives of

in serving customers.

the potential collaboration, with solid buy-in from senior management and

n Front-end banking partnerships.

division leaders.

Combining a bank's infrastructure

Ultimately, legacy financial

with technology developed by a

institutions must try to eliminate

fintech or other third-party provider,

outdated bank processes and ensure

with the partner organization

that information can flow across

interacting directly with the end

systems in real-time.

customer in the delivery of banking

Jim Marous

The majority of financial services

products and services. These

leaders believe that some sort

partnerships offer the opportunity

of partnerships or collaborations

Named as a top 5 influencer

to reach new or broader customer

will be needed to move forward

in banking, Jim Marous is an

segments.

successfully. Only 19% of global

internationally recognized

financial services executives stated

financial industry strategist,

they were using their core system

co-publisher of The Financial

Digital Banking Report, 56% of

providers exclusively for modernizing

Brand, owner and publisher of

financial institutions are already

their technology and digital banking

the Digital Banking Report and

meeting customers' digital banking

capabilities. Conversely, 37% stated

host of the Banking Transformed

needs through collaboration with

they utilized core providers for at least

podcast.

fintech firms and other third-

75% of new technology deployments,

party solution providers. These

with 44% relying on third-party or

Marous has been featured by

collaborations increase the speed and

fintech collaborations whenever

CNBC, CNN, Cheddar, The

scale of innovation, reset business

possible.

Wall Street Journal, New York

According to research from the

models, and make traditional financial

Important factors to consider in

Times, The Financial Times, The

services organizations more future-

collaborations include financial

Economist, The American Banker,

ready.

dependencies, brand and reputational

and numerous other global

aspects, responsibilities of each

publications. He has spoken to

Third-Party Collaboration

party, operational dependencies,

audiences worldwide on the

Objectives Vary

and the level of involvement from

impact of change to the banking

Consumers want financial institution

management. Key challenges

industry. Jim has also advised the

partners that can simplify their lives in

include cultural gaps, getting the

White House on banking policy

a personalized and seamless manner.

back-office "ready" for integration of

and his podcast has received

Many banks and credit unions have

new solutions, and scaling from a

three international awards for

found it difficult to deliver a consumer

technological perspective.

podcast excellence. n

experience that replicates those offered by fintech and big tech

The Future of Collaborative

firms due to product and data silos,

Innovation

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