Thomas Krogh Jensen CEO of Copenhagen FinTech Association shares that the Nordics, just like rest of the world, are also affected by the current economic downturn and recession. The fintech startup is a cluster organisation and investors are also becoming hesitant to press a lot more doorbells. He adds a lot more internal rounds are happening, but good companies with steady growth will manage to race ahead in the early stages.
Although the region is very small with about 27 million people living in areas comprising Iceland, Norway, Finland, Denmark and Sweden. It has about 1500 fintech companies, out of which 12 to 15 are unicorns. He attributes these incredible numbers to the existence of digital infrastructure, which has also led to an increased public-private partnership along with changing innovation.
One trend that he observes is that the Nordic region is experiencing more number of early stage funded companies in this challenging macroeconomic environment. Also, the number of deals made were higher lately as compared to year 2020, which is between three to four million Danish Kroners.
Hot & Buzzing sectors:
Another emerging area of interest in the fintech space is the sustainable finance space, such as ESG, climate environment fintech, working within the framework of the 17 UN Global sustainable development goals.
He adds that a lot of fintechs operate in the SME space, and majority of them struggled during Covid. Hence right now though the current macroeconomic environment is weak, there are solutions which are available in the market to cater to these problems.
“We see a lot of fintech solutions starting to embed themselves in other platforms.” Embedded finance is also an emerging space for fintech to tap into the benefits of solving problems. Lastly he believes that the Nordic region comprises people who are fairly wealthy. Hence, wealth management and the capital market space has been buzzing with activity.
Views on India:
He sees a very high quality fintech ecosystem playing out in India, with even three to four listed entities. Although the pulse of the ecosystem is very strong, profitability continues to be a pressure. Talent pool is an incredible advantage that India has over the Nordics, who currently struggle with that. Moreover, there are many developments taking place in the fintech space with CBDC, blockchain, digital lending and so many other reforms that Danish investors are also betting big on India.
“I think in general we need to see more companies investing in long term and that’s probably one of the things we would like to see even more in the coming years. Danish Nordic companies setting up subsidiaries in India and trying to work the market a bit more long term because it is a market you need to be acquainted with, you need to grow your network, you need to develop your Partnerships I think that’s the way out and takes time.”
Lastly, he concludes by saying that the fintech funding winter is quite real and consolidation is on its way. He believes that we are moving towards a super interesting period marked with a lot of innovation and changes that could unleash the best in the fintech ecosystem.
Watch the latest episode of Fintech Diary with ETBFSI Editor Amol Dethe.