Blog post by Kirsi Larkiala: Finland, the home of FinTech?

“FinTech, like Finland and Tech?” writes Kirsi Larkiala in her blog post.


The Nordics are known for efficiency, automation and engineering. Since the inception of the internet, the Scandinavians, and the Finns especially, have been eager early adopters of the latest internet and mobile technologies. There are plenty of great examples of successful Nordic/Swedish FinTech startups like Klarna and iZettle, but fewer widely known Finnish FinTech startups.

This might not sound surprising, but it actually is. If you are well versed in financial technology adoption at a global level, you would know that the Finn’s love for technology has been specifically prominent in banking. Finland has been leaps and bounds ahead of the rest for decades now. The adoption rate of full STP solutions, advanced treasury, e-invoicing solutions and recently innovative financing solutions for corporate customers, have been much higher in Finland than in the rest of the markets. As early as the late 1990s, banking had already moved online in Finland, while the rest of the world was still dreaming about a life with less bank branches. The first European online bank was Finnish. Finland was and still is in a league of its own when it comes to electronic invoice adaptation (which is a pre-requisite for automation of many financial processes), where Finnish e-invoicing platforms like Basware and Opus Capita helped to shape the whole industry by capturing the invoice market with a high level of automation.

From Consumers to Businesses

So far FinTech successes have been mainly focused on B2C value chains and consumer transaction solutions. Consumer products and services usually benefit from economies of scale inherent to big local markets. Therefore, a relatively small local market, like the one in Finland, tends to be a disadvantage for products targeting consumers.

In the B2B market, a small local market can actually be a competitive advantage, as business ecosystems are small and everybody knows each other, which makes reaching a critical mass and iterating products faster. A small market is also a great platform for global players to pilot new innovations. The case in point, this surely has played role in early adoption of many of the previously mentioned corporate online financial services in Finland. Furthermore, in a small market with a too specialized niche product or service it would not work, so the final service would need to address a sizeable part of the market and thereby also be a viable product across markets.

Clearly, consumer solutions like payments or lending are the spearheads of FinTech’s market entry. However, the true opportunity lies within the innovative FinTech solutions targeting the corporate and institutional banking value chain, which still tends to operate with pre-internet processes.

From Corporate banking to FinTeching

Unlike corporate banking, when you combine Fintech with groundbreaking technology, such as the use of artificial intelligence to quickly assess credit risk or robotics to do analysis faster and using massive amounts of data, credit decisions can be made immediately, and funds disbursed in a matter of seconds.

Clients benefit from the elimination of queues, cumbersome paperwork, and negotiations in a bank branch. They further avoid long credit committee processes as supply and demand decide the final pricing of their credit in a live market.

In general, FinTech companies have very competitive point solutions in areas where banks require coordination of several departments in order to provide the same service. This advantage, combined with increased bank regulation, makes even small FinTech companies formidable competition to big banks in areas such as invoice financing, trade finance and wealth management.

Therefore, clearly the first area of corporate banking that is ripe for disruption is corporate lending. There are great gains to be achieved by automation, artificial intelligence, robotics and blockchain.  Market conditions are also favorable as wealth managers are searching for gains and companies have seen their bank credit lines diminishing after the credit crunch and especially due to regulation.

Naturally, there will be plenty of collaboration opportunities with banks and other traditional players like Wealth Management companies, insurance companies, Tech companies, Accounting companies etc., as FinTech is still offering point solutions and therefore cannot yet cover all the corporate banking needs.

Is there finally a role for Finland in FinTech?

For example, in the UK, FinTech companies have already entered the corporate lending market earlier with solutions like MarketInvoice and FundingCircle. They were early to market, but maybe because of that, their approach seems now quite conventional and traditional.

The service offering continuously evolves as Fintech companies are looking for ways to differentiate, provide better customer experience and deliver more value to their customers. There are small early adopter friendly markets like Finland that may play a role in the testing of how to put the customer at the centre of the decision-making process. We have to remember that e.g. large corporates have already actively started their own technology and innovation projects via their Treasury or Financing staff; themes are robotics for ERP & treasury processes or Payment Factories, blockchain for Trade Finance and supply chain financing chain, IoT for the supplier chain or how about replacing cash pool setups in the future with blockchain solutions attaching accounting companies, ERP, Treasury, banks, Wealth Management companies and Fintechs in real-time.

Since the emergence of the first FinTech corporate lending solution, the technology and market have moved forward and the second wave of B2B FinTech solutions are coming and at least some of the newcomers have been iterating their approach in small, tech-savvy, early adopter markets like Finland.

The more we can innovate new solutions for SMEs (of which over 62.000 companies are with international activities) to help them to finance their business leads, the better we can help them to grow as global players and take huge growth jumps. To have Finland as competitive as possible, it´s vital to keep financial sector active and alive and two steps ahead of the competition. In that future, Fintech will play even a bigger role either alone but most preferably as key partners for the traditional players who go through the massive digitalization projects of their legacy systems and struggle with the heavy regulative pressure. Together Finland is stronger; collaboration is one of our greatest strengths in building the future.  

About the writer:

Kirsi Larkiala is a dynamic and highly respected wholesale & transaction banking and Fintech senior executive with market-leading results in increasingly more complex leadership and client advisory positions.  Kirsi has over 30 years of experience in Corporate, Institutions & Retail & Transaction, Liquidity & Risk Management banking. Last three years Kirsi has been focusing also on Financial technology (Fintech) as a founder of Finnish Fintech Executive Community and also as a co-founder and member of the Board for Fintech Finland Association. Kirsi is ranked to Global FinTech Top100 Influencesr/and No 1 in the Nordics & Finland (July 2016 by Oanalytica, London). Kirsi is also ranked to Top 100 IT Influencers by TIVI magazine in Finland (in the ranking only 2 from the banking sector).

Kirsi is known as a thought leader in digitalization, disruption, innovation & change management as well as client advisory in the financial industry. Long-term professional relationships with leading institutional and corporate clients at C-level in Finland & the Nordics are important part of Kirsi´s network.

Kirsi is also member of the Board at Grannenfelt Finance. Grannenfelt Finance is an independent provider of financial solutions for growth and scale-up companies and the goal is to find comprehensive funding solutions that support growth during the entire life cycle of the company. Today’s funding opportunities are diversified and fragmented outside the conventional banking sector to private, government, EU solutions and Fintech.

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