Last week Kidbrooke Advisory attended the Stockholm FinTech Week 2019. In particular, our representatives had the opportunity to participate in the following key areas: FinTech & Market leadership collaboration, RegTech, InsurTech, Sustainability and Impact Tech and finally Regulation & Nordic Collaboration.
Here we briefly summarise our most valuable takeaways from the event:
FinTech and Market Leadership Collaboration. The new players in the financial industry, as well as the traditional incumbents, recognise the value in collaboration, which currently steers the debate towards ways such a partnership should form and develop. A couple of tips from the stage included: both the old and the new financial industry players should be realistic about expectations, committing to create and facilitate a transparent dialogue, minding the challenges faced by their counterpart, yet being aware of the rising competition represented by the rapidly digitalising peers.
RegTech. According to the chairman of the Nordic RegTech Organisation, over 80% of RegTechs focus on anti-money laundering (AML) or know-your-client (KYC) solutions. However, in our view, the compliance for many more regulatory frameworks could be approached creatively and proactively, which is the point of many RegTech offerings. In the case of Kidbrooke Advisory, such regulations could be, for instance, MiFID II, IDD, Solvency II, PSD II, FRTB and many more. Some speakers suggested that RegTech is limited to back-end solutions, while we believe that compliance could influence business model innovation and thus strengthen a company’s competitive positioning.
InsurTech. The Swedish insurance industry is known for its conservatism, which is partly a result of the combination of the cultural legacy fostered by the insurance business not changing its underlying logic for a long time and the old IT infrastructure that is extremely expensive to replace. However, modern technology provides opportunities for developing more seamless customer experiences, and therefore the traditional players should innovate to keep up with the rapidly evolving demands of present-day consumers.
Sustainability and Impact Tech. The lagging but yet emerging awareness of climate change has motivated the population to add another criterion to their investment considerations – the sustainability performance. Currently, despite mandatory reporting, there are no KPIs that would allow an analyst to rank the potential assets with regards to sustainability confidently. The Stockholm ImpactTech companies aim to resolve this issue by developing platforms for sustainability reporting data aggregation, the personal footprint self-assessment apps and by fostering the collaboration with the established industry incumbents.
Regulation and Nordic Collaboration. The environment for financial innovation in the Nordics is favourable. The population is tech-savvy, the business culture recognises the values of transparency and trust, and the regulators are open to a dialogue with the market participants. The FinTech firms have formed coalitions in each of the represented countries: Sweden, Finland, Norway, Denmark and Iceland. In Sweden, the regulator does not plan to open a sandbox to help the FinTechs test their business models (e.g.UK regulatory sandbox) because it could potentially place one type of the competing entities in a more privileged position. However, the Swedish Financial Supervisory Authority representative emphasised that the market participants are encouraged to approach the regulator with relevant questions and take an active stance in ensuring compliance.
