First established during the Hamburg Fintech Week 2019 as an event to connect the banking and fintech industry across borders, the first Building Bridges event of 2021 took place on 08 February as a digital event for well-known reasons.
As 15 months have already passed since November 2019, we were keen to once again offer a stage to the Swedish fintech scene to see what has happened since then. And a lot has indeed happened, and this despite the currently significantly more difficult circumstances for everyone.
At the beginning of the event, we spoke with Anders Norlin from the Swedish Fintech Hub Findec (www.findec.co) as well as Jan Korte from Hamburg Financial Centre (https://finanzplatz-hamburg.com/de/) about the changes since 2019. Both agreed that it was noticeable that Swedish fintechs had discovered Germany as an important foreign market for themselves. This applies not only to the big players like Klarna, Trustly or Tink, but in general. One can currently see several companies that are putting out feelers to Germany or already have concrete implementation plans ready for a market entry. Anders Norlin pointed out that, in general, the first step abroad for Swedish companies is automatically into the other Scandinavian markets. But for many, this would be followed directly by Germany and, with some reservations (keyword Brexit…), also Great Britain. This trend is also clearly expressed in the announcement that both Findec and the Hamburg financial centre are currently discussing the form of a partnership. Really good news!
Directly afterwards, the three Swedish fintechs (Markus Alin for Sharpfin / https://www.sharpfin.com/, Fabian Grapengiesser for StockRepublic / https://www.stockrepublic.io/) and Anders Martensson for Vilja Solutions/ https://viljasolutions.com/) confirmed exactly what was said in advance … Swedish Companies setting sail for Germany! The details of these 3 fintechs as well as their approach to entering the German market can be found at https://www.buildingbridges.hamburg/.
However, it can be summarized for all three that knowledge of the German peculiarities (e.g. KYC, data protection, currency) and also a local network or support are considered essential for a market entry.
As an interim conclusion, it can be stated that Germany seems to be a worthwhile destination for Swedish fintechs, among other things due to the size of the market; but what about the opposite direction? It is known that Mambu and Deposit Solutions are active in Sweden. Anders Norlin shows why it is worthwhile for German companies to look at Sweden, even if the actual market may seem quite small compared to the German home market. But due to other location factors such as the well-developed fintech ecosystem and a high degree of innovation, Swedish fintechs offer themselves to German companies as partners for product development, for example. Experience shows that Swedish fintechs need partners at their side who can solve the KYC challenge or licensing issues for a market launch in Germany, for example.
Christoph Iwaniez, CFO of bitwala (https://www.bitwala.com/de/), after a brief introduction of the company and its crypto offering, addressed the importance of customers based outside of Germany. Currently, about 40 % of the customers are not from Germany; there are also already a large number of customers from Sweden. Sweden will continue to play an important role in bitwala’s future plans, but the Swedish krona is currently still a hurdle for a comprehensive bitwala offer to Swedish customers.
Sarah Kok from the Women in Fintech Network (https://www.wiftn.com/) moderated a panel on what is the key to entering new markets.
Staffan Wegdell from AddleshawGoddard (https://www.addleshawgoddard.com/en) pointed out that Swedes and Germans in each other’s countries are always surprised that despite the proximity, there are cultural and legal/contractual differences. These should be taken into account and prepared for in the course of initiating a market entry.
Erik Bennerhult from Näktergal (https://naktergal.tech/) reported on previous experiences, especially with Germany. It is not enough to deal exclusively with the customers; one must also know and take into account the partly heterogeneous / regional framework conditions. Madeleine Af Ugglas reported that Vilja Solutions had decided to use a local “navigator” as a first step into Germany in order to get to know the local conditions, to hold discussions and to avoid possible obstacles.
Christoph Iwaniez explained that in addition to currencies that differ from the euro (SEK, GBP, CHF …), national KYC conditions posed a particular challenge. Currently, bitwala customers who are not from Germany still have to go through a KYC process based on the German requirements, which entail a certain complexity for e.g. the BankID-accustomed Swedes. Felix Magedanz from the Kiel-based start-up Hanko (www.hanko.io) reported on the current challenges; since Hanko’s path is clearly heading in the direction of internationalisation, they have to deal in detail with the regulatory framework conditions in each new country; uniform EU rules or not… In addition, it is not easy for Hanko to find and hire the necessary new colleagues at its Kiel location.
All panel participants agreed that the fintech industry is still not sufficiently diverse and that women in particular are still in a clear minority in this industry. However, companies also find it difficult to find or inspire women for vacant positions. On the one hand, we must work hard to ensure that women are finally granted equal opportunities in the fintech (and banking!) industry, but on the other hand, we must promote the fact that our industry is a great professional home for ALL.
At the end, the main findings of the BB21 event could be summarized as follows:
- bridges (symbolic of international cooperation) are needed; if not there, we need to build them.
- companies that want to enter a new market need to research in detail what awaits them on the other side of the bridge.
- ideally, there is someone waiting on the other side of the bridge to “take a company by the hand” on its way into the new market.
We are looking forward to more events in the Building Bridges series; we are already working on ideas for new regions to which building a bridge and thus an event makes sense. More and concrete information will hopefully be available soon ….