Present in 162 countries, BDO provides its clients with a single network for audit, tax, advisory and accounting services. They aim to bring original and effective solutions to their customers by challenging themselves and their business partners. Present in 70 locations across Norway, they possess strong awareness of both local market conditions and global trends. Nordic Fintech Disruptors caught up with Thomas Nielsen, Director at BDO, to take his thoughts on the current and future fintech landscape in the region.
Fintech Disruptors: As advisors and tax consultants to both fintechs and established financial institutions in the Nordic region, what changes have you seen in the market and in your business over the past year?
Thomas Nielsen: The advent of PSD2 has brought many new challengers to the fintech market this year. For established financial services companies, there’s a focus on reducing costs owing to the lower margins they are experiencing. That same pressure has led to a greater emphasis on co-operation and common digital solutions. At the same time, the industry is coming to grips with new regulatory requirements such as MIFID II, GDPR and Anti-Money Laundering legislation.
For fintech start-ups, the challenge of limited market access means that they are choosing to partner with established institutions as a means of building customer trust. Of course, that also enables the start-ups to benefit from established customer channels and the regulatory experience of larger financial institutions. Thinking about our business in particular, we are adapting to the new regulatory environment clients face, and enhancing our specialist technology skills to meet client needs.
Fintech Disruptors: The theme of this year’s report is “success”: what factors would you identify as being crucial for success for both fintech start-ups and established FIs?
Thomas Nielsen: In our experience, start-up companies that can anticipate and prepare for regulatory changes or enhanced regulatory requirements are more likely to succeed. For traditional financial institutions, we’ve seen situations in the last year where they’ve shelved new products they’ve been working on for some time, either because the market has moved on, or because a new solution has been launched that has met the customer need their new product was aimed at. This is an area in which fintechs can really help established FIs because fintech start-ups tend to be more agile than established players.
Fintech Disruptors: You’ve mentioned regulation as a changing area over the past year. How might fintechs and FIs better negotiate regulatory change, and what other areas do you see changing?
Thomas Nielsen: Working with the right partner, like BDO, that can brief you on regulatory changes and how they will affect your business is a great start. As I said earlier, some start-ups fail because they don’t anticipate how changing regulation will affect them. Equally, established FIs are often too focused on the needs of their business to give regulation proper consideration. Looking ahead, I see financial inclusion as another major area of focus as the economy becomes more digitised. It’s incredible but true to think that there are still groups in developed societies that don’t have access to a bank account or online services, and the development of products that can include these groups is surely important for the future.
Fintech Disruptors: Speaking of the future, what would you characterise as the key trends in the year ahead?
Thomas Nielsen: We’ll see an increased regulatory focus on making sure that new products and services are compliant before they come to market. We’ll also see an increased focus on developing new services that respond to people’s needs for faster and cheaper financial services. I expect established financial institutions and payment systems to start using regulatory developments to their advantage, especially when it comes to limiting access to consumers for start-ups that might compete with them. All players in the market would benefit from thoroughly mapping out existing and emerging customer needs and the regulatory landscape associated with these needs as a means of better understanding the challenges they will have to overcome in the future.