FinTech in Norway : the effect of FinTech on the traditional Norwegian banking sector

2017

The purpose of this thesis is to investigate the effect of FinTech on the Norwegian banking

industry. We investigate the drivers of FinTech, the current and potential Norwegian FinTech

market, and the international competitiveness of the Norwegian FinTech movement.

We identify nine segments of FinTech within the traditional banking functions Financing,

Asset management, Payments and Authentication, and we find the key drivers behind the

rapid growth of the FinTech market as changing consumer preferences and technology

innovation. Bank customers demand quicker, easier, and cheaper banking than what the

traditional banks have offered, and we conclude that the increasingly tech-savvy population is

ripe for adopting FinTech solutions. The formation of FinTech startups is facilitated by

customized and transparent regulations, access to seed and growth capital, and access to

technological and entrepreneurial talent.

Through a bottom-up market sizing of the current players in the Norwegian FinTech industry,

we find a low FinTech adoption rate in all segments except all-digital banks and

Authentication. However, Norway is positively positioned on the drivers of FinTech

development, and we forecast a significantly increased FinTech adoption within five years.

The incumbent banks are highly aware of the changes caused by technology infusion, and

they are open and proactive in developing solutions in cooperation with FinTech startups. We

believe the banks have recognized that their strengths lie in IT infrastructure, customer data,

capital access and regulatory knowledge, while the FinTechs offer innovation, flexibility and

tailored solutions. This has resulted in FinTech having considerable disrupting effects on how

banking is done, but has allowed the incumbent banks to maintain important positions.

Finally, we have assessed Norwegian FinTech’s competitiveness in the light of world leading

FinTech nations. We conclude that while there are several positive trends in Norway, there

are significant scale advantages in FinTech development, which diminishes the chances of

competing on an international level. Recent attempts at increasing the cross-Nordic

cooperation could have positive effects. We also see that although Norway will have

difficulties competing internationally, this does not exclude the possibility of individual

successes within the FinTech segments.