Iceland’s Fintech Revolution

Iceland’s financial sector is undergoing a dynamic shift as traditional lenders join forces with innovative fintech companies. This collaboration is transforming the way Icelanders bank, offering a wider range of services and a more streamlined experience.

Kvika banki leads the charge

Kvika Banki has emerged as a frontrunner in this fintech revolution. The bank has struck multiple partnerships in recent months to enhance its payment offerings. In June 2023, they collaborated with Enfuce to modernize their payment services, upgrade their Aur app, and introduce a new Visa credit card. This partnership leverages Enfuce’s technology to boost card usage and integrate with digital wallets like Apple Pay and Google Pay.

Another subsidiary of Kvika Banki, Straumur, partnered with Adyen in January 2024 to offer efficient payment solutions for both businesses and consumers. Adyen will act as Straumur’s card acquiring bank, simplifying commerce and improving customer experience across various channels. Straumur, a leader in Icelandic payment processing, handles a quarter of the country’s transactions, supporting in-person payments, online commerce, and mobile applications for over 1700 merchants.

These partnerships build upon Kvika Banki’s ongoing fintech efforts. The bank has invested heavily in infrastructure upgrades, developed a portfolio of specialized digital solutions, and pursued strategic mergers and acquisitions to bolster its digital capabilities. In 2021, they acquired Netgiro (a BNPL provider) and Aur (another BNPL platform). They also made their biggest acquisition to date that year, purchasing digital insurance leader TM.

Other Icelandic banks join the trend

Kvika Banki isn’t alone in embracing fintech. Landsbankinn, the country’s largest bank, established a sandbox environment in 2021. This platform allows fintech companies to develop solutions that connect with Landsbankinn’s systems, ultimately providing customers with a broader range of services. Further demonstrating their commitment to open banking, Landsbankinn partnered with Meniga in November 2023 to offer payment initiation and aggregation services. This will allow Landsbankinn customers to transfer funds directly to other Icelandic banks within the Landsbankinn app and view all their accounts across Icelandic banks in one place, simplifying financial management.

Arion Bank is another prominent player actively collaborating with fintech companies. They’ve partnered with tech providers like Lucinity and Datactics to enhance their regulatory technology (regtech) and data management capabilities. Additionally, they’ve invested in fintech companies like Leiguskjol and acquired Vordur, Iceland’s fourth-largest retail insurer, fully integrating it into their banking app as part of their bancassurance model. Arion Bank’s CEO, Benedikt Gislason, emphasizes the bank’s commitment to continued investment in Icelandic fintech startups, praising their agility and innovative spirit.

Islandsbanki is also on board with the fintech movement, collaborating with fintech companies to improve services and modernize their systems. They’ve made significant investments in infrastructure and technologies like robotics to streamline operations and reduce costs. Islandsbanki is also re-evaluating its branch network to ensure maximum efficiency.

A win-win for Iceland’s financial landscape

The collaboration between Iceland’s traditional banks and fintech companies is fostering a dynamic and competitive financial sector. This partnership benefits both institutions, allowing banks to leverage fintech agility and innovation while fintech companies gain access to established infrastructure and customer bases. Ultimately, Icelandic consumers win by receiving a wider range of financial products, improved efficiency, and a more convenient banking experience.

International Fintech Business (IFB), can help you enter the fintech industry. We can help you incorporate a company with a financial license in any jurisdiction, including Iceland, or buy an existing company. Our experts can help answer any questions you may have. Contact us today!