Sweden has managed to turn itself into one of Europe’s leading fintech centres thanks to a rush away from cash, good digital infrastructure and skills. Swedish payments start-ups Klarna and iZettle have both attained unicorn status.
The next company to watch out for could be Tink, which is already Europe’s largest open banking company and has drawn interest from the likes of Mastercard and PayPal.
Valued earlier this year at €415m, Tink’s platform allows banks across Europe to offer their customers a better mobile experience by, for instance, grouping all their different accounts together or showing them data on how they spend money.
Daniel Kjellén, Tink’s chief executive, tells #fintechFT that the company he co-founded in 2012 is aiming to be the “rails and brains” of open banking.
“Rails” refers to the connectivity to allow account aggregation, potentially bringing together accounts from several different banks. Mr Kjellén says one bank told him when Tink first started that he would “go to jail for it”. Since 2016, however, it has been part of European law.
“Brains” is Tink’s attempt to allow its customers to get as much information out of the data as possible, be it through financial planning, credit scoring or data visualisation.
Fintechs have enjoyed mixed fortunes during the Covid-19 pandemic, but for Tink it has been positive. The Stockholm-based company does not reveal financial figures (although it is lossmaking), but Mr Kjellén said that the second quarter had been its best ever for new sales as coronavirus accelerated “the two megawaves we’re trying to trailblaze” — the move from closed to open banking, and the move from analogue to digital.
Mr Kjellén says that Tink is happy to be based in Stockholm and follow in the wake of Spotify and Klarna. But many of Sweden’s biggest tech successes have sold out. iZettle was bought by PayPal two years ago, and Mojang, the developer of Minecraft, was snapped up by Microsoft.
Others, such as Spotify, have seen their centre of gravity move more towards the US.
Tink has had its suitors. It raised €90m in January but also held shortlived talks about a buyout from Mastercard around the same time, Sifted reported. Mr Kjellén is clear that the open banking sector is fragmented and ripe for consolidation, and that Tink wants to play “an active part” in that. But he also concedes that iZettle sold out because “they saw an opportunity to take the company to another level”.
He stresses that the latest round of fundraising means Tink does not need to raise more money for some time. Its shareholders include PayPal and banks such as SEB, Nordea and ABN Amro. But Mr Kjellén adds: “This opportunity is global. Eventually you will need to invest $1bn. I’d love to invest heavily in other parts of the world. There is an opportunity to raise more money to accelerate growth.”
Visa shocked the fintech sector around the same time as the January fundraising by buying Tink’s US rival Plaid for $5.3bn, while Mastercard snapped up the real-time payments business of Denmark’s Nets Group for $3.2bn last year.
If Tink’s growth continues — Mr Kjellén said it was close to doubling its sales each year — then the Swedish start-up is likely to remain a target for big US financial players.
Quick Fire Q&A
Company name: Eqvanta
When founded: 2008
Where based: Moscow
CEO: Andrey Kleymenov
What do you sell: Alternative finance and financial technologies.
How did you get started: We started as a microfinance organisation. We were the first in Russia to offer payday loans.
Amount of money raised so far: $61m
Valuation at latest fundraising: $73m
Major shareholders: Yuri Provkin and the Strategy private equity fund.
There are lots of fintechs out there — what makes you so special: We provide quick access to finance for unbanked people through our scoring system, which uses more than 10,000 variables.
Further fintech fascination
Wirecard fallout: The Financial Times reports that Germany is to make sweeping reforms to financial regulation following the collapse of Wirecard. BaFin, the financial regulator, will be given powers to intervene “directly and immediately” in public companies. Meanwhile, says the FT, former Wirecard CEO Markus Braun has been accused by Munich prosecutors of committing a multiyear fraud.
Follow the money: The Financial Times reports that Revolut has raised $80m from US investor TSG Consumer Partners, resulting in a $5.5bn valuation. It will use the money to expand its US business and its recently-launched rewards programme. Revolut is Europe’s joint most-valuable private fintech company, alongside Sweden’s Klarna. However, Revolut is saying goodbye to Richard Davies, a banking veteran brought in a year ago to strengthen its governance, who is leaving to join a new banking start-up called Allica Bank.
Follow the money (2): US-based insurtech Hippo has raised $150m in a Series E funding round that values the company at $1.5bn, reports The Insurer. The money will be used to expand — Hippo hopes to reach 95 per cent of the US homeowner population in the next 12 months. Chief executive Asaf Wand told Bloomberg that the company would be ready to go public in 2021.
Follow the money (3): Hippo is not the only insurtech to have its eyes on a flotation. Policybazaar, the India-based insurance price comparison site backed by SoftBank, is aiming to go public in 2021 with a valuation of over $3.5bn, according to Bloomberg. But before it floats, the company is planning a $250m financing round.
New frontiers: Competition in Indian insurance is heating up. Techcrunch reports that Amazon has started offering car and motorbike insurance in the country, teaming up with Acko General insurance. Amazon is also planning to offer cover for health, flights and cabs.
#fintechFT will be taking a break in August and will return in September. Have a good summer.
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