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How the Nordic countries are reinventing finance

by Giorgi Mikhelidze 2 years ago in finance

Going cashless is the answer in the North

The past few decades have seen a massive transformation of almost every industry. The change has primarily been driven by global technological advancement. Almost every sector is now being digitalized in an attempt to meet the needs of modern society. However, the financial industry is a frontrunner in almost every country in terms of the digitalization rate.

The introduction of debit and credit cards in the 20th century marked the start of the irreversible process of the system’s modernization. Banking today is smarter, faster and more convenient than ever before. Almost every major commercial bank or a financial institution offers mobile or an online platform to its customers.

The financial industry has gone an unprecedented revolution throughout the last decade. A newly emerged niche called fintech is changing it all very fast. It simply is a combination of two words - finance and technology, marking the recent adaption. Fintech is making millions of lives around the world easier as going to a bank branch is not needed anymore to perform the majority of financial transactions or other activities. Just a single swipe or a click is enough to get money onto an account across the ocean or on the other side of the world.

Moreover, fintech is crucial for those without proper access to financial instruments. Such populations are mainly located in developing or underdeveloped nations in Africa and south-eastern Asia. The trend is clearly visible in India, where the absolute majority of people use at least one type of a fintech service despite the nation’s economic state in comparison to more developed ones. Another example is Kenya, where over 90% of people pay their utilities and perform financial transactions through mobile phones or other gadgets.

The Nordic phenomenon: reinventing the financial industry

Nordic nations have long been the leading ones in many different fields. Finland, Denmark, Sweden and Norway are some of the richest, most developed and technologically advanced nations on earth. Finland is a hub for technology, Denmark and Sweden are leading the sustainability race while Norway is a major trading destination.

The spread of the internet globally led to an increase in the volume of trading online. Forex markets allow anyone to sell or buy currencies on online platforms. The number of brokers globally is steadily rising as many people started to acknowledge the immense possibilities of trading. Norwegian Forex brokers account for the vast majority of transactions in Northern Europe. This mainly is due to the nation’s liberal financial policies and particularly the high rate of economic freedom.

However, the field in which all of the Nordic countries are leading is the digital adaption of the financial industry. This comes with no surprise as 4 of them form the most technologically advanced region in the world. Finland, Denmark, Sweden and Norway are leading the way globally in terms of cashless services available to customers. They were some of the first to move onto a wide adaption of credit and debit cards in the 1990s.

Importantly, as the world is moving forward on the path of going completely cashless, the advanced infrastructure and mindset of Nordic nations have caused them to be frontrunners here as well. Sweden has the world’s highest rate of cashless payments at over 80%. Even young adults and school kids use debit cards or other means of cashless payment to pay for goods and services. The nation is expected to go completely cashless in the coming decade. However, the government is being rather cautious as not everyone is happy with the ongoing process. The elderly population, naturally, is having a hard time keeping up with the change. In response, the government is still keeping the options open for those, who prefer to use good old cash on a daily basis.

The Nordic region also is the international financial hub. It was one fo the first major economic areas to liberalize its policies in an attempt to make the process of setting up a business easier. As a result, nations in Northern Europe have received tens of billions in Foreign Direct Investments (FDI) throughout the last decades. This is one of the reasons why the region now poses itself as one of the most advanced on earth. Without such enormous amounts of capital investments, revolutionizing the financial industry would be impossible.

These countries have managed to become global financial superpowers despite being small and insignificant on the map. Such results were only possible because of the reforms they fostered in the past. Technologies are playing a crucial role in shaping the future of the region, which might soon become the first fully cashless, digitalized society on earth.


Giorgi Mikhelidze

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