Nordic nation leads the way on financial innovation

Measured by its economic output per capita, Norway is one of the wealthiest places on earth (only surpassed by Luxembourg and Switzerland). Oil and gas exports have filled the nation’s coffers for decades, allowing it to build one of the world’s largest sovereign wealth funds (currently worth more than 1 trillion USD).

Meanwhile, important changes have been implemented within the country’s financial system, giving it an edge over other national economies. Here are some examples:

  • The banking sector has shifted its focus to online lending.
  • Consumers are allowed to digitally sign legal documents with a 2-factor authentication device.
  • Enhanced security, e.g. through the introduction of credit card chips and removing check payments.
  • Information is automatically exchanged between lenders and the nation’s tax authorities.

A paperless reality

In 2007 a new signature solution was introduced called BankID (a type of rudimentary 2-FA system). It consisted of a computerized chip which allowed the account holder to sign documents electronically.

As a consequence the traditional paper contracts were rendered obsolete, and banks began shifting their focus to online lending. Since then, the computer chip has evolved into a mobile app, making it easier to both store and access.

Another important step was the introduction of credit card chips, reducing the amount of fraud and theft. The reduction in monetary fraud has also been compounded by the removal of check payments from the national banking system.

A new partnership between the private and public sector

Lenders have simultaneously forged a new partnership with the public sector, leading to the automatic exchange of information. Consumers may file loan applications online and sign the documents electronically without ever setting their foot within the premises of a bank.

Loan processing times have decreased by a factor of x 10, as same-day payouts is becoming the new normal. Meanwhile, the internet has given birth to a whole new financial ecosystem. So-called “lead generators” are now responsible for the majority of online traffic to lending portals.

One example is https://www.billigeforbrukslå, a portal seeking to tear down the information silos within the nordic lending market. Their services allow consumers to compare lending rates, and the terms attached to each offer.

Less tax fraud and overhead

The nation was an early adopter of automatic information exchange between employers and tax authorities. Wages and other forms of income are automatically reported on a monthly basis.

The system has benefitted the national economy in numerous ways. Particularly through the reduction of tax fraud and money laundering.

As income numbers are automatically reported to national authorities, lenders may automatically access the information with permission from the applicant. This in turn makes it easier to assess the credit score of an individual, based on a relevant history of income. It also reduces the banks’ overhead expenditure, as documents no longer require the same degree of manual review.

More changes are coming

The automatic exchange of financial information can save national economies billions of dollars a year, while reducing the environmental footprint. Most developed nations will likely seek to fully digitalize their public sectors by the end of this decade.

Moreover, the financial industry is becoming more complex. The introduction of robots has made trading and lending more efficient, while leading to increased unemployment. We predict that this development will continue at full speed into the 21st century, and lead to fundamental economic changes.