Iceland Innovation Week: Big things have small beginnings

Traversing its volcanic landscape, one cannot help but draw comparisons between Iceland and an alien planet. In fact, this rocky expanse served as a location for the opening scenes of Ridley Scott’s Alien prequel, Prometheus.

Iceland’s otherworldliness belies its down-to-earth approach

But this strange new world offers much more than just a convenient shooting location for those looking to make sci-fi movies. Bubbling away, this industrious nation is carefully cultivating a fintech scene that belies its population of 300,000 people.

Here for Iceland Innovation Week (IIW), FinTech Futures learned how the country is looking to muscle in on the shortlist a potential fintech founder may make when deciding where to start their new venture. Like a jewel in a crown, Iceland makes much of its geographical location sat atop a map of the globe.

Nestled in the Arctic Ocean between North America and Europe, Iceland hopes to offer the best of both worlds: the tenaciousness and business nous of the Americans melded with the social security and liberalism of Europe.

And it makes a compelling case. Icelanders are highly literate (one in ten will publish a novel in their lifetime), enjoy a robust and generous social safety net (raising a family is a doddle thanks to progressive state support), and benefit from unequalled gender parity. Meanwhile, the country is building, building, and building (plans for Reykjavik include areas dedicated to various industry sectors). These qualities provide fertile ground for fintechs and their founders.

Start small

But the ambitions of Iceland extend well beyond its borders. It bills itself as a place to found a company and test the waters before expanding internationally.

Gunnlaugur Jonsson, CEO and founder of the Fintech Cluster, says Icelandic fintechs must be “expert generalists”, and says the organisation works with other clusters across the world, rolling out products globally after they’ve been proven in Iceland.

“Because of our smallness, we’ve also been able to have more oversight and create more holistic things,” Jonsson says. For example, the Icelandic banking system had real-time payments as early as 1985, “decades” before other countries.

Digital Iceland CEO Andri Heiðar Kristinsson draws comparisons to Estonia, which took an active approach in digitalising its society and economy. “This is an opportunity for the government to brand ourselves as a technology country, both to attract business Iceland, and attract talent,” he says.

With a home market that is so small, Kristinsson says Icelandic people have to think global “from the get-go”. He draws comparisons to his time in Silicon Valley, which had the luxury of focusing on its home territory. “Here, you’re forced to be global.”

Conversely, the intimacy of the country, with its small population, has its benefits too. “We just go for it,” Kristinsson says. “If we needed help from the president, we literally used to call them, which is very unique to Iceland. We need to build on this being a small society.”

Red telephone

Presidential assistance is only a phone call away

Speaking of the president, Guðni Thorlacius Jóhannesson himself was at IIW, which only served to underscore Kristinsson’s aforementioned memory of the president.

Speaking on stage, the president, himself an historian, said that having the past in mind is essential when looking ahead. “Here in Iceland, we had a regime once that was so determined to be a force for innovation that we know it as the innovation regime,” he says.

Jóhannesson adds that the government of today is also determined to foster and strengthen innovation, much like the one in power between 1944 and 1947.

This former regime published a pamphlet, Jóhannesson says, on innovation and on the front cover were Icelandic fjords, high mountains, a fishing boat, a factory, “and huge black smoke coming from factories”.

“We should keep in mind that the innovation of today can often be the old news of tomorrow. So don’t forget the historians when you look ahead.”

For a country so steeped in history, which is also attempting to forge a place in the future, his axiomatic observation rung true.

While the land may not be so fertile, what Iceland has created and is creating is the ideal living conditions for fintechs such as Lucinity and Indó. And with the president only a phone call away, what more could a start-up need?