Denmark’s fintech ecosystem has made remarkable strides over the past years, driven by a combination of talent, investment and robust community support.
However, to maintain its upward trajectory and remain competitive, Denmark must modernize its regulatory framework and foster closer collaboration between startups, regulators, and industry stakeholders, according to Steen Lund Olsen, Vice Chairman of the Financial Services Union Denmark and Chairman of Copenhagen Fintech.
“The growth layer for Danish fintech is not just sprouting; it has truly taken root, so now it’s about creating optimal conditions to strengthen it. Not just nationally, but also in relation to competition from abroad,” Olsen told Nordic Fintech Magazine. “We have a huge potential, and it would be a shame if it, so to speak, should slip through our fingers.”
Olsen noted that while the Danish fintech environment is growing, with innovation creating many new and exciting companies, outdated legislation is hindering opportunities for expansion. He pointed out that startups in Denmark are immediately bound by the Financial Business Act, which imposes significant legal burdens that can deter investors.
Olsen warned that rigid rules may undermine future growth, with Denmark risking to fall behind more agile fintech hubs in the US and Asia where regulatory environments are more favorable, with simpler compliance and higher investor confidence.
“I am well aware that it is a balancing act because we must not compromise on all laws and regulations, but in my view, there should be an opportunity for startups in the fintech environment to cautiously get started and be allowed to test their business ideas and concepts, for example, in a closed sandbox environment. Preferably in cooperation with the authorities,” Olsen said.
“Too many of the new companies struggle with the rules, and I think it’s a shame when, from a business policy standpoint, Danish fintech is specifically highlighted as a position of strength.”
To address these challenges, Olsen called for better collaboration with authorities, and enhanced partnerships between fintech startups, the established financial sector, as well as unions like the Financial Services Union Denmark. He advises for a more flexible and business-friendly regulatory approach that would still nevertheless ensure necessary oversight.
A thriving fintech ecosystem
Denmark has rapidly established itself as a force in fintech, transforming from a nascent player to a leading ecosystem within less than a decade.
Between 2015 and 2022, the number of people employed in fintech in Denmark surged more than sixfold, soaring from just 700 to over 4,300, according to Nordic Fintech Magazine. Today, the fintech workforce surpasses that of the entire local insurance industry.
This growth is mirrored in the number of companies: Denmark now hosts around 350 fintech firms, making fintech the country’s largest tech vertical with a 17% share, data from Copenhagen Fintech and Tenity show. The sector also leads in venture capital (VC) activity, accounting for 32% of VC investments between 2021 and 2023.
Global consultancy McKinsey ranks Denmark among the leading European countries for fintech companies, alongside the UK, Sweden, Ireland, the Netherlands, and Switzerland. Denmark ranks third regionally in fintech funding per capita, following Sweden and the UK. This indicates strong investor interest and confidence.
In terms of fintech companies per capital, Denmark ranks fifth in Europe, suggesting a healthy and active ecosystem of fintech companies relative to its population.
Denmark’s fintech leaders
Underscoring Denmark’s fintech success are its two unicorns. These billion-dollar startups both hail from the fintech sector, highlighting the space’s dominance in the country’s startup ecosystem, data from CB Insights show.
The first unicorn is Lunar, a digital challenger bank valued at around US$2 billion. Lunar offers banking services, in addition to savings, payments, and investments products, serving more than 900,000 private and business customers across the Nordic region. The company has raised about EUR 50.9 million
Denmark’s second unicorn is Pleo, a business spend management worth a reported US$1.62 billion. Pleo provides European businesses with various spend management tools including company cards, employee expense reports, as well as credit products. It has raised more than US$430 million in funding to date, and claims over 37,000 business customers.
Other prominent fintech startups from Denmark include Inpay, a company that specializes in cross-border payments, ViaBill, Denmark’s leading buy now, pay later (BNPL) provider, and Cardlay, a spend management platform.
Featured image: Edited by Fintech News Nordics, based on images by Kajikom and sitthiphong via Freepik