Since 2012 Arion Bank has invested in 80 startup companies in various industries through the startup programs Startup Reykjavik and Startup Energy Reykjavik. Experience from running these programs resulted in the Bank starting its own internal innovation program, Startup Arion. Today, the Bank operates a digital accelerator where digital products and customer journeys are re-engineered and delivered in a 16-week process. Furthermore, other IT projects that are not part of the accelerator are now worked on using the same agile methodology.
In 2008, the three large commercial banks in Iceland went bankrupt, the local currency plummeted, unemployment rose and the state finances were in ruins. The whole of Icelandic society was impacted.
Arion Bank, one of the three large commercial banks in Iceland, chose in 2012 to start invest heavily in the local startup ecosystem. Startup Reykjavik (SR), a seed stage, mentor driven startup program (business accelerator) was formed.
Annually, ten companies are chosen from an application pool and receive $22,000 in seed funding in exchange for 6% of the equity. The program runs for three months during which the teams sit in a joint facility and meet dozens of mentors from the Icelandic and non-Icelandic business community, ranging from C-suite, investors, entrepreneurs and academia. The goal is to speed up the process where each company becomes sustainable by aiding them in producing their first Minimum Viable Product (MVP), iterate and seek continuous feedback from customers. In short, this is the lean startup methodology in a nutshell. Since inception, over 80% of the participant companies focus on niched software or hardware solutions and the remainder on various verticals.
While SR and SER both had initially a clear business and social aspect to them, it gradually became obvious that how the startups developed, shaped and implemented their business and business models was also intriguing. The time from idea to execution was admirable. Could it be done in a larger organization like a bank?
The rise of FinTech startups, as well as discussion and investment in the banking industry globally, underlined the need for new methods of innovation and implementation. Forthcoming yet somewhat distant EU regulations, e.g. PSD2, MiFiD 2 and GDPR only accelerated the internal discussion. How would the current banking model be affected? How should the Bank tackle the agile and fast moving FinTech startups? There was one way to find out. Arion Bank’s FinTech Party (hackathon) was launched in spring of 2016.
FinTech Party was a 30-hour hackathon where 11 teams hacked away in the Bank’s headquarters.
The FinTech Party needed to answer three propositions:
All three propositions were strongly confirmed.
„Startup Arion proved three things for us. Small, diverse teams could accomplish complicated tasks. The speed of delivery was much higher and feedback from customers was immediately implemented in the products“ - Einar Gunnar Gudmundsson, CEO's Office.
„The ambition is a 10X impact rather than a marginal 10-20% improvement in any given Digital Future project“ - Höskuldur H. Ólafsson - CEO Arion BankOther processes include Corporate Customer Onboarding, opening new accounts, new credit cards, spreading credit card payment, credit assessment for mortgages, mobile cash transfers, mortgage lending, online trading, pension fund services, start / change personal overdraft, change credit card limit and freeze / reopen credit cards. All solutions are fully automated end-to-end customer journeys where the customer can self-service himself anywhere and anytime.
Arion Bank is a leading Icelandic bank offering universal financial services to companies, institutional investors and individuals. These services include corporate and retail banking, investment banking, capital markets services, treasury services, asset management and comprehensive wealth management for private banking clients.
Arion Bank’s balance sheet was more than 1,100 ISK billion (€8.9 billion) in 2017. Arion Bank only has operations in Iceland. Read more about Arion Bank.
Read more about Arion bank
Situated in the North Atlantic Ocean between Europe and the United States, Iceland is a European country with 330,000 inhabitants. The capital and largest city is Reykjavik. Two thirds of the country's population live in the Greater Reykjavik area. Iceland, as other Nordic countries, ranks high in economic, political and social stability and equality.
Icelandic citizens are early adopters when it comes to technology and technical infrastructure is good where 97% of residentials have access to internet. Iceland ranked number six globally in terms of GDP per capita in 2016 according to the International Monetary Fund.
About Iceland on iceland.is
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