For a country that has a population of less than half a million, Iceland has an impressively diverse tech scene that includes a number of pioneering FinTech players.
The country’s FinTech landscape can be roughly divided into two clusters; one group of blockchain-focused developers blurring the boundaries between FinTech, gaming and Web3 commerce, and on the other hand, a small community of anti-money laundering (AML) and anti-fraud startups that are pioneering the use of artificial intelligence (AI) to prevent financial crime.
With three non-fungible token (NFT) marketplaces launching in the last two years, Iceland is fast becoming an important center for Web3 commercial activity, which rides on decentralized exchange mechanisms designed specifically for digital assets and marketplaces.
What’s unique about Iceland’s Web3 startups is that they have a shared tendency to merge the features of decentralized finance (DeFi) with blockchain gaming and the growing NFT space.
For example, Supreme Finance brings NFTs into the DeFi ecosystem as more than just a gimmick, as has often been the case when DeFi platforms issue NFTs.
With Supreme, users can stake their NFTs to earn rewards. Although only a handful of NFT gaming projects are currently compatible with the Supreme platform, the idea holds a lot of potential. It means that early adopters of a certain NFT variety will have the chance to profit from any subsequent growth of the project without having to sell their NFT. Instead, DeFi-style farming rewards them with a portion of any new value injected into the system.
Iceland is also home to several blockchain gaming startups, including Legend of Fantasy War, Imperium Empires, and Nitro, each with its own native token and minting protocol, what gets called its “tokenomics” in the extended blockchain ecosystem.
In addition to that, the European nation houses blockchain startups with more obviously “financial” use cases like Monerium, a cross-chain token project that enables people to send euros between fiat accounts and crypto wallets with a “blockchain IBAN.”
But the fact that tokens from the likes of Nitro and Supreme fall into the in-game currency category doesn’t limit their value beyond the scope of gaming. For example, Decentraland’s Mana has a market cap of nearly $2 billion and can be exchanged on most of the world’s major crypto exchanges.
So, as Iceland’s burgeoning Web3 hub demonstrates, the distinction between in-game and universal currency is increasingly blurred in a world where digital assets are often more valuable than physical ones.
Using Tech to Win AML War
In the second of Iceland’s technology innovation groups, two FinTech startups stand out for their contributions to the field of AI-powered AML technology.
More on this: 5 EU Startups Making Waves in the AML Technology Space
Firstly, Authenteq has developed a fully automated identity verification platform that helps organizations comply with relevant know your customer (KYC) legislation.
The solution facilitates digital onboarding for services that need to verify users with government documents. Authenteq biometrics technology can be integrated into any app, allowing users to take a photo of their identity document and one of their face. The software then automatically verifies that the document is legitimate and that it matches the face of the person in the photo.
Related: How Face ID Can Power End-To-End Verification
The second FinTech startup shaking up the AML space is Lucinity, an AML platform that uses AI to scan transaction data for patterns and then present them in an intuitive way to industry professionals whose job it is to identify suspicious transactions and actors.
Read Lucinity CEO interview: FIs Need Collaboration AND Technology to Win AML War
In an interview with Lucinity CEO Gudmundur Kristjansson, he said that part of the reason Iceland’s FinTech scene is thriving is that two specific talent pools converge there.
On the one hand, prior to the 2008 banking crash, the country had a huge financial sector with an international footprint. Many of the professionals that worked in Iceland’s banking sector still live there today, and the country’s FinTech startups can leverage their skill set and knowledge of financial services.
The second talent pool that Iceland’s young FinTech firms have been able to draw on emerged from Iceland’s recent history as an innovation hub for various high-tech industries. Home to the likes of DNA sequencing pioneer Decode, the country also has a strong tradition of science and engineering excellence.
As Kristjansson said, “back in 2000, there were phenomenal startups that created tremendous engineering [and] data science talent [here].”
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