Nordea to introduce crowdfunding service to the market

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16-04-27 10:07 | About Nordea | Digital banking

Nordea will be the first bank in Finland to offer its customers an equity-based crowdfunding service. Nordea has developed an online Nordea Crowdfunding service platform that will match entrepreneurs seeking financing with investors. In contrast to other service providers on the market, Nordea's service will be linked to the book-entry system. The service will be introduced to the market within the next few months.

Crowdfunding is a way of obtaining financing for a company or a project from a large number of investors. The funding can be in the form of a loan, donation or a subscription for shares. Nordea's

crowdfunding service is equity-based, which means investors subscribe for a company's shares in a share issue.

- Successful businesses are a benefit to Nordea and society at large. Finland needs growth, entrepreneurship and new innovations. We aim to support this trend by bringing together companies looking for crowdfunding and investors interested in such companies, says Sampsa Laine, Deputy Head of Banking Finland at Nordea. Laine is in charge of Retail Banking Finland's operations that serve small and medium-sized companies.

Crowdfunding gaining rapidly in popularity
Crowdfunding is currently growing vigorously across the world as a form of financing especially for startups and rapidly growing small companies. The popularity of crowdfunding is rising quickly in Finland, too. In 2015, crowdfunding was used to raise close to 85 million euros for various projects, an increase of almost 30 million euros on the previous year.

The Finnish Parliament is currently processing a government proposal for a crowdfunding act that will create a consistent set of rules for crowdfunding in order to allow this form of financing to operate and grow in Finland. Another aim is to clarify the responsibilities of various authorities in supervising crowdfunding, improve investor protection and diversify the financial markets.

- The proposed act is excellent news for Finnish growth companies, as I believe that corporate financing needs a well-functioning investment-based capital market to complement bank financing and public funding channels, says Laine.

For businesses, crowdfunding offers a flexible financing opportunity with a light structure to complement other financing alternatives. Crowdfunding often also involves certain communal features, as it allows companies to test new ideas, engage their stakeholders and grow their networks. For an investor who recognises the risks involved, crowdfunding offers a way to directly support new Finnish innovations and growth in Finnish companies.

- Unlisted growth companies involve a high risk of losing the entire investment. On the other hand, for investors who understand this risk, crowdfunding offers an opportunity to jump on board exciting growth stories and to own shares in companies close to their heart. Moreover, you can become an investor with just a small sum, says Sebastian Wikström from Nordea Markets’ Alternative Finance Solutions.

Crowdfunding projects will not fall within the scope of Nordea's investment advice, nor will Nordea provide investment recommendations related to participating companies, as Nordea will take the role of an intermediary between companies seeking financing and investors. Nordea has developed its online service in cooperation with the central securities depository Euroclear Finland and the Finnish software company Futurice.

- Digitalisation enables us to provide new services very cost-efficiently and with extremely high quality. A good example of this is that our crowdfunding service is linked to the book-entry system, making it easier for investors to gain a good overview of their investments when they are all in one place. We wish to be a pioneer in the transformation of the financial market in Finland and the Nordic countries, Wikström sums up.

For further information, please contact:

Sampsa Laine, Deputy Head of Banking Finland, tel +358 50 555 9035

Sebastian Wikström, Alternative Finance Solutions, Nordea Markets, tel +358 50 436 8694

Anni Hiekkanen, Chief Press Officer, tel +358 9 165 42320

For more information on the proposed act, go to: www.vm.fi

Follow Nordea Crowdfunding on Twitter.

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