99% of houses in Iceland have internet access. 88% of Icelandic mobile phones are smartphones. The proportion of 14–76-year-olds using digital banking is 94% in Iceland.
Iceland falls under the PSD2 legislation and has adopted Berlin Group’s NextGenPSD2 standard. PSD2 is a European Directive that regulates electronic payment services and was implemented in all EEA countries in 2016 and went live in September 2019. The Financial Supervisory Authority is the financial authority in Iceland.
In their European Open Banking league, Yapily ranked Iceland 18th out of 18 countries because Open Banking is a very low priority for regulators, and there is no guidance around implementation in Iceland. Whilst Iceland’s level of Open Banking maturity is not yet comparable to its larger and more advanced European counterparts, it has made progress with a growing Fintech scene. This, coupled with its smaller ecosystem, suggests that Iceland has the potential to move quickly on Open Banking if it should wish to in future. Yapily states that for Open Banking in Iceland to take shape, the Central Bank must move quicker in providing a set of minimum standards and expectations on how it can and should be implemented. Setting up specific legislation or a regulatory sandbox aimed at Iceland’s Fintech community would be a great place to start.
Yapily states that Open Banking is a very low priority for regulators in Iceland and there is no guidance around implementation. Iceland has a relatively small financial system. As such, industry coordination becomes easier. The regulatory bodies could move quicker in providing a set of minimum standards and expectations on how Open Banking should be implemented and then allow the industry to develop its own solutions by a specified deadline.
Fintech solutions have enabled the financial industry to change rapidly in Iceland. Icelanders are considered to have a high adoption rate of new financial solutions, and Fintech solutions are provided by both independent businesses and commercial banks. There are 25 Fintech startups in Iceland. In 2018, the Association of Fintech Companies and the Fintech Cluster were established to strengthen innovation and cooperation.
Iceland ranks high in ease of finding skilled employees.
Iceland has adopted the Berlin Group’s NextGenPSD2 technical standard.