Creative economy and innovation

One of our key focuses at Arion Bank is to help stimulate a flourishing and creative economy. In recent years we have collaborated on a wide range of stimulating investment projects with our customers. We are committed to supporting entrepreneurs and we nurture innovation and growth through partnerships with selected partners.

A well-functioning financial system is one of the fundamental pillars of society, being vital for investing money and for funding the projects society wants to undertake. It is a prerequisite for economic growth and is important for all areas of society.

Our role is to facilitate the flow of funds from savers, institutional investors and other investors to households, entrepreneurs and companies who require funding to realize their ideas. Our goal is to perform this duty responsibly and effectively. We aspire to be a reliable investment partner, whether the customer is someone intending to buy a family car or a house or whether it is a company making a major investment. This is how we lay the foundations to our customers’ prosperity and stimulate more investments, development, economic growth and a creative economy.

We also firmly believe that cultivating innovation has a positive impact on society and we are therefore committed to supporting innovators, something which includes providing them with advice and access to funding and by supporting companies with their product development.

Arion Bank’s commitment to innovation and active participation in the development of a creative economy, as well as responsible banking, supports two of the UN’s sustainable development goals, namely goal number 8 on decent work and economic growth, and goal number 9 on industry, innovation and infrastructure.

Innovation

In recent years the Bank has directly invested in a number of startups and related projects. Arion Bank has furthermore taken part in a range of events linked to innovation and in 2020 was one of the partners of Innovation Week which organized a hackathon during the autumn.

The challenge set out by Arion Bank in the hackathon was for participants to devise methods to calculate customers’ carbon footprints and help them reduce their negative environmental impact. Six teams submitted stimulating and ingenious solutions. The winning team was Gamithra Marga and Eyþór Máni for their solution Green Fund.

The jury decided unanimously that Green Fund was a creative solution which provided clear benefits for all parties involved, i.e. financial institutions, customer and, not least, the environment. The winning presentation can be seen here.

A culture which nurtures innovation

The environment for financial institutions is constantly evolving. The focus on innovation is therefore vitally important throughout the Bank in order to respond to changes and to improve the Bank’s ability to compete in the long term. We continually examine whether the current methodology behind products, services and processes is the best way to achieve success and this approach represents a key component of the culture the Bank seeks to nurture.

It’s vital that innovative ideas are handled effectively at every stage of the process, from analysis, to development and implementation. The Bank works on seed investment programmes and related investments in a cross-bank team which collaborates on decisions, development and implementation.

Supporting entrepreneurs

Arion Bank has supported entrepreneurs in diverse ways, through business accelerators such as Startup Reykjavík and Startup Energy and by investing directly in startups. The Bank has endeavoured to help create an environment where entrepreneurs can receive advice and guidance from experienced mentors in order to realize their ideas and thereby create new business opportunities.

During the year Arion Bank enjoyed a very productive partnership with Controlant, an information technology company which develops software with a special focus on the pharmaceutical industry. Controlant plays a key role in the distribution on the COVID-19 vaccine, and the company has designed real-time solutions to monitor the temperature and location of temperature-controlled products during transportation and storage.

At the beginning of 2020 Arion Bank managed the placement of ISK 1.3 billion convertible bonds to finance the company’s operations. In the second half of the year Controlant secured $15 million in Series B funding to drive the company’s market expansion. Following a heavily oversubscribed sale process the company had issued share capital of ISK 2.3 billion.

Arion Bank also arranged the sale of an 11.33% stake of the second largest shareholder in the company, Frumtak. The total estimated sale value was approximately ISK 2 billion.

Strategic partners

Enhanced service to people on the rental market through Leiguskjól

Leiguskjól is an excellent example of a partner selected by the Bank to support the services offered by the Bank. Leiguskjól participated in Startup Reykjavík in 2018, and the Bank invested in the company, acquiring a 6% interest. In 2019 the Bank entered into a partnership agreement with the company and increased its investment to 51%. The investment and partnership agreement with Leiguskjól clearly demonstrates the Bank’s commitment to stepping up its collaboration with fintech companies, where the aim is to utilize the Bank’s core strengths and to combine it with the focus and dynamism inherent in innovation.

The company performed well in 2020 and is a prime example of a fruitful partnership between a fintech company and a bank which leverages on each other’s strengths. Arion Bank sees plenty of opportunities to advance its partnership with Leiguskjól in the future and will draw on the experience it has gained to work with other fintech companies.

Eyrir Sprotar – investing in startups

Arion Bank, in cooperation with Eyrir Invest, runs the venture capital fund Eyrir Sprotar slhf. Eyrir Invest and Arion Bank are the fund's largest shareholders. The fund is worth ISK 6 billion and has invested in 11 companies.

Advancing innovation on the financial market with the Fintech Cluster

Arion Bank is a member of the Fintech Cluster, an organization designed to advance innovation in the financial sector. The Fintech Cluster also runs an innovation centre and organizes a range of events.

Supporting young entrepreneurs

The Bank is one of the main sponsors of Junior Achievement Iceland. The role of this organization is to prepare young people for the future and to improve their skills for the job market and by promoting education in innovation, entrepreneurship and business at secondary school level. In 2020 it organized a competition for secondary school students which gave students the chance to experience innovation first hand in the classroom.

A total of 113 companies were founded in the competition and the winner was Dyngja, a company set up by students from Verslunarskóli Íslands. They went on to represent Iceland at the JA Europe Company of the Year Competition which was held digitally this year. Dyngja is an investment app which enables users to invest in the Icelandic stock market using artificial currency.