By Thomas Eikrem, EMEA Managing Director, Fencore
In his 1966 book, The Scandinavians, TIME Magazine correspondent Donald S. Connery reflected on the cultural differences across Denmark, Norway, and Sweden. While his characterizations reflect the stereotypes of that era, they highlight the enduring fascination with Nordic diversity. As someone who has lived and worked across the region, I’ve seen first-hand both the common threads and the nuances that make each market distinct.
With that in mind, Fencore, in collaboration with FundGuard, set out to explore trends, trials and tribulations in times of change and hyperinnovation, and over the last year have invited investment management professionals to roundtables in Copenhagen, Stockholm and Oslo.
Investors tend to look to the Nordics for their stability, transparency, and forward-thinking ethos. But beneath a shared veneer of robust governance and social welfare lies a tapestry of distinct approaches to mobilising, allocating, and stewarding capital.
Starting in Norway, The Government Pension Fund Global aka “The Oil Fund,” is a USD 1.9 trillion investment giant, preserving wealth for future generations, and despite a 70% global equity allocation, has a deeply conservative, long-term approach to investments. Unlike most of the world’s leading sovereign wealth funds, they do not currently invest in private equity. The investment process has a strong ethical focus that goes well beyond ESG.
The mutual fund market is dominated by a few leaders, like DNB, KLP, Storebrand, and Nordea, which together manage nearly 70% of total assets.
There are, however, a lot of smaller players emerging, especially with regard to private markets.
Denmark’s pension fund market is significant with more than USD 4.3 trillion AUM, and its many participants have evolved into some of the most sophisticated and well-capitalised in the world—especially relative to the size of Denmark’s economy. Unlike Norway, Denmark benefits from its EU membership, with regard to the regulatory framework for foreign investors.
Sweden leads in most categories across the investment management community, including pension, private wealth, alternative investments and institutional asset management. The blend of large financial institutions (SEB, Nordea, Handelsbanken, Swedbank) alongside specialist boutiques (Carnegie, Öhman, Lannebo) makes the community especially diverse, innovative and interesting, also for foreign investors.
Pan-Scandinavianism dates back to 1840, and from a finance and technology perspective we have in recent years seen several initiatives, from Nordea and DNB’s pan-Nordic robo-advisor platforms and blockchain for cross-border funds to data-sharing consortia for ESG.
The Nordic countries remain on the forefront of ESG and are responsible for 40% of Europe’s sovereign and municipal green bonds.
Scandinavian investment managers with a solid cross-border footprint include Storebrand, DNB, OP, Nordea, EQT and Danske Bank.
Maybe surprisingly, few international asset managers have a significant operation across the region.
The following subjects consistently popped up at our trio of roundtables across the Scandinavian capitals:
Seamless Data Integration and Interoperability
With technology moving faster than ever, and most of the market leading investment solutions, from portfolio management systems to investment accounting apparatuses, dating back to the last millennium, rapid integration and interoperability are considered essential to support the investment management operation.
It is recognised that legacy solutions, complex in structure, originally designed to be on-premises, and with insufficient, and often bespoke and unnecessarily complicated integration tools, will be a business bottleneck in an increasingly competitive landscape. Contrary to the occasionally clever marketing campaign, you cannot be reborn in the cloud or no code / low code with the addition of pre-configurations.
The Additional Dimensions of the Next Generation Operating Models
The simplistic Front-Middle-Back, system centric operating model has aged like the CD player, and we need to consider data, workflows, organisation and breaking down the artificial barriers between the silos.
Data Operating Model
Data is no longer a dependency, and if you rely strictly on overnight batches and manual or semi-automated corrections, you are already behind. The data-enabled investment manager constructs a system-independent data operating model, allowing for faster replacement of systems, when they are no longer fit for purpose – or not financially viable. Data is on-demand, always changing and consistent across the organisation, from research and sales enablement, via portfolio management, to investment accounting, performance and risk. Data is validated and curated and becomes an asset.
Beyond IBOR: Breaking Down the Barriers of Traditional Front, Middle and Back Office Thinking
With investment strategies becoming more complex, we see investment requirements for real-time data previously considered middle and back-office data becoming the norm. A verified, on demand, single-source-of-truth of investment accounting information is essential for best-in-class portfolio management. It facilitates better and faster decisions, powers analytics and attribution models, slashes the lag between execution and insight, and accelerates workflows.
Next Generation Component Based Outsourcing
Several Nordic investment managers went through outsourcing projects in the early 2000s, and few of them are regarded as very successful. The outsourced services didn’t live up to the expectations, or the amount of work needed to reconcile data or replicate processes eroded the anticipated cost savings.
However, times have changed. Next generation outsourcing is no longer about replacing expensive labour with cheap labour. There are considerations about knowledge, automation, control and resilience, and what generates alpha. Costs are of course still important, but it’s no longer a simplistic equation. Outsourced services have improved, mostly due to investment in technology by the services providers. We also see additional functions previously considered as core being outsourced, e.g. research, trading, OCIO, and regulatory and client reporting.
Organisation
The CTO role is relatively new and began to emerge prominently in the late 1990s to early 2000s, when digital transformation started reshaping financial services, and asset managers realised they needed dedicated leadership to navigate increasingly complex technology landscapes. The CDO role is even newer, but with the increasing popularity of a “Data First” culture, it is becoming a norm, especially among the larger protagonists. Progressive, tech-enabled asset managers have taken it one step further, establishing specific functions constantly evaluating new technologies and solutions or partnering up with leading consulting firms to explore, monitor and assess alternatives.
The Nordics have yet to fully embrace this, unlike most of their American and English peers. The rather archaic “System Administrator” role is still around, and in many cases is much more an operational than a business development role – and sometimes the last line of defence of legacy technology. However, with a generational shift in technology and operation management, this role will change with the times, as competition intensifies and technology becomes a business driver.
ESG v. 2.0
As mentioned, the Nordic investment management community remains on the forefront of ESG, ethical and sustainable investments, but the framework is changing, becoming more demanding, quantitatively speaking, returning to finance and science, because of market sentiments, high demand and new regulation. Good quality data remains a prerequisite for a successful implementation.
Cloud-Native & SaaS-Driven Architectures
The era of bespoke, in-house software is waning. Investment teams are increasingly adopting managed, cloud-based platforms to accelerate feature delivery, scale on demand and reduce total cost of ownership.
Generative AI & Agentic Architectures
Asset managers are embedding AI across the value chain—from idea generation and risk modelling to compliance monitoring. Small- and large-language models are evolving into “co-pilots,” automating routine tasks and surfacing deeper insights, all while operating within multiagent frameworks that mirror microservices in software design.
Client-Driven Customisation & Tech-Enhanced Strategies
Investors now expect hyper customised mandates powered by data-enabled insights and adaptive algorithms. Many engage regularly with asset managers on how new tech can be woven into portfolio construction and reporting.
Finally, thanks to everyone who attended the roundtables and contributed actively. Special thanks to Nykredit, Storebrand and Northern Trust for hosting at their offices.
If you’d like to join the debate and attend a future roundtable, register your interest and preferred location(s) here.
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