By Perry Le Dain, Senior Advisor at the Business Finland London, UK
The UK is increasingly looking to Finland for technology expertise as it continues to transform towards a knowledge-based service economy with a lower carbon footprint. In fact, the opportunities for Finnish tech companies to break into the UK market are now probably better than ever, especially in areas like the digital transformation and the bioeconomy.
Working as a Senior Advisor with Business Finland and hundreds of Finnish companies over the past 17 years, I have spent a lot of time talking to potential investors in the UK. These days many of them keep a keen eye on what is going on in Finland and the other Nordics. The key tech areas that currently spark investor interest include the life sciences, data centres, artificial intelligence (AI), virtual reality, fintech and IoT – all of which are areas where Finland is very strong.
The investors are a good litmus test for what’s going on in the UK economy. If they are investing in AI, you know there is a demand. Often the investors can’t find sufficient companies in the UK, so they come to Business Finland and say, “we know there is a lot going on in Finland, can you help us to find the right companies’. As a result, several Finnish companies have already had success with investment from the UK.
Finland has world-class expertise in many of the technologies that are empowering the digital transformation. In the UK, 80% of the GDP is created from the service industries, such as financial services, investment and retail. This represents huge market potential for innovative Finnish companies specializing in digital services, design and service delivery.
Despite its status as a global hub for financial services, the UK has a skills shortage related to fintech and is lagging behind in the technology that is driving those services. Commercial and retail banks in the UK are now exploring Finnish fintech solutions to bring their systems up-to-date.
Finnish companies also have smart retail and ecommerce solutions to address the challenges facing the UK’s retail sector. If you read the Financial Times, there are some fairly depressing stories about the impact that the digital economy is having on the high street. The margins of middle-ranking retailers especially are being squeezed due to the growing impact of ecommerce.
Shopping habits are changing and consumers are becoming less brand loyal. In the UK, 36% of customer journeys now begin on a website. Luxury retailers are also suffering from this trend. UK retailers are therefore actively seeking innovative ways to attract consumer footfall back on the high street, and they also need help in creating a faultless, multi-channel ecommerce experience for their customers.
Finland excels at digital service delivery and analytics, whereas the UK (population 66 million) is good at generating vast amounts of data. The UK retail market offers great opportunities for Finnish companies with advanced digital marketing and data-crunching abilities. The same applies for the UK’s financial sector and healthcare providers.
The UK is currently benchmarking Finland as an example of good practice for district heating. About 49% of Finnish homes are connected to district heating but in the UK the figure is only 2% and the majority of homes are still heated with gas-fired boilers.
The UK government has allocated GBP 2 billion for 280 district heating projects by 2020, which means that there is roughly GBP 6.5 billion (about EUR 8 billion) of operational and maintenance contracts for supply chain providers. There simply aren’t enough UK companies with the right expertise to meet this contract value. This is a big opportunity for Finland which is also attracting growing interest from the UK as one of the leading bioeconomy innovators and for its solutions to improve the sustainability of the built environment.
Finland’s tech landscape used to be dominated by Nokia which sold its mobile phone operation in 2014 to focus on the network business and is currently spearheading the development of 5G. Nokia’s enduring legacy – the massive investment in R&D that created the smart devices we take for granted today – remains very much in evidence.
Nokia is still going strong but now there are also thousands of other Finnish companies that are doing very clever stuff, many of them founded or staffed by former Nokia engineers. This is why UK companies are going to Finland to access the wealth of tech talent being incubated in cities like Tampere, Turku and Oulu.
Finnish tech companies Kone, F-Secure, Futurice and many others have proved themselves on the international stage. Healthcare, MedTech and Edutech are also important areas where Finland has a global reputation. London’s iconic buildings The Gherkin, The Shard and the Millennium Bridge were constructed with the help of 3D-modelling software developed by a leading Finnish building information modelling company. Exciting innovations and new tech success stories are emerging every year from Finland.
This year Business Finland is organising events at the Finland Trade Centre in London that highlight Finnish expertise in ecommerce, industrial internet, fashion & lifestyle, and intelligent vehicles. We are also doing many activities around healthcare and the life sciences. I extend a warm welcome to the UK companies and investors that have yet to discover the technology superpower that is Finland.
P.S. Learn more about our next Trade Mission of pioneering companies operating in the Industrial Internet and Big Data arenas, which will take place in London between Tuesday 22nd and Thursday 24th May.
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