Näktergal is the Swedish fintech startup propelling mortgages to infinity and beyond.
Founded in Stockholm in 2015 by two banking industry veterans, Erik Bennerhult (CEO) and Mikael Abrahamsson (COO). Erik and Mikael wanted to transform inefficient and outdated lending systems. Erik has been building bank lending systems for over 20 years, and Mikael has been building financial institutions for more than 30 years.
In previous roles, Erik and Mikael struggled to find a system they were happy with; an easy-to-use, automated, and cutting-edge system. After years of developing banking systems inside banks and gaining deep insights into industry complexities in technology, processes, and regulatory requirements, they decided they would change things.
“At Näktergal, we are passionate about building innovative SaaS technology to help fintechs, banks, challengers, and lending institutions scale seamlessly and stay competitive in today’s complex and ever-changing market. Essentially we build the skeleton of the financial system. And because each customer is unique, we use APIs to customize solutions based on their specific needs.
We take care of the entire infrastructure system, from customer onboarding and credit scoring to beautiful UX. So our customers can focus on what’s most important. Developing their core business.” stated Näktergal’s CEO, Erik Bennerhult.
The fat and happy fallacy
Most banking system infrastructure is legacy - it’s old and rigid. Parts of it were even built in a pre-internet time, in a world with more straightforward analog challenges than today’s digital ones. Modern lending requires digital solutions that comply with stringent regulations.
All financial institutions require substantial IT infrastructure. This infrastructure can be built in-house, but this is incredibly resource-intensive. According to Erik’s experience, roughly 90% of IT projects in this field ultimately fail. Moreover, if the project succeeds, there is a risk that the infrastructure is suboptimal and not secure enough to fulfill the financial sector’s stringent compliance requirements. Herein lies a significant decision, to build in-house or outsource.
“There are two major challenges in this shift to digital banking…
1) Being fat and happy. Banks going online meant they initially built systems that were good enough at the time. But after a while, they got stuck in this ‘good enough’ fallacy, and as they grew, it became increasingly difficult to change.
2) A wave of regulation makes it challenging to stay up-to-date on reporting and system requirements. Systems built 30 years ago have no chance of meeting the modern stringent data requirements.” Erik summarised.
Näktergal is uniquely positioned to solve these challenges. The entire core team has come from inside the finance industry, whether technical or commercial. Having seen where finance has come from, they see more clearly where it is going. According to Erik, building a technical solution isn’t the complex part. Understanding the regulation and marrying the two is key to success. That’s why they, on top of their SaaS offering, also provide consulting services to help fintechs and banks tackle the regulation jungle.
Revenue from day one and taking on mortgages
Näktergal’s journey is unique because they had a paying customer from day one. GCC
capital commissioned Näktergal to build a new system for unsecured lending. This provided the team with financial stability and immediately validated the business idea. In Mikael and Erik’s previous in-house roles, building a lending system typically took up to a year, even with a team who knew exactly how to build it. Now they have cut that time down to a couple of days.
“We are skilled craftspeople and experts. We know what works and how to build it. Focusing on what we are good at provides the best possible solutions to help our customers succeed. We serve our customers best by sticking to our high-tech sweet spot of building the best possible skeleton, if you will,” commented Erik.
One of the biggest challenges Näktergal has faced is its expansion from unsecured lending to mortgages. Mortgages are a much more complex lending product than what is required for unsecured lending. Not just from a technical standpoint but also a regulatory and emotional one. It is tied to one of the most significant consumer purchases, which means emotions run high.
According to Erik, in the world of fintech the mortgage market is most in need of disruption as it’s typically the most outdated and requires profound changes to modernize. Moreover, mortgages are also where banks can improve efficiency, ultimately reducing overheads and saving consumers money.
Näktergal set out to tackle mortgages by building a highly automated standardized system and estimates that their digital mortgage platform is 10x cheaper to operate than the typical legacy system. This could save the €7 trillion EU mortgage market more than €13 billion per year.
The Mortgage Business Act of 2016 saw many new players enter the Swedish market with whom Näktergal signed partnership agreements. The company took a chance that this new regulation and new market players would boost the mortgage market. Although market growth hasn’t materialized as expected, due to the difficulty new entrants have had with securing sufficient funding. Näktergal believes this will shift in 2023. And the company is ready to capitalize on the upcoming second wind.
Advice for other startup CEOs
Having gone through the twists and turns of a startups journey, Erik’s advice to other CEOs is to fail fast;
“Many say this, but it is important to kill your darlings. That’s the best advice I’ve received and a philosophy that we live by at Näktergal. Of course, it is not always easy to balance this mindset when building and analyzing what’s working and not. But when it’s not working, make fast decisions and try something new. You can’t control market conditions, but you can impact how you react to it”.
Although the market volatility has been challenging this year, Näktergal’s future looks optimistic. They are working towards preparing for the forecasted mortgage market boost in 2023 and redirecting from a growth-focused to a profitability-focused mindset of achieving break-even. They also have a good flow of new customers.
“We have a proven track record of onboarding new customers quickly. We gladly welcome financial companies within the unsecured lending and mortgage market looking for an experienced partner to help them get up and running quickly or grow securely,” concluded Erik.
If you are interested in learning more about Näktergal, please reach out to Erik at