Financial services: Giving birth to a new kind of bank

One financial services firm in Iceland thrives by focusing on 'feminine values'.

Halla Tomasdottir and Kristin Petursdottir, the founders of Audur Capital, a securities company based in Iceland, say on their website that it took close to a full pregnancy term to develop their service offering, and another six months to come up with what makes them different from other financial services providers. “Now that we have given ?birth’ to her, we feel proud and excited,” the Founders page reads, “we are happy to share her upbringing with you.”

Such a unique approach requires an iconoclastic spokesperson. The company chose Iceland’s most famous export — the diminutive rock star Björk, who is best known for physically attacking a paparazzo and wearing a swan around her neck to the Oscars. Now Audur itself is being seen as something of an iconoclast, for emerging as a success story through Iceland’s recent economic turmoil by capitalizing on one of the most powerful trends in financial services — the fragmenting of the industry into a host of niche-targeted upstarts. The niche in this case: an investment firm run by women, for women.

Prominent Icelandic businesswomen Tomasdottir and Petursdottir founded Audur Capital in 2007 with the idea of providing financial services with an approach that places a high degree of emphasis on feminine values such as social responsibility and risk-awareness. The securities company handles a private equity fund called AuÐur I, which invests primarily in businesses that are owned or managed by women. In December 2008, the company also established a venture capital fund, called Björk. According to the company website, the Björk fund is intended for “investors seeking the business development of small companies with the objective of catalyzing the recovery of the Icelandic economy.”

To say that this is a bold objective may be an understatement. Last fall, three of Iceland’s largest banks collapsed under massive foreign debt, plunging the economy into a severe depression. A fund that invests primarily in the early stages of businesses in the country worst hit by the global financial crisis is not a usual recipe for success. According to Ken Orchard at Moody’s in London, “Iceland’s financial markets experienced a painful hammering in 2008, and the situation remains far from normal by any standards.”

In an interview with the BBC, Tomasdottir blamed the financial situation in Iceland on risk-taking by male investors. The Audur website states that Fortune 500 companies with a higher proportion of women on their management teams outperformed businesses with the lowest proportion of women in senior positions by nearly 35%.

The idea that mixed-gender management may solve some of the world’s economic woes seems to have gained traction in Iceland. Since the financial crisis, the Icelandic government, led by the world’s first lesbian head of state Johanna Sigurdardottir, has appointed women at the helm of two of the nationalized banks. Audur, for its part, put down an initial 100 million kronur in the Björk fund ($870,000) and is seeking other investors. It seems unlikely that this will be enough to rekindle the country’s economy, but it’s working for Audur — it tripled its wealth management business during last October’s financial crisis.

Besides unlocking the economic potential of female management, Audur also aims to tap into the vast private wealth controlled by women. According to its website, “48% of personal wealth in the U.K. is owned by women,” and “women influence or make 80% of the household purchasing decisions.” Audur is trying to access this pool by appealing to the much more conservative investment practices that are not only associated with a female style of business, but are those that tend to prevail in times of economic uncertainty.

These values include understanding the investment, investing in businesses with strong management teams, and having a long-term view. Indeed, Warren Buffett espouses many of these “feminine” values. To avoid the pitfalls of hubris, the Sage of Omaha kept the name Berkshire Hathaway for his company to remind him of his failed investment in the now-defunct textile firm. What are the women at Audur saying by naming their fund after an arguably crazy pop singer?