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Swedish FinTech – The Rise of a Giant

Swedish FinTech – The Rise of a Giant

Swedish fintech is on the rise; the sleeping giant has been awakened. Investments in Swedish companies offering technical solutions to the finance industry – fintech, are among the highest in Europe as a new report from the Stockholm-based School of Economics has shown.

Payment service giants like Klarna, Trustly and Izettle have made the sector more accessible in recent years as investments in the industry are among the highest in Europe. This is evident from a new report made by Michal Gromek, a researcher in fintech at the Stockholm School of Economics. As Sweden has a small population which enables fintech contractors to aim for an international market right from the start – it’s a beneficial trait to have in an exciting industry.

According to the report itself, \’\’growing investments from the banking FinTech ventures, launch of niche FinTech VCs companies, two reviews of current regulation done by the government itself with the goal to facilitate a more efficient financial ecosystem for FinTech companies and there is a high potential for an overall growth of FinTech companies in comparison to other locations\’\’. It is, therefore, safe to say that the government is doing all it can to promote it in the country.

But a limited legislation and lack of competence restricts the sector substantially. Can more be done?

Since 2010, more than SEK 7 billion has been invested in the Swedish fintech sector. 94 percent of the investments are concentrated in the Stockholm region. Between 2009 and 2017, the number of registered companies in Greater Stockholm increased by 450 percent.

Overall, London is the European city where investments have seen the greatest amount.  According to a study which  compared 145 European cities, in 2016, it invested almost five billion crowns. Stockholm is currently in fifth place with investments of almost one billion crowns. If this was measured relative to population, Stockholm would be at the top. 

Between 2013 and 2014, the Swedish fintech sector grew by 75 percent according to the number of registered companies. One likely reason was that the well-known companies such as Klarna, Trustly and Izettle, which offer different types of payment solutions for individuals and companies, received major investments over time. This may have inspired others to enter the industry.



Exports of Swedish fintech are currently limited. Some Swedish companies that succeed internationally are formerly Izettle, who prepares a listing and payroll Klarna. The largest include Nasdaq, which has exported its systems to stock exchanges around the world.

Even the Nasdaq Challenge Cinnober has long been targeting an international market and has exported to countries like USA, Japan and the UK. According to Michal Gromek, the biggest challenge lies in finding the right skills.

Here is the opportunity to see how universities can meet the need for labor in the area, where there is a need for collaboration between different sites offering technical and financial education, Michal Gromek considers.

Fintech, or financial engineering, is a way to offer financial services through modern technology. Payment companies Klarna and Izettle are examples of fintech companies. Included in this term are companies that deal with payment solutions, block chain technology and Payment of things (linked products that contain payment solutions).
This year, there are two new EU directives that draw on the financial sector gaming plan and thus affect many fintech companies: Mifid 2 and PSD2.

Mifid 2 is a directive introduced on January 3. The aim is to strengthen customer protection and increase transparency in the financial market. The rules should also make it easier for investors to compare different services.

PSD2 changes the rules for electronic payments to improve competition and security in the banking market. For consumers, it is easier to use other financial services than banks. The directive will not enter into force until May of this year.

It\’ll be interesting to see how Sweden can hold on to its position as a rising giant and spearhead the way to the top. The situation, for the moment looks promising with \’\’an added meatball\’\’ but the dish is not served without potato mash, so they would need to add an extra foundation in regard to government support and incentives for growth, so that a firm European leadership position can be achieved. 

Daniel Vice

Evolveraalways changing, always evolving

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