As specified in the Stockholm FinTech Report 2018, Sweden has been a leader in FinTech investments per capita in 2014/15, while the Greater Stockholm region has been in Europe’s top five regions newest published review in 2016.
Despite a positive historical track record, the breakdown of the Crowdlending payday provider Trustbuddy.se, recent troubles in the Stockholm Fintech Hub. As well as the ongoing shortage of both FinTech executives and developers have slowed the growth.
Brexit – a possibility to attract FinTech investments
Seeing Brexit as a possibility to attract even more FinTech investments and after the recent FinTech that saw PayPal invest 1.1. Billion USD into Izettle, the European leadership in total European FinTech investment value remains insight. In order to keep being a front-runner, there might be a need to clean up Sweden’s national FinTech legacy.
FinTech and traditional financial providers should increase their communication
Remember how frustrated you felt while traveling abroad and found that nobody spoke any of the foreign languages you are capable of at a specific location? This is how the majority of nearly 300 Swedish FinTech companies feel. Ongoing frustration while browsing the websites of traditional financial providers, like banks, while desiring to engage in cooperation due to a lack of information, whom to contact and what to send in.
Ventures might apply to early or too late
On the other hand, executives working on the side of the banks, while desiring to work with FinTech are often inundated with wonderfully designed pitches. Despite these high-class designs, those ventures might apply to early or too late in the development circle. Or simply miss a particular application period specified by the banks.
In Sweden and abroad, such “translation difficulties” are an example of a miscommunication. This has been going on in a process between large banks and smaller FinTech ventures. The process is defined as “intraorganisational cooperation”. Despite extensive annual plans evaluating the how, why, and if a bank should work together with a FinTech company, only a very few traditional financial providers have created potential ‘FinTech-Bank cooperation checklist’. This publicly available checklist would only need to be simple two pages long and could incorporate the preferred cooperation models, focused areas, requested financial information, desired development stage (i.e. pre-seed, series A. etcetera), as well as application duration (if any) and a phone number to a first line investment manager.
Technological integration – a structural issue
Cooperation challenges are not only connected with communication but also with the technological heritage between FinTechs and banks. Even if banks and FinTech companies do their best to cooperate, they have different ‘technological heritages’. FinTech companies have used newer programming languages like Python. The banks, on another hand, have started to create their IT systems. This within the 70’s or 80’s with programming languages like Turbo Pascal and build on top of it. Modifications to such banking systems with extensive heritages will require verification in all programming languages used previously.
FinTech companies – a smart solution for entering new markets
Despite the best efforts of the banks, the quick integration of agile apps remains both difficult and very costly. You must have heard the saying that when it doesn’t go right, try creatively to go left. Exchanging executives between FinTechs and banks or using foreign FinTech companies to enter a new market. Or offer a new service might be a smart way forward. Each individual step forward could bring Sweden into the European lead.