RateSetter has added additional detail to its annual performance statistics to provide greater transparency; the additional details provide data on loan originations by lending type with a breakdown of consumer and commercial loans; for commercial lending the firm will now also disclose loans to property developers, small and medium size enterprises, and wholesale lenders; the changes were prompted by a request from the Financial Conduct Authority for greater disclosure on wholesale lending across the industry; the update from RateSetter also included a report on a defaulted loan that RateSetter has taken onto its balance sheet to protect investors. Source
I’m just beginning to get an understanding of why Sweden is so hospitable to startups, but so far every entrepreneur that I have met has said, with emphasis, that they are lucky to be in Stockholm, and it’s a great place to build a fintech. Here are eight reasons why I think that’s so.
1/ Foreign giants don’t bother with Sweden.
For example, while Amazon is nearly ubiquitous in the US, it hasn’t penetrated Sweden yet. Hardly anyone here as so much as ordered a book off it. That allows the Swedes to come up with their own products & services that can gain complete market share before an outside firm has the chance to. That allows Sweden to be insulated, but not isolated, by its unique language, currency and culture.
2/ Small but not insignificant market.
There are 600,000 small & mid-sized enterprises (SMEs) in the Nordics, and the big banks have pulled away from SME lending — leaving plenty of opportunity for savvy fintechs to find profits. It’s a large enough market to support a decent-sized business. And if that business does something really novel, it can then export its capabilities beyond the Nordic countries into larger economies.
3/ High-functioning, centralized institutions.
The top four banks in Sweden claim 93% market share. The oligopoly has its benefits, including its BankID system, described below. And when the banks vacate a portion of the market — as in SME lending — a significant opportunity is created.
This is a digital identification solution that is essentially ubiquitous — think of a robust KYC system accessible from each citizen’s smartphone — and allows Swedes to authenticate easily, freely, for virtually any transaction. This has broad implications, not the least of which is that frictionless micropayments are ubiquitous.
5/ Federal collections enforcement.
The government is involved in debt collection, and due to the hyper-transparency of the Swedish government, to be late on payments here has an entirely different meaning. The “payment morale” in Sweden is very high, meaning the Swedes generally have extraordinary payment integrity.
6/ Arguably the most cashless economy on Earth.
There may be pros and cons associated with being nearly cashless, but where digital lending, banking, payments and commerce innovations are concerned, a nearly 100% cashless society is a very attractive place to build.
7/ Consumers adopt early & expect more.
Due to a surprising move by the Swedish government in the late 1990s, Swedes have become an incredibly technophilic society. Watch my video for more on this.
8/ Strong national pride coupled with a commitment to intellectual prosperity.
This is just a magical combination: the Swedes are patriotic and supportive of each other, and have a long history of intellectual prowess. As a group, they are always looking for ways to excel, and are generally supportive of each others’ success.
So there you have it. Eight reasons I think Sweden punches above its weight in fintech innovation. Stay tuned for more on this very interesting nation.
Bo Brustkern is fascinated by the developments in Web3 and crypto, and how they will interact with the embedded systems of traditional finance. He is co-founder & CEO of Fintech Nexus, and operates mainly from his office in Denver, Colorado, USA.