According to the Swedish Fintech association, Swefintech, a number of fintech companies have been refused to open corporate accounts with major banks, something the industry association cites as an obstacle to competition in Sweden.
– Access to financial infrastructure has always been a problem, but it escalated in 2020. To conduct its operations in Sweden, the payment institution needs a corporate account with a major bank and it will be a question of democracy, says Louise Grabeau, general secretary of the Swedish Financial Technology Association, if banks are allowed The major determinants of fintech companies that may or may not start.
Payment institutions that had previous partnerships with large banks were dropped without explanation in 2020 or threatened to be discontinued.
The motive is that there are risks in their business, according to Swefintech’s information.
This problem, especially regarding blockchain or cryptocurrency startups, was also highlighted by Tillväxtanalys in a previous industry report on the Swedish fintech industry.
We were informed that new players were not allowed to open accounts, she says.
Since access to the existing financial infrastructure forms the basis for the ability to operate in the market, the government needs to review in which and in what manner all different types of players should be allowed to participate on an equal footing, Swefintech believes. Restrictions on competition can also occur at the service level, for example in joint banking initiatives.
– Bank ID or Swish are very good initiatives, but since they are managed by major banks, it so happened that they excluded some companies from collaborating. We believe that the challenges associated with bank ownership of financial infrastructure should be highlighted. There is a risk that some players will be excluded from these initiatives at the bank level. You must watch it.
PSD2: All parties must comply with regulatory requirements
Sweden and the Nordic countries can be seen as leaders in implementing the PSD2 Directive on Open Banking, Swefintech believes that implementation by Swedish banks is still falling short, despite the ambition to collaborate on common standards within the Swedish API Forum at the initiative of the Swedish Bankers Association.
PSD2 is basically great and has created opportunities for third-party vendors, but the APIs of the major banks maintain high enough standards for efficient information exchange between different players. It should be clear what would be a good API. Louise Grabeau says they also have different views of what the legislation actually means.
Swedish banks say they are the best in Europe and so they are, but we would like to see PSD2 also touch on other long-term financial information, such as mortgages and insurance, to create more competition.
The European Banking Authority, EBA, has on several occasions also indicated that PSD2 has not been implemented.
– The Swedish supervisory authority should set higher requirements so that all parties covered by PSD2 meet the requirements of the regulations. For now, the situation remains unsatisfactory, which is anti-competitive for the third-party suppliers that are fintech companies. We hope this will be addressed in the EU review of the PSD2 directive next year.
Growing but still lacking an understanding of fintech
According to the latest report, members of the Swedish Fintech Association feel that knowledge and understanding of the fintech industry has increased among politicians and other people in power, but that there is still a shortage. It would be desirable for proactive action to foster innovation in the financial industry.
Overall, we believe stewardship works well, but there is a need to increase understanding of new technologies and new business models. She requires a supervisory authority that she has the mandate to work with proactively which piques her curiosity. It would be desirable that the supervisory authority, or other authority, be given a clearer mandate to work for innovation in finance. For example, the Innovation Center started during Finansinspektionen 2018, but the government has not provided additional funding for it, and FI has no mandate to work proactively while promoting innovation. One could, for example, have a regulatory protection fund like in the UK. We need to see increased interest and understanding of the fintech industry, Louise Grabeau says.
Swefintech is closely following her Investigation into the development of the payment market appointed by the government in December She hopes Anna Kinberg Batra will take into account the fintech industry perspective when the investigation delivers its final report in 2022.