It was following a cooperation within a Vinnova policy lab initiative that Finansinspektionen’s work with policy development started in earnest. This in turn resulted in a forum for policy development that fintech companies now can turn to.
“This is not a legal advisory service as that is something we neither can, nor want to offer,” says Stig Johansson, Project Manager and Financial Inspector at FI. “It’s more about having a dialogue about innovation and how different regulatory frameworks can be interpreted. We believe this can help the companies to feel more secure, but above all I see it as a contribution to FI as an organisation as it means that we’ll be faster at joining the development that we’re seeing at the moment and thereby avoid falling behind.”
An industry where regulations control everything
Fintech is one of the industries which is seeing the most investments in innovative startups globally, and FI’s investment is further bolstering this environment in Sweden as regulations are such an important part of all fintech. Quite simply, it is reinforcing Sweden as an ecosystem for fintech services for both new and established companies without compromising the stable institutions already in place.
“Potential growth and job opportunities for highly qualified individuals are one part. The other is that this will open up opportunities for more services to be established, such as cheaper mortgages, more transparent services and more informative visualisations, which benefit consumers,” says Peter Svensson, project manager at Vinnova. “We already know that there is a great deal of experimentation with a lot of new business models and ways of structuring financial services, which are essential for changing a market.”
Elisabeth Thand Ringqvist, Senior Advisor at NTF Ventures and former CEO of Företagarna, believes that the centre is a necessary but insufficient step forward.
“In Europe today, the race to become a fintech centre is underway and we know that other countries have invested a great deal in creating shared incubators and other types of cluster collaborations. I hope that we will continue talks with both the Swedish Agency for Economic and Regional Growth and Vinnova in order to ensure that Sweden retains a special position in Europe as a fintech centre, and this is the first important step.”
She sees the innovation centre for the financial market as an important signal from the government and believes that if the people working there are attentive to what is going on, it will be simpler to understand where the market is headed and to identify points of friction.
“The lack of quick help has previously created a great deal of frustration and large demand to create some form of regulatory sandbox; a “safe” place for testing innovations within the scope of the legislation, something which already exists in many other countries.”
Since FI considered the dialogue with the agency to be the most positive aspect for the companies, it has instead chosen to focus on the innovation centre idea as this is believed to produce the greatest benefit.
“Our supervision is risk based and we want to provide all companies with an understanding of how to establish new services, what would be required in order to test them on the market, instead of inviting a small number of select companies to a sandbox.”
The innovation centre for the financial market came about as a result of the round-table discussions organised by FI last spring in collaboration with Vinnova and Transformer Design in order to evaluate the needs of fintech companies. A total of some 80 companies took part, small and large alike, both established and startups. One of the many observations that emerged was that a number of companies usually avoid any contact with FI whatsoever.
“This is something we’re trying to address, and I think that the conversation we have now started may help the companies to feel more safe. We could for example become better at explaining the opportunities and responsibilities that our various types of permits and registrations facilitate more clearly and objectively,” says Stig Johansson.
Elisabeth Thand Ringqvist finds it interesting that FI’s review reveals that there are very few instances in which the current legislation would not work.
“This means that they have really listened to the different companies that have participated in the round-table discussions. The authority has also changed tack and realised that they can have several roles – a guiding and a controlling function – which is a major step forward.