Stockholm is a major hub for Fintech, attracting about one fifth of all European FinTech investments and can pride itself in being the home of successful FinTech companies such as Klarna and iZettle. In order to maintain its position as a European FinTech center, the Swedish Government has given the Financial Supervisory Authority an assignment to facilitate FinTech innovation. This has resulted in a FinTech Regulatory Sandbox where FinTech companies can bounce off their ideas and seek guidance directly with the regulators.
The Swedish Financial Supervisory Authority (Sw: Finansinspektionen) (the “FSA”) received an assignment from the Swedish National Innovation Council (the “Council”) in May 2017 to investigate how the FSA could handle questions and needs of financial businesses offering new and innovative services. The Council is tasked with advancing Sweden as a country of innovation and strengthening Sweden’s competitiveness. The Swedish Prime Minister Stefan Löfven chairs the Council, which consists of five ministers and ten advisory members from the business and research sectors.
The Council has pointed out the importance of putting in place public processes, rules and policies that facilitate innovation. Public regulations and government processes are not always adapted to the fast paced technical development. This may obstruct innovation and pose obstacles to innovative companies.
“We want to facilitate for new companies to start, grow and act within the FinTech sector”, says the Swedish Minister for Financial Markets and Consumer Affairs, Per Bolund.2
The assignment to the FSA is part of the Council’s mission to support innovation. The innovation center will serve as the natural first point-of-contact at the FSA for FinTech companies that are unsure of the rules, processes and principles that apply on the financial market in conjunction with innovation. The objective of the center is to make it possible for companies to receive the information they need to progress in a quick and simple way. The center will also arrange and participate in seminars and similar events.
The sandbox will also improve the FSA’s possibilities to follow the developments on the financial market. The FSA becomes a natural part of the discussion when its regulations and processes are perceived as unclear in light of an innovation. This should contribute to better supervision and further enhancement of consumer protection.
Matthew Argent, founder and CEO of the Stockholm FinTech Hub, which was launched in February 2017, made it his personal mission to include the FSA in early discussions around the formation and role of the Fintech Hub as the FSA’s participation and support is a prerequisite for innovation to reach the critical mass.
By launching the Regulatory Sandbox, the FSA seems to have taken great steps towards facilitating FinTech innovations, which in turn should work in favor of Sweden’s possibilities of advancing Sweden as a country of innovation and strengthening its competitiveness