In a new report written by Stockholm School of Economics researchers Robin Teigland and Claire Ingram, the authors shows that investments in innovative Swedish financial technology companies increased sharply last year.
Fintech is transforming the global financial industry at a rapid speed and there is a strong interest from investors in the sector. The growing sector has attracted investments at an estimated USD 12.2 billion globally in 2014 as well as interest in a number of regional hubs, being Silicon Valley, New York, London, Stockholm, and Australia.
Stockholm is one of Europe’s largest hubs for the financial technology sector according to the report. We are not surprised. Ever since disruptive innovation through financial software technology was pioneered in Sweden by companies such as Front Capital Systems, Trema Treasure Management, Interbizz and ORC, the sector has been strong.
The pioneering companies nurtured a cluster of talented financial engineers, software developers and sales executives that has brought the innovations to the global financial industry. When I worked in Trema Treasury Management in the 1990s, we added a large number of the global Fortune 500 companies to our client list. In those days fintech was very much about the institutional side of the financial industry.
In Trema, we developed the software that runs the European Central Bank, large trading departments and major asset management operations of banks like SEB and Citibank and such as ADIA Investment Authority. Today such backbone software is mainstream. Today new Fintech from Stockholm is more about retail solutions, with companies like Klarna, izettle and Trustly.
A recent report commissioned by Nasdaq OMX in Stockholm and the Stockholm Chamber of Commerce titled “Growth Stockholm: The Financial Ecosystem as a Growth Engine” highlights how the Finance Sector contributes 5 percent of Sweden’s GDP and two percent of its employment but is the fourth largest sector in terms of value in the Swedish economy. Topped by only the Retail, Construction and Business Services sectors, the Swedish Finance and Insurance sector was valued at SEK 147 billion in 2013.