Open Banking in Sweden

Open banking in Sweden

In September 2019, PSD2 went live in the EEA. Sweden’s capital is a major fintech hub with about one fifth of all European fintech investments and major Swedish banks already offer open banking.
 

What is Open Banking and PSD2? 

Open banking is banking practice that securely shares financial information such as consumer banking, transactions and other financial data to third-party financial service providers (Estevez, 2020). Sharing data is done through the use of application programming interfaces (APIs) and only with the consent of customers (The Balance, 2020). Open banking is the drive behind both innovation and competition in the financial industry (Cahill, n.d.). 

PSD2 is a European Directive that regulates electronic payment services, was implemented in all EEA countries in 2016 and went live in September 2019.
 

Open Banking in Sweden

In Sweden, everyday banking services are almost exclusively performed online making it the norm (Nilsson, 2020). Furthermore, Swedes use non-cash payments more than most other Europeans (Nilsson, 2020). Thus, the use of cash is declining and Sweden is quickly moving closer to a cashless society. 

Sweden’s capital is a major fintech hub with about one fifth of all european fintech investments and is the home of successful fintech companies such as Klarna and Swish. Swish, which is a real-time account-to-account transfer app, was launched in 2012, has 7.5 million uses, or 70% of the population (Nilsson, 2020). 

To ensure its place as a European fintech centre by facilitating innovation, the Swedish Government has implemented a fintech Regulatory Sandbox, which enables fintechs to test their innovations without the risk of infringing on regulatory requirements(Oxhammar & Nilsson, 2018). 

Of all Swedish citizens using the internet, 87% use the internet for online banking, which is 21% above the EU average (DESI, 2020, 9). Additionally, on integration of digital technologies, Sweden ranks 6th among EU countries (DESI, 2020, 10). Furthermore, Sweden ranks 10th in the EU for digital public services (DESI, 2020, 12). 

Sweden has a total of 125 banks, the largest of which include SEB and Swedbank (Nilsson, 2020). 

How does Open Banking Work?

Open banking uses an API that allows financial institutions to exchange financial data, usually through a third party-developed application (Estevez, 2020). These applications are developed by up and coming FinTech companies with the mission to improve digital banking.

To access and use the open banking APIs in Sweden, you will need to acquire an account information service provider license, issued by the relevant authority. Furthermore, you will require a relevant certificate (QTSPs or eIDAS), compliant with PSD2 requirements. Alternatively, you can use an open banking platform, such as Nordigen

References

The Balance. (2020, October 11). What Open Banking Is and How It Will Affect You. https://www.thebalance.com/what-is-open-banking-and-how-will-it-affect-you-4173727

Cahill, H. (n.d.).InvoiceFair. The Evolution of Open Banking: Connectivity breeds digital competition. https://invoicefair.com/the-evolution-of-open-banking-connectivity-breeds-digital-competition-081118/

DESI. (2020). Sweden.Digital Economy and Society Index (DESI) 2020, 1-13.

Estevez, E. (2020, August 27).Open Banking. Investopedia. https://www.investopedia.com/terms/o/open-banking.asp

Fintech Global. (2021, February 4).What’s Next For Sweden’s Fintech Ecosystem?Fintech Global. https://fintech.global/globalregtechsummit/whats-next-for-swedens-fintech-ecosystem/#:~:text=Sweden's%20FinTech%20ecosystem%20has%20gone,millions%20of%20dollars%20last%20year.

Nilsson, C. (2020, December).Sweden's Banking Sector: Facts & Figures. EBF. https://www.ebf.eu/sweden/

Oxhammar, P., & Nilsson, J. (2018, January 12).FinTech Regulatory Sandbox established in Stockholm. Blockchain. https://blockchain.bakermckenzie.com/2018/01/12/fintech-regulatory-sandbox-established-in-stockholm/


Providers

Here is a list of major open banking platforms in Sweden

Tink

Tink was founded in 2012, and has built one of Europe’s biggest screen-scraping / open banking platforms – they claim to have broad connectivity and services that create value out of the financial data. Tink offers their platform to banks, fintechs, and startups.


Instantor

Instantor is a account aggregator and credit analytics company using screen-scraping. They were acquired by Tink in 2020.


Nordigen

Nordigen is an authorised Account Information Service Provider. We provide free access to bank data and premium data insights, using regulated PSD2 connections.


Asiakastieto

Suomen Asiakastieto is a digital business and customer information service provider in Finland. They gather and translate data and information into analyzed data models and observations for use in interactions between individuals, businesses, and society.