The Impact of FinTech Companies on Financial Institutions in Sweden

Sammanfattning: FinTech companies have grown tremendously during the last decades and generated great impacts on traditional financial institutions and led to enormous alteration in the ways of providing the financial services. The continuous development of the financial services has stepped into a new stage, where new entrants impact incumbents even more and many challenges accompanied by threats might come to light. Questions started to appear about the future of the financial institutions, since the new entrants provide the same services of the incumbents in an effortless manner. The choice of this research topic was driven by the fact that previous research about FinTech focused solely on the evolution of FinTech companies and their segments, but studies have been neglected the impact of FinTech companies on financial institutions and how the latter remedy with that impact. Hence, the interest in how the financial institutions are influenced by FinTech companies resulted in the following research question: What is the impact of FinTech companies on financial institutions in Sweden? We formulated two more detailed questions to guide our study: 1) How the financial institutions remedy with the development of FinTech companies to protect their existence as financial services providers? 2) What kind of relationship have the financial institutions with the FinTech companies? The aim of this study is to extend the existing knowledge about the current and potential impacts of FinTech companies on financial institutions. Moreover, the purpose is to have a better understanding about how the incumbents remedy the effects of the new entrants and challenges that they confront. This study answered the research question through a qualitative method and the empirical data has been gathered from ten interviews with banks and insurance companies in Sweden. The findings of this thesis revealed that the FinTech companies obliged the financial institutions to develop their IT systems and services, either inhouse or by cooperating with FinTech companies and made them more open for collaboration than before. Further, the banking sector is more impacted by FinTech companies than the insurance sector. That makes them more likely to leave some segments for the new entrants in future. Concerning the attitudes, all the financial institutions are positive about FinTech companies and their impacts even though a few of the new entrants attempt to provide financial services with low security, generally most of them keen to improve the financial services.