The FinTech sector in Stockholm includes technologies for banking and corporate finance, capital markets, financial data analytics, payments, and personal financial management.

The sector is growing rapidly and global investments tripled from $4 billion in 2013 to $12 billion in 2014. It has also attracted interest in a number of regional hubs, such as Silicon Valley, New York, London, Stockholm, and Australia.

Stockholm – Europe’s unicorn factory

In the last decade, the Nordic countries have produced 53 percent of Europe’s billion dollar exits. Sweden alone has accounted for 50 percent of the Nordic exit value.

Stockholm plays a significant role in this activity as it is an internationally recognized innovation engine and prominent technology hub that performs way beyond its size. For example, within recent years the city has produced five unicorns, or start-ups with a valuation exceeding $1 billion. These unicorns are Skype, Spotify, King, Mojang, and Klarna. According to research by Atomico, Stockholm has the highest number of unicorns per capita, and it is surpassed only by London, with its seven unicorns, in the total number of unicorns.

The Nordic region’s leading financial center

Stockholm stands for one-third of the Swedish economy, and its business community is home to many local and multinational headquarters.

The financial sector plays a fundamental role in this ecosystem and creates conditions for growth. It is the fourth largest sector, by value, in the Swedish economy. Stockholm is ranked as the leading Nordic financial center, with strengths in such areas as innovation, technology, and with the headquarters of four major Nordic banks and the largest stock exchange.

Attracting big investments

The year 2014 was a landmark year for investments in Stockholm-based FinTech companies. In total 15 FinTech deals attracted $266 million in investments. Moreover, FinTech investment in Stockholm represented 32 percent of total investments in Sweden.

More remarkable is that Stockholm’s 2014 investment volume alone is half of the past five year total of $532 million invested in FinTech in the Stockholm region.

Traditionally the Payment and Trading & Banking segments have received the biggest share of investments, but lately there has been increasing activity in the Cryptocurrency and Innovative Lending segments. For example, the 2014 and 2015 investments in KnCMiner made it one of the best-funded Cryptocurrency companies globally.

Stockholm – Europe’s No.2 FinTech city

Stockholm’s contribution to FinTech investments in Europe over the past five years represents 18.3 percent of the total FinTech investments and 7.7 percent of all deals.

Looking at the past 11 years, Stockholm comprises 15.9 percent of the total FinTech investments in Europe. That puts Stockholm in the past decade as the second highest funded city in Europe after London – and solidly ahead of the third place city Amsterdam.

It is quite remarkable that Stockholm has achieved such strong and stable results in FinTech, given its size and that it does not have an extensive financial ecosystem of accelerators, incubators, and niche investors such as that found in other European financial centers.

Prominent international investors drawn to Stockholm

The capital flowing into Stockholm FinTech companies comes from many sources, and during the past five years there has been a substantial increase not only in the number of local investors but also the number of investors from the US and Europe. From 2013 to 2014, the number of unique investors grew by a factor of five – from 5 to 25.

Revenue drivers

In addition to the fast pace of growth in FinTech investment, the revenues of FinTech firms have also seen consistently strong growth with 2013 revenue estimates for the Stockholm FinTech sector at $1.3 billion, an increase of 25 percent over 2010 values. Trading & Banking with 38.8 percent of total revenue and Payments with 33 percent are main segments driving FinTech revenue.

44% employment growth 2010-2013

The Stockholm region employs approximately 197,000 individuals in full-time high-tech positions, which is 18 percent of the region’s total employment. The region boasts the highest per capita concentration of high-technology employees of any large business region in Europe.

Total FinTech employment in Stockholm reached an estimated 4,600 full-time employees in 2014. Furthermore, the FinTech sector in Stockholm is rapidly increasing – with a solid 44 percent increase from 2010 to 2013. Going forward, employment is expected to grow even more.

A dynamic hub for innovative payment, funding, banking, and transaction technologies

·         The Nordic financial hub: Stockholm’s position as the Nordic financial hub is the result of more than 30 years’ experience integrating IT with marketing and new product development operations.

·         Strong startup ecosystem: There are a number of successful firms that act as role models by setting high standards inspiring current and future entrepreneurs while serial entrepreneurs share their expertise and reinvest in new firms.

·         Community of high-tech early adopters: Consumers in Stockholm and in Sweden are hightech early adopters, and multinationals often choose Stockholm as a testing market for the development of new products.

·         A natural global focus: Sweden’s smaller market size encourages almost every startup to think and act as a global player from the start.

·         Stockholm is a leading region and a desirable location: Stockholm is number two in Europe and number five in the world as the birthplace of the world’s most successful billion dollar companies.

·         Strong government and social security: Sweden has a stable government and a strong regulatory framework, which provides a solid base for companies looking to expand abroad. Substantial social benefits reduce the risks faced by entrepreneurs and costs for companies, thus encouraging startup and innovation.

·         Swedish leadership style: A bottom-up and flat, non-bureaucratic management style empowers creativity and innovation and enables high quality product development that is difficult to duplicate elsewhere.

Source:  A summary of the research report Stockholm FinTech – An overview of the FinTech

sector in the greater Stockholm Region by the Stockholm School of Economics (SSE)

Photos: Yanan Li, Henrik Trygg/ mediabank.visitstockholm.com