Swedish view on the global fintech trends for 2022

The latest edition of KPMG’s Pulse of Fintech highlights the top fintech trends for 2022. We asked Karin Sancho, Head of Financial Services at KPMG in Sweden, to comment on the international trends from a local point-of-view. 

Embedded finance has been a growing trend over the past year and is well-positioned to grow even further as numerous banks look to become service providers to non-bank and non-financial institutions looking to deliver a customer experience or service proposition involving financial services as a component of a larger offering.

Karin Sancho: “In Sweden we are seeing the start of a development where banks are interested in delivering services to other distributors. These banks are still in minority and many banks still want to hold on to the customer interface. On the other hand, there are many other non-bank players who see embedded as their only distribution alternative.”

The increase in financial products or services embedded within and delivered through non-regulated entities is expected to drive greater levels of regulatory awareness and intervention over the next 6 to 12 months as regulators look to protect customers by clarifying issues like accountability and available recourse.

KS: “Absolutely, and I’d say the question should be about how local authorities are going to keep up as the development picks up speed. In addition, we are seeing business models changing on the back-office side as well, and there will also be increasing regulatory scrutiny of new service provisions and outsourcing.”

Many fintechs will likely reinvent themselves into data organizations and data providers that happen to provide payments and other financial services in order to differentiate their organizations in the eyes of investors and the market.

KS: “I think this is old news in Sweden. Most fintechs here have had a clear focus on data for a long time.”

Given the growing prioritization of ESG happening more broadly, there will likely be increasing interest in fintechs with ESG capabilities, including companies focused on climate change, decarbonization, and the circular economy.

KS: “My view is that the ESG focused fintechs in Sweden are already well-established and should look to expand geographically to reap the interest of investors and clients in other markets.”

Investors will ramp up their targeting of jurisdictions considered to be underdeveloped in terms of financial services — making more deals in regions like Africa, Southeast Asia, Latin America, and the Middle East.

KS: “The question is what this means for Swedish fintechs, for example if there will be less capital available for them? Again, my point-of-view is that Swedish fintechs need to expand more and faster to countries and markets in the regions mentioned above.”

The incredible rise in the number of unicorn companies, particularly in the US, will likely make the status less valuable for companies in developed markets — although it should continue to be an important building block for startups in emerging markets and less mature fintech hubs. 

KS: “I’d say that this trend is perhaps less relevant for smaller markets like Sweden, as the mere size of our market might limit the numbers of unicorns, or?”

Want to learn more about the global fintech deals and market development during the past year? Please download the Pulse of Fintech report.