The Swedish banking market

The Swedish financial market

In Sweden, the financial sector is of fundamental importance for economic wellbeing and it is a pre-requisite for private and business life to function adequately. With an efficient and reliable system for savings, finance, payment intermediation and risk management, a considerable contribution is made to production, employment and welfare in the country. Banks and other credit institutions, insurance companies, securities companies and other companies within the financial sector manage this system.

The Swedish Financial Sector
2 percent of the workforce
3,8 percent of the GDP 
10,5 percent of the corporate tax.

The economic role of the financial sector

The three main functions of the financial system are to convert savings into funding, to create the conditions for efficient processing of payments in the economy and to manage risks. An efficient and reliable financial system is of fundamental importance for the Swedish economy to both function and growth. This will ensure Sweden’s economic prosperity. These systems consist of banks and other credit institutions, insurance companies, securities companies and other companies in the financial sector. The financial sector channels savings from households and companies into investment and consumption, such as the needs of households to even out consumption over the various stages of life, as well as the need for companies to finance investment.

In 2019, the financial industry accounted for 3.8 percent of the total output in Sweden, expressed as its GDP. Over 95,000 individuals, representing about 2 percent of the total workforce, work in the financial industry. This can be compared with the manufacturing industry, which employs 11 percent of the workforce, and the information and communication sector, which employs 4 percent. Banks are also important taxpayers: the seven largest banks in Sweden accounted for 10.5 percent of the total corporate tax in 2019.

Types of financial enterprises

Banks (commercial banks, foreign bank branches and savings banks) constitute the largest group of companies in the financial sector in Sweden as regards total assets and liabilities. The banks’ total balance sheet items were SEK 9,700 billion in 2019. Credit market companies come next after the banks in size, measured in total balance sheet items. Housing credit institutions are the largest group of companies among the credit market institutions.

Securities companies conduct trade with securities in their own name on behalf of customers and on their own behalf, as well as commission trading. In this capacity they play an important role in creating an efficient market for securities.

Beyond the above-mentioned companies there is a Group of companies that fulfil an important role in the financial market as investors: insurance companies, mutual funds companies and pension funds. In addition there are also private equity companies and FinTech. Private Equity companies mediate risk capital by investing and taking part-ownership in companies. FinTech are companies that offer financial services using the latest digital technology.

Market changes

The financial sector is experiencing a significant change in its structure and many new financial companies, both Swedish and foreign, have established themselves on the Swedish market.

The transition to a sustainable society means changes in several areas, like the transition to a sustainable economy. Many banks are already part of this transition. It means that these banks offer sustainable products and that the banks fund themselves in a sustainable way. Banks must also manage risks with assets that are not sustainable.

New technology has also paved the way for the establishment of new banks and companies offering financial services (FinTech), and in turn increased competition within banking. These new channels of distribution of banking services have enabled the development of new services whilst existing services have changed. At the same time, this has meant that branch offices have become less important for bank customers’ daily services. Today normal bank services are to a large extent performed using computers, mobile phones and tablets. Other ways of performing bank services are, for example, real time payments between customers (Swish) and e-invoices, etc.

Mutual funds and insurance savings have for many years become some of the most important forms of household savings. Around 75 percent of the population have some of their savings in mutual funds. Bank savings are, however, the largest household savings type.