The digital transformation of financial services markets and industrial relations : Exploring FinTech development in Denmark, Estonia, the Netherlands and Sweden

The recent expansion of FinTech companies supplying digitally sophisticated products and services on the financial markets is repeatedly linked with different ideas of digital disruption. The development is said to challenge traditional banks and their “one-stop-shop” business models and value chains, integrating a wide range of products under one “roof”. FinTechs thus emerge as a threat to conventional businesses models in the financial markets, and thereby also raise concern for the types of jobs that employees in traditional banking and finance may face in the future (Abassi et al., 2021; Rego, 2018). Previous research on this development often focuses on the innovation of new businesses. By investigating the broader institutional conditions addressing industrial relations in the FinTech sector, this report also provides knowledge about aspects conspicuously absent from many previous studies. This is crucial to our understanding of how different institutions shape the future labour market and the way FinTech companies and other financial actors acquire the skills needed to develop. The report draws on the analysis of four country cases (Denmark, Estonia, the Netherlands and Sweden) all characterized by pervasive digital transformation of financial services. The report confirms an extensive digital transformation of financial services in all four countries studied, but our findings still suggest that FinTech companies do not necessarily disrupt existing businesses – at least not in a radical fashion. As the FinTech niche in all four countries appears to consolidate and influence the emergence of a new business ecology – in which conventional banks continue to play a key role – our analysis rather suggests that the development consists of an intense and innovative differentiation of market services. FinTechs primarily position themselves as partners to established businesses, providing technical solutions or even ideas that are bought by banks and thus co-opted or integrated through strategic partnerships (cf. Brandl and Hornuf, 2020; Hornuf et al., 2020). They also forge a position as intermediaries between the bank and the customer, utilizing open banking solutions based on customer and account-information from traditional banks. In doing so, they are shaping both a possibility to add new services, and for customers to utilize and get an overview of services from different actors on the market (cf. Lomachynska, 2020). Contrary to studies describing how digital services destroy job opportunities (Brynjolfsson and MacAfee, 2014; Umans et al., 2018), the report depicts a development that increases demand for new skills, urging us to look further into what types of jobs will be available to employees in banking and finance in the future (Abassi et al., 2021; Rego, 2018). At present, the rapid growth makes it difficult to provide a definitive answer as to what exactly these skill requirements will be. Our report nevertheless finds that policymakers, business associations, and FinTech communities are more concerned with a lack of education and competence development satisfying demands for new combinations of tech and financial skills, than with the risk of job losses in the sector at large. Avser rapport/working paper