Funds challenge big bank dominance of Swedish market

Analysis by the Swedish Competition Authority (Konkurrensverket) has found that competition in the funds market is a rare bright spot in an otherwise challenging environment of big bank dominance in lending, credit, fund and life insurance markets.

According to the Authority, “there are signs that the big banks’ strong position in the funds market has to a larger degree been challenged by increasing international competition and increased customer mobility. This has led to the dominance of the big banks’ fund companies being somewhat reduced, and that asset management fees generally have fallen in the market.”

The analysis looked particularly at the relevant market strength of the largest four banks in the Swedish market: Nordea, SEB, Handelsbanken and Swedbank. In its report, the Authority noted that it remains difficult for other banks to establish themselves and take market share in Sweden. What could change the status quo is alternative financing opportunities and increasing internationalisation.

“The four big banks together have a very strong position in terms of lending and extention of credit. This despite the relatively high number of players in these markets [lending, credit, funds and life insurance], which suggests that there is still a lack of customer mobility. On mortgage lending the big banks’ strongly increased gross margins in recent years suggests that price competition may have shrunk, which can partly be linked to increased capital requirements.”

Director general Dan Sjöblom added: “It is important to monitor actors in a strongly concentrated oligopoly market, as the banking market is. Reduced competition in an already concentrated market can hit customers hard.”

The Authority’s report notes that as developments such as digital solutions and alternative financing solutions come to market they are implemented in a way that benefits consumers in the form of increased competition, albeit retaining guarantees for the safe handling of customers’ interests.

To read the full report from the Swedish Competition Authority (in Swedish), click here:


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