Actions to gain legitimacy in the Swedish financial sector A study of Swedish fintech startups

Abstract

The financial sector has been undergoing changes the past decade and one reason behind this change is the development of the fintech sector. This new sector has brought new innovations that challenges the incumbents in the financial sector. The new entrants, further referred to as fintech startups, are focusing on developing services in short iterations that reflect the end customers needs. In addition, the fintech startups have a great focus on user experience. The incumbents have dictated the terms in the financial sector for decades and have managed to build regulatory barriers that makes it difficult for new entrants. This dynamic makes it challenging for the fintech startups to navigate in the financial sector in terms of how they should establish their service on a new market. Trust and relationships has historically been building blocks in the financial sector and are aspects that new entrants often lack. In addition, there is a need for legitimacy when operating in the financial sector, some of which is possessed by the incumbents, but also the fintech startups. This thesis aims to describe how Swedish fintech startups establish legitimacy when entering a new market to reduce the liability of newness related to their service. The establishment of legitimacy can be achieved both through internal and external actions for the fintech startups. This research presents different dimensions where actions was taken by Swedish fintech startups to gain legitimacy, these are: innovative, market, historical and compliance. Furthermore, this thesis presents how these dimensions can be gained, both internally for the fintech startup, but also externally through strategic alliances with incumbents. The relationships between the dimensions and different aspects of legitimacy is presented in a model in the end of the thesis.