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The Swedish Financial Supervisory Authority has granted TF Bank’s Swedish subsidiary TFB Service AB a license to operate as a deposit-taking financial institution. With this license, the Nordic division of the company’s eCommerce payment solution, currently operating under the Avarda brand, can be transferred to a separate entity.
The move follows a trend among Banking-as-a-Service firms to create separate entities for the provision of all commercial, non-banking services.
The practice has become commonplace as financial institutions have diversified their business practices to extend beyond the sphere of banking. Rather than trying to coordinate non-banking activities within the strict regulatory environment that governs what banks can and cannot do, creating isolated subsidiaries under the banner of a holding group allows the non-bank branches to operate with less restraint from regulation intended to protect bank customers from high-risk business practices.
As things stand, TF Bank’s presence in the Nordic eCommerce payments sector is growing. At the end of March, Avarda’s loan portfolio in the Nordics amounted to 1.5 billion krona ($1.48 billion), corresponding to a 58% increase in local currencies compared to the same time last year.
Legally detached from the company’s eCommerce activities, the digital-first TF Bank will continue to conduct deposit and lending activities to private individuals in Sweden, Finland, Norway, Denmark, Estonia, Latvia, Lithuania, Poland, Germany and Austria through branch offices or cross-border banking.
The restructuring comes as Nordic customers increasingly demand local merchants improve the mobile commerce experience.
Read more: Swish CEO: Nordic Consumers Demand Local Merchants Improve Mobile Commerce Experience
What’s more, as Nordic countries prepare for the rollout of the P27 payment infrastructure, alongside parallel EU-wide projects, the landscape of payments in the region is set to change. As consumers come to expect real-time payments as standard, eCommerce payment solutions that can work with the new rails will become more important.
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