Already today, the Internet banks contain much more than merely the opportunity to make payments and check one’s account balance. One function on the Internet that will probably lead to increased competition within the finance sector is the existence of companies that offer price comparisons. There are, for instance, several independent companies on the Internet today which enable a simple comparison of mortgage costs or provide assistance in finding the most beneficial insurance policies. Competition will increase with regard to share trading, mutual funds, insurance and mortgages, even from abroad. One reason for this is that the Internet will cause a reduction in entry barriers, i.e. that the costs connected with starting a business and achieving critical mass with regard to customers will not be as high as before. New companies today do not need to establish far-reaching office networks, which is proved by companies such as Skandiabanken and companies known as Internet stockbrokers. Finally, it is perhaps worth pointing out that IT in the financial sector does not merely consist of the Internet. Many of the instruments that are currently traded in the markets, particularly derivative instruments such as options and swaps, are completely dependent on modern information technology to be priced and traded at all. As derivative instruments are mainly used to buy and sell financial risks in a cost-efficient manner, it is possible to say that IT comprises a base for modern financial risk management, as it is put into practice on dealers’ tables around the world.
One example where the banks did not co-operate in the payment market is the service of digital invoicing systems. Up to spring 2002 the banks were offering two different, non-compatible systems, “e-giro” and “e-faktura”. The existence of two digital invoicing systems was an obstacle with regard to getting both companies and households to utilise the new technology. Today the banks are investing in making the systems compatible with one another and the goal is that invoicers and invoicees will be able to reach one another regardless of which bank they use. If this succeeds, it should lead to increased acceptance from customers and enable critical mass to be achieved more easily. Will cash disappear? The use of cash in Sweden has halved since the mid-1950s, which is of course a result of the technological developments with card payments and later Internet payments offering good substitutes for payment with banknotes. However, the decline in the use of cash has slowed down in recent years and the M0 money supply is currently around SEK 90 billion, or 4 per cent of GDP. Cash is suitable for certain types of transaction, including, unfortunately, those that people don’t want registered, and there is perhaps a lower limit for the demand for banknotes. In addition, the alternative cost for cash has been low in recent years, as a result of low inflation and low interest rates. However, the use of cash in Sweden is higher than in other Nordic countries.