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17. Dezember 2015

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Fintech: It's about being open to new things

Fintech: It's about being open to new things

Thomas Sutter, Deputy CEO, and Martin Hess, Head of Economic Policy, explain why the SBA is concerning itself with digitalisation, and examine which developments can be observed in this segment in the banking centre.

Switzerland experienced a Fintech boom in 2015. Hardly a day went by without news of a new digital gadget, self-proclaimed experts expressing their views on digitalisation or an event related to digitalisation. The Swiss Bankers Association (SBA) plays an important role in the digitalisation of the banking sector.

insight: When was the last time you were in a bank?

Thomas Sutter: The last time I was in a bank branch was four weeks ago to withdraw foreign currency. Apart from that, I only go into a bank if I can´t get the service I need at an automated teller or online.

Martin Hess: I meet with my client advisor once a year. Otherwise, the same applies for me: I do my banking business online.

Why is Fintech taking off at this particular moment?

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Thomas Sutter, Deputy CEO and Martin Hess, Head of Economic Policy

Hess: The banks have been focussing on digitalisation for some time now. The momentum that we´re seeing at the moment can be attributed to a number of technological and regulatory factors. Today we have the ability on the one hand to offer services in a much more inexpensive way, and on the other hand, to provide added value to customers in the form of new offerings. In addition, customers are used to organising their lives online, and they want the same for their banking services. Tighter regulation is also adding fuel to the Fintech boom: The financial sector has to do business more efficiently due to the pressure on costs and margins.

Sutter: That´s correct. Obviously, the banks have been addressing Fintech for some time now. But the big difference is that people aren´t just using online banking these days, they are also doing mobile banking. Which means from anywhere in the world and at any time. The SBA has been analysing the developments in this segment and working to increase awareness both within the sector and the government in Bern for two years now.

Why is the SBA concerning itself with Fintech?

Sutter: Because it will have an important impact on the future of the banks. We have to continue to create added value and jobs in Switzerland. It is in the interests of the banks that we, as an umbrella organisation, continue to represent a significant part of the value-added chain in future, and that we take on an important role as an interface between the banks, the regulator and the world of Fintech. Our Board of Directors shares this view, and this year decided that we should, and must play a greater role in the Fintech segment.

Hess: While initiatives that are in the early stages are still getting their bearings, the SBA is already up and running. We are a well-known institution and Fintech is firmly embedded in our policy.

Sutter: The SBA has a comprehensive network and strong expertise in lobbying. We can help to shape the framework conditions in such a way that allows new business models or processes to develop.

Hess: In future, a global financial centre will also distinguish itself through the fact that it unlocks profitable business opportunities in digital banking, and that Fintech companies will want to set up shops here. We are involved in the regulatory process to ensure that this will be the case in Switzerland. The regulation must be appropriate and in line with what is needed.

Sutter: We have already made progress in this area, in that the regulator is now taking Fintech more seriously. I am very positive in my outlook that there will be further amendments next year, for example in the area of onboarding.

FINMA sees the service that Valora introduced in December as a positive sign. We´re talking about small loans granted at the newsstand – where do you stand on this?

Sutter: To put it in simple terms: Whatever the customer wants is a good thing. But the framework conditions must be identical for all players. The key concept here is a level playing field.

Hess: It´s important to promote innovation. This strengthens the financial centre and gives Fintech startups an incentive to conduct their activities in Switzerland as well.

What insights have you gained in the last two years?

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The SBA has been focussing on digitalisation for some time now.

Hess: The current developments are not just simply: “more of the same with a sprinkle of digitalisation”. It´s about rethinking the existing business models. There is a paradigm shift taking place at the banks in terms of the way they provide their services. The banks have to be open to working with other stakeholders on this front. Because certain processes can often be carried out faster and more efficiently outside the banks.

Sutter: The first steps to this end have been taken. An ecosystem with financial services providers and Fintech companies has emerged. The small startups are interconnected and are now also more clearly formulating their objectives. The key challenge is to achieve scalability of services by reaching a large customer base. To this end, it is important for Switzerland to quickly establish its own standards, for example in the area of payment transactions.

Hess: We need standards that are recognised internationally. If we don´t secure market access, Switzerland will not be able to keep up with other countries.

Where do you see the need for more action?

Hess: We must, for example, address the issue of cyber security. There is a fine line between access to and utilization of data, and security. Security and trust are the Swiss banking centre´s greatest capital, and we cannot make any concessions in that area. Amending framework conditions too late can become problematic, because Fintech clusters are developing quickly in other parts of the world. We need to get to the point where it becomes attractive for companies to conduct their business out of Switzerland. There are some promising steps being taken on this front.

That sounds like a lot of analysis and less like concrete implementation.

Sutter: No, that´s not the case. We are influencing the framework conditions. We achieved a lot in this area in 2015. But at the end of the day, it´s up to the banks to generate business from this. We should stop always being so typically Swiss and seeing only the drawbacks. There have been a lot of positive developments in the banking sector. The various articles in insight´s Fintech-series have illustrated this nicely. The winner is not always the first, but the best. For example, Google was not the first search engine, but today it is the biggest by a clear margin.

What are your goals for the coming months?

Sutter: We have to clarify some unresolved regulatory issues relating to onboarding. Being able to open a customer relationship using digital authentication is a must. Also, we will be defining individual areas for action quickly, areas that we will be getting very involved in. Big data versus data protection is one of these.

Hess: There is great value here, that is to say, the information that data contains is very valuable. But the utilisation of data for commercial purposes runs contrary to the protection of privacy. There has to be a discussion on this front: What is the objective, what is necessary from a business perspective, and what are the interests of the customer?

Neither of you is a digital native, but you are nevertheless the poster children for Fintech at the SBA. Hand on heart: How digital are you in your everyday lives?

Sutter: It´s not a person´s age that is important. It´s about being open to new things. That is the key criteria for using, understanding and evaluating new technologies, which is what´s important in this segment. It was over five years ago that we decided to place a clear online focus for communications at the SBA. For example, we systematically built up our twitter channel and will continue to build it out in future.

Hess: I used to do programming in the past, and so I know what it is we´re talking about, even though these days I´m primarily a user. Digital technologies have to first and foremost bring advantages, and must be faster, cheaper and more convenient. My mentality on this front is probably similar to that of the masses, and so I´m able to gauge quite well which developments are just a passing hype, and which technologies represent real value.