The online magazine of the Swiss Bankers Association
March 30, 2016


The Swiss Fintech Ecosystem

The Swiss Fintech Ecosystem

Technological progress and competition lead banks to align themselves with Fintech firms. A Swiss-based digital finance cluster will help to strengthen the global competitiveness of our financial sector. While there already exists a small but impressive ecosystem, more should be done to rev up.

The digitalisation of the financial sector is the latest in a series of technology-based economic developments. New markets are being created and the rules of the game are being turned upside down for the entire industry. Standardisation and scalability have now also taken hold in the world of banking. Production processes are being broken up and reassembled as desired.

No digital, no success

Banks are now aware that the way to ensure their own future happens through the systematic automation of business processes and the enablement of digital services across all distribution channels. In a highly competitive environment, digitalization leads to considerably lower costs in the production of financial services. First to fall victim to the disruption are services that require low levels of advice and that are easy to standardise. Moreover, with the informational empowerment of bank clients, banking is rapidly turning from a provider’s to a buyer’s market. Client orientation will thus need to be stepped up and adapted to the new normal.

Client orientation will thus need to be stepped up
and adapted to the new normal.

As a consequence, a strong banking sector requires collaboration with young Fintech companies. The ability to act swiftly and to bring innovative customer solutions to the market in due time is key for the banks’ success. As to structural dynamics, we may observe an acceleration of the outsourcing dynamics.

Traditional quality and innovation hand in hand

Banks need to make sure that the traditional strengths of Switzerland such as expertise and confidentiality may be carried over to the digital reality. To capitalize on these advantages, efforts from both the private sector and the authorities are needed to secure Switzerland’s position as a top location for digital innovation. A Swiss-based Fintech cluster will help to strengthen customer confidence in the services provided by Swiss banks, and represents a key asset in the international competition.

A Swiss-based Fintech cluster represents a key asset
in the international competition.

To achieve this, the objectives formulated by the Swiss Bankers Association are straightforward: Firstly, added value and jobs must continue to be created in Switzerland in future. Secondly, a Fintech ecosystem must be established in Switzerland, one from which all banks can benefit. And thirdly, the framework conditions must be conducive to encouraging domestic Fintech investments and provide a level playing field for different business models or technologies.

Fintech Cluster upgradable

While in the past there was a perception that Switzerland is significantly lagging internationally, a survey by the Institute of Financial Services Zug IFZ published in mid-March 2016 has found that the Fintech ecosystem in Switzerland is alive. It is very diverse with regards to business models and the size of companies.

Source: IFZ FinTech Study 2016

However, we are far from being an international hub producing global solutions and global leaders. There are encouraging signs, particularly in the B2B segment, that Swiss companies are internationally oriented, and that the Swiss Fintech market is competitive at the international level. Optimism is being fuelled by the efforts of important players in the financial market, as well as by the authorities that Switzerland is on its mark for further growth.