SwissBanking
The online magazine of the Swiss Bankers Association
September 21, 2017

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Better together

Better together

Banks need fintech companies in order to remain competitive at the international level, and fintechs need banks because they enjoy the trust of customers. On 4 September, Swiss Fintech and Digitization Day was held under the motto “Better together”.

Who is going to come out on top – the banks with their traditional business or the innovative fintech companies? The simple answer to this question is: neither. While fintech companies offer an ideal framework for new business ideas and can implement these quickly, the banks enjoy people’s trust and through collaborations with startups can, for example, expand their service offering. The trend is therefore increasingly moving from an “egosystem” to an ecosystem; from one against the other to one together with the other. However, at Swiss Fintech and Digitization Day, which was held in Zurich on 4 September 2017 under the motto “Better together”, it became apparent that there is still room for improvement. In addition to Federal Councillor Johann Schneider-Ammann, who has made digitalisation in Switzerland a priority, the event also featured a panel discussion on the subject “Egosystem vs. ecosystem”.

Innovation: Switzerland the number one

The Swiss Bankers Association (SBA), which sponsored the event, has recognised the importance of the digitalisation of banking for some time. One year ago, it therefore created the fintech group of experts, whose members consist of high-ranking representatives from all the bank groups. Among other things, the fintech group of experts monitors seminal fintech developments with the objective of helping to ensure that Switzerland becomes the country with the best framework conditions for digital business. This because in future, there will be no top-tier global financial centre that does not have an important fintech cluster. And the signs are positive for Switzerland: according to the July 2017 Swiss FinTech Start-up Map, there are currently 207 fintech companies working on seminal ideas. Not only that, but Switzerland is the global number one when it comes to innovation. “Switzerland is one big centre for innovation, and that has to remain the case”, said Federal Councillor Johann Schneider-Ammann, who went on to say that he will also advocate for this.

Expedient regulation required

In order for Switzerland to remain an innovation leader in future, expedient regulation and optimal framework conditions are imperative. The panellists at Swiss Fintech and Digitization Day agreed: a Swiss finish would be detrimental to international competitiveness both for fintech companies as well as for the banks. It is for this reason that the SBA welcomes  the fact that the Banking Ordinance, which was amended by the Federal Council, takes into account the needs of new digital business models. But there is still room for improvement: in global comparison, Switzerland ranks only 8th in terms of competitiveness in digitalisation.

IMD World Digital Competitiveness Ranking 2017.JPG
World digital competitiveness yearbook

In the view of the SBA, it is important that existing financial services providers are able to participate in the innovative fintech market by meeting the same regulatory requirements as the new providers. Particularly in the area of money laundering, for example, it would be extremely risky for the Swiss financial centre if the duties to be met by fintech companies were to be relaxed.

This demand, however, in no way obstructs the existing or envisaged collaboration between fintech companies and banks. On the contrary – it was not for no reason that during the panel discussion at Swiss Fintech and Digitization Day, Martin Hess, Chief Economist at the SBA, said: “Without fintech, Swiss banking will not hold up in the environment of increased international competition.”