Swiss fintech vs. the world (Part 2)

By Madhvi Mavadiya | 12 September 2016

With Sibos 2016 SWIFT-ly approaching, (pardon the pun!) it is of paramount importance for you to get clued up on all things Swiss fintech before heading out to Geneva. In the last edition of Swiss fintech vs. the world, we took a look at how the fintech is evolving in the Swiss city in comparison to other hubs around the world. Alongside this, we questioned why Switzerland, with its flair for finance, is a step behind other cities like London and New York, as EY’s recent report highlighted. Here, we take a look at Switzerland more closely and delve deep into why the country is a sweet spot for business.

According to Swiss Re’s Innovation Manager, Oliver Werneyer, despite Switzerland’s size, this is positive for business because a close community can be built. Following on from this, the Ernst and Young and the Swiss Finance + Technology Association report broke down why the country is a competitor for others, especially when it comes to education, economic and political stability. “The Swiss economy is very stable, with a very low unemployment rate, a flexible job market and very high income per capita. Moreover, Switzerland’s direct democracy has a long tradition and is renowned for its stability,” the report read.

However, there have been some concerns around the strength of the Swiss franc and the threat of production and research facilities relocating abroad. In addition to this, according to the Cost of Living Index 2015, seven of the top 10 most expensive cities to live in are located in Switzerland. Despite this, funding seems to be abundant in Switzerland with many government-supported organisations, such as the Swiss National Science Foundation and the Commission for Technology and Innovation providing institutional support.

The tough regulatory landscape in Switzerland is less supportive, which is not contributing to the growth of fintech startups. In order countries, for example, it is possible to open a bank account much faster, compared with the bureaucracy and complexity involved in Switzerland. Financial organisations are currently too preoccupied with regulatory compliance to dedicate enough attention to fintech startups,” the report read.

In addition to this, Switzerland is in the habit of holding cash for the purpose of funding, but the venture capital and incubator ecosystem is still in its infancy. “Switzerland has raised about one-third of the VC that London has. On top of that, the Swiss Government and the large established financial institutions lack commitment to provide financial support.” This relate to entrepreneurship in the country and whether or not Switzerland can be called a startup hub, rather than a fintech hub; entrepreneurs at the age of 18-24 are increasing at a low rate, whereas the rate for those over 55 is above average.

“Thanks to the excellent education system, founders have access to well-educated graduates. The economic and political stability of Switzerland might be especially important for founders aged 55 and older, given that they invest a portion of their assets and need to secure their retirement benefits. As senior entrepreneurs are typically able to finance the early stage without assistance and are often well-connected, they do not depend on government and institutional support in the same way as young entrepreneurs without assets to invest.”

Therefore, one conceivable strategy would be for Switzerland to focus on developing a hub for senior entrepreneurs within the financial industry,” the report summarised.

Drivers of success in Switzerland (as explained in the report)

  • Entrepreneurial experience
  • Financial state
  • Differentiation of product or service
  • Business potential
  • Market size

Fintech initiatives in Switzerland

  • Finance 2.0
  • Meetups Zurich and Geneva
  • Fintech 2015 Boost Innovation
  • Swiss fintech Award
  • Digital Zurich 2025

Incubators and Accelerators

  • Fusion
  • SIX F10 Incubator
  • BlueLion Incubator
  • NexusSquared

Associations

  • Swiss Finance + Technology Association
  • Swiss Crowdfunding Association
  • Swiss Finance Start-ups
  • Digital Finance Compliance Association

Cluster Projects

  • Sibos Geneva
  • Digital Circle
  • IFZ Fintech Forum

Next week we’ll be listing the hottest Swiss fintechs to watch! Watch this space! 

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