Switzerland offers new opportunities for UK FinTech firms
For years, Swiss banks have served as discreet safe havens for the world’s most powerful people and institutions. Strict regulation and high-level discretion have helped position Switzerland as a leading global financial hub. The country is now building on its reputation as a pioneer in financial services by focusing on the FinTech sector and, in particular, by developing its expertise in cyber security, digital currencies and “robo-advice” for wealth and asset management.
Switzerland’s stable economy, its strong reputation for innovation (ranked No. 1 in the Global Innovation Index), alongside its unique free-trade policies and emphasis on privacy and security, make it an ideal place for FinTech firms to operate. Switzerland was also one of the first countries to legitimise Bitcoin as a foreign currency and, as a result, has become somewhat of a “mecca” for a large number of bitcoin and blockchain players including Ethereum and Monetas. The country now boasts its own “Crypto Valley” in the city of Zug, where local companies are coming up with solutions to trade and exchange bitcoin safely and efficiently.
The growth of the Swiss FinTech sector has been accelerated by initiatives such as the Swiss Finance and Technology Association, which aims to connect local FinTech players to other leading global centres such as London. This has been supported by the recent launches of several Swiss FinTech incubators and accelerators, such as FinTech FUSION, Nexxussquared and an initiative by Six Group. Institutional players are also embracing innovation with Swiss banks such as UBS leading the charge for FinTech technologies like blockchain.
But there is still work to be done before Switzerland realises its full potential as a FinTech hub. Collaboration is still a challenge and institutional firms need to get closer to the innovations that are shaping the future of finance. Guillaume Dubray, founder at FinTech Fusion, believes that the best chance for FinTech success will come from start-ups that provide banks with digital solutions rather than platforms that compete with them for clients. “Swiss FinTechs will gain much more advantage partnering with banks than taking them on. Only UBS and Credit Suisse have the financial power to have dedicated teams focusing on digital advances. No-one else has that luxury,” Dubray stated.
This message of collaboration came up frequently during the two-day trade mission to Zurich and Geneva Switzerland last week, which was organised by UKTI for UK FinTech firms. The event, which included a keynote address from Innovate Finance, gave local institutions and investors a chance to meet with UK firms producing valuable innovations including distributed ledger technology and data analytics for risk and portfolio management in asset management, banking and insurance.
Blockchain, surveillance analytics and compliance management tools were showcased by members, as was the potential of capital markets.
“Bonds are the biggest untapped FinTech opportunity,” Raja Palaniappan, CEO of startup Origin, told an audience of investors and institutional firms in Zurich. “Through the creation of an electronic platform we can enable corporate borrowers to offer private placement bonds directly to institutional investors. Our technology is essentially opening up a billion dollar market.”
Palaniappan’s presentation summed up our vision of what FinTech is about — identifying opportunity and encouraging the sector to open the doors to growth and encouraging transparency in the market.
Origin was one of nine Innovate Finance members that joined a FinTech trade mission. The other companies to make the cut were Bankable, Clear Macro, Credits, Feature Space, Live Data Set, Percentile, Prophis and Sybenetix.
The Swiss mission helped them to raise their visibility among institutional players and investors and to showcase the talent in the UK. Anthony Pereira, CEO at Percentile, stated “the trip has opened up new opportunities for Percentile with some of the biggest names in insurance and private banking. Perhaps as importantly, it provided a rare opportunity for frank discussions with other founder and CEOs leading to potential collaborations.” Likewise, Eric Benz from Credits commented that the trip “gave us a chance to highlight our work currently being carried out at the F10 lab powered by Six Group. As a result, many of the attendees were interested to know more about Credits and what we were providing in the Blockchain space.”
Hopefully this trade mission will be the start of greater opportunities for both FinTech hubs to support entrepreneurs that are helping to create a more sustainable future for financial services.