5 things a Swiss fintech startup should have in mind
Don’t touch the core!
In the last 10 to 15 years banks invested millions into their legacy systems. Today the so called Core Banking System ensures valid account balances and data consistency from backend to frontend.
Over the years, this multilayered primary system, made available by different suppliers, became a Leviathan. Slow release cycles, heavy costs for hosting and expensive application management is paired with a diminishing number of IT-managers, who actually understand its complexity.
Should your startup improve or replace something that is part of this core system like online banking, beware. Banks will see this as a risk: their most important branch — online and mobile banking — could get a hickup.
It’s not just us versus them
The startup mindset typically thinks “we are disruptors, agile and fast and they are slow, old-school and get what they deserve”.
But in reality there is no clear line between fintech startups and legacy players in Switzerland. With the goal of “safeguarding the future of the Swiss financial center” legacy players started their own fintech activities.
For example SIX started F10, a FinTech incubator offering „an entire ecosystem for innovations“. Swiss Life started Swiss Life Lab, a multi-million CHF funded innovation lab and Valora created Valora Labs — their first product is called bob finance.
Legacy players are trying to become disruptors themselves. They don’t help the fintech ecosystem per se. If your project is not on their roadmap, you won’t get any support at all. If your fintech idea is in conflict with their agenda they will make you trouble.
In fintech you are not really independent
An additional dimension is the dependency of most fintech projects on the existing financial industry. In E-commerce you can just do it: build a website, rent a warehouse, buy and store stuff, sell and deliver.
But in fintech there is always a point where you come into contact with the payment infrastructure and regulation. Or your are in need of bank-, insurance- or credit card data. So you can’t do business without building a bridge to the legacy player you want to disrupt.
In other countries this may be different, but keep that in mind for Switzerland.
Switch from B2C to B2B
You may have a great finance or insurance tool for consumers. But you had to learn how expensive consumer advertising is in Switzerland. Finance keywords in Google adwords are among the ones with the highest price. One click on the keyword „kredit“ can cost you more than CHF 25.
So what happens if your marketing budget is used up and your B2C KPIs are weak? Perhaps a switch to B2B could be the answer.
Now it is an advantage if legacy players are on your list of close friends.
What is growing faster, fintech ventures or the industry around them?
The Swiss fintech scene is young and growing, yes. New startups seem to come out of nowhere every month.
At the same pace or even faster an entire industry around the fintech trend came into being. There are people and companies organizing awards and conferences, creating alliances and associations, providing hubs and incubators.
But this growing number of industry associations and conferences does not automatically create a business friendly environment bringing you new customers.
In the end startups need a pipeline of new clients and projects to cover the cost for product development and salaries.
If you want to participate in those events and meetups because you think it gives you visibility, you have to keep in mind the cost and time it consumes.