Switzerland needs fintech start-ups
The start-up boom has hit Switzerland. Unfortunately, conditions here are not always the most accommodating. Swiss Finance Startups (SFS) wants to change this.
Thomas Brändle | Board member of Swiss Finance Startups (SFS) and CEO of Run my Accounts
There is a lot of entrepreneurial potential in Switzerland, as well as considerable financial expertise honed over many years of experience. These provide a good basis for fintech start-ups. Unfortunately, this potential has not yet been properly recognized at the institutional level. Indeed, many politicians do not even know what fintech is. Things are quite different elsewhere. In the UK, David Cameron has taken a personal interest in the fintech industry. UK-based fintech start-ups quickly receive legal advice directly from the regulator, while in France regulators are working directly with local crowdfunding associations to compile new regulations for this sector. Similar things are happening in New York and Singapore.
Four companies – Knip, Contovista, Dealmarket and Run my Accounts – got together in summer 2014 to found Swiss Finance Startups (SFS). The association was founded to represent fintech on the public stage and now boasts around 60 start-ups among its members. It also receives sponsorship from more than 20 companies and banks, including Swisscom, UBS, PWC, and MasterCard.
Its objectives are:
1. to represent the interests of Swiss fintech start-ups,
2. to promote fintech start-ups and Swiss innovation,
3. to support networking and operational interaction, and
4. to develop the Swiss fintech ecosystem.
The association is in communication with economic and political stakeholders to help further these objectives, and these efforts have already borne fruit. A consultation with the WAK-N (Swiss Commission for Economic Affairs and Taxation) in November 2015 granted the SFS Board the opportunity to present a catalog of suggestions on how to create a much friendlier environment for fintech start-ups in Switzerland.
Three of the most critical suggestions are:
1. A FINMA fast track for start-ups
Fintech start-ups need an expedited review procedure, as well as coaching to guide them through the regulatory jungle. Up until now, it has generally taken up to eight months to obtain official advice on the legal viability of business plans. Switzerland’s role model here is the UK, for reasons described above. In the UK, fintech start-ups can receive free expert advice within just 24 hours.
2. Creating a legal framework for crowdfunding
Crowdfunding is currently being held back by a very restrictive interpretation of existing legislation by FINMA.
3. Raising political awareness of the latent potential of fintech start-ups
Policy-makers must understand how digitalization has vastly altered the financial services sector. Take the insurance industry, for example. In a hypothetical world of self-driving cars, will there still be a need for car insurance? And if not, how will insurers deal with the loss in revenue?
SFS wants to help Switzerland not only to maintain its long-standing reputation as a financial center, but expand on it as we enter the post-digitalization fintech era.