Fintech in Switzerland: Progress but still lagging behind

Stefan Kyora

04.02.2016 11:57

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The Swiss Fintech Report shows once again the strengths and weaknesses of Switzerland as a fintech hub. For our article we picked out the more surprising results and complemented it with some recent news about funding.

Today the Swiss Fintech Report was published by EY and the Swiss Finance + Technology Association. Overall, the report indicates that Switzerland is making progress on the journey to become a good place to start a venture. However the report also shows that the fintech ecosystem in Switzerland evolves only slowly.

Strengths of Switzerland are its excellent education and world-class universities, together with a deep knowledge in the field of financial services. In addition Switzerland has to adopt to digitization if the country wants to stay one of the leading financial centres of the world. On the other hand Switzerland is facing some challenges when it comes to financing despite being one of the richest countries in the world. Venture financing can sometimes be more difficult to find in Switzerland compared with other countries with large domestic markets that allow operations to be scaled up more easily.  

Some interesting results of the report:

Switzerland’s role as one of the leading financial centers of the world is at risk
There has long been a heated battle between leading financial centers, which is tracked annually by the Global Financial Centers Index (GFCI). Recently, London surpassed New York City and became the new leader. Switzerland is not only among the leading ranks, it has two cities with strong positions. Zurich currently ranks seventh (second-highest in Europe after London), but has dropped from sixth and has seen its overall score fall by four points. Meanwhile, Geneva has maintained 13th place and has seen its score increase by five points. Switzerland continues to hold impressive rankings; however, challengers from rapidly growing centers in emerging markets continue to make advances. For example, Singapore is perched on the fourth place, has a heavy focus on wealth management and is rated most likely to gain in importance. On the other hand, Zurich is slipping in the r ankings due to the development in the financial s ector during the financial crisis ( down four places) and its reputation in general (down two). As a result, Zurich now only ranks seventh overall.

Switzerland has lost its unique proposition as a financial center, which was shaped and protected by banking secrecy. This highlights the importance of future-proofing the sector and playing an active role in innovations reshaping the financial service industry.

Start-ups founded by experienced founders
Entrepreneurial activity among the youth (18–24) in Switzerland is the lowest of all comparable countries, whereas the 35–44 age group shows the highest entrepreneurial activity. 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.

High costs, but…
According to the Cost of Living Index 2015, seven out of the top ten cities in terms of cost of living are located in Switzerland. This implies that Switzerland is by far the most expensive country in the world. However the costs of starting a venture are more or less comparable with other hubs like London, New York City or Singapore.

Accoring to the Swiss Venture Capital Report 2016 Fintech is becoming increasingly important, albeit at a low level for the time being. Knip’s financing round of CHF 15.3 million was the largest round in the sector over the past year and also the largest in the young history of the Swiss fintech industry. Until now, Numbrs’ financing round of more than CHF 11 million in 2013 held the record.

2016 has begun quite well. FinanceFox generated CHF5.5 million in a Series A financing round and Monetas announced recently that the company has raised CHF7 million since the start.

The Swiss Fintech Report 2016 can be downloaded from the website of EY.

More news related to fintech on startupticker can be found with our fintech tag.

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