Switzerland has been named the second most attractive location in Europe for fintech stakeholders, surpassing the Netherlands, Estonia, and the UK. The country is recognized for its conducive business environment and the attractiveness of the local market for fintech players, according to the 2024 European Fintech Index.

The index, released on June 27 by Lithuanian fintech company ConnectPay, provides an overview of the fintech landscape across Europe. It evaluates key markets in the region and their potential for fintech businesses, government institutions, investors, and other stakeholders, assessing market potential through three dimensions:

• “Fintech attractiveness”: This includes metrics such as the presence of fintech-related regulation, funding per capita, workforce share, and the number of fintech licenses. These factors determine whether a country can be deemed a favorable market for establishing a fintech business;
• “Business attractiveness”: This spans several parameters such as startup friendliness, ease of doing business, and taxation competitiveness to define the overall context for conducting business; and
• “Market attractiveness”: This covers aspects that make a market favorable for fintech to conduct commercial operations and successfully scale. Metrics include population engagement with digital and financial services, economic health, and relevant regulations.

Across the 32 European countries studied, Switzerland ranks second, recognized for its favorable business landscape (ranked 3rd) and market potential (ranked 3rd). The country also boasts one of the region’s largest numbers of startup unicorns.

Switzerland has made some efforts to create a conducive business environment for fintech companies. In 2023, it launched the Swiss Financial Innovation Desk (FIND), an independent unit within the State Secretariat for International Finance (SIF), aimed at fostering financial innovation by supporting collaboration between the public and private sectors.

The government has also introduced regulatory changes to provide greater legal clarity and encourage innovation. These include the Fintech license introduced in 2019, the regulatory sandbox introduced in 2017, and the pioneering “DLT Act”, a legislation covering blockchain technology, digital assets and tokenization that came into force in 2021.

Challenges in fintech attractiveness

Despite its high rankings in business and market dimensions, Switzerland ranks 8th in Europe for “fintech attractiveness,” behind jurisdictions like Estonia and Luxembourg.

Previous research has delved into the difficulties fintech companies face in the Swiss market. The 2024 IFZ Fintech Study by the Lucerne University of Applied Sciences and Arts’ Institute of Financial Services Zug (IFZ) highlights that Switzerland is lagging behind fintech hubs such as Singapore and Sweden. These countries have been more proactive in enhancing their support for fintech companies, overshadowing Swiss efforts.

Additionally, a 2024 study by UBS, Credit Suisse, and the Swiss ICT Investor Club (SICTIC) indicates that Swiss startups face significant funding challenges and limited international recognition. Moreover, with a population of just nine million, the local market is too small for startups to thrive, compelling young Swiss tech ventures to seek international expansion early in their development.

Access to well-educated workers is another key challenge faced by Swiss startups, with 46% of the founders polled by Credit Suisse finding it hard to fill vacancies with suitable candidates. Labor market challenges are more pronounced for startups in the growth and expansion phase, with 55% of struggling to recruit qualified employees, compared to 39% for startups in the pre-seed and seed stages.

Sweden recognized as the most attractive country in Europe for fintech stakeholders

The 2024 European Fintech Index ranks Sweden as the most attractive country in Europe for fintech stakeholders. The country, which ranks within the top five across all three dimensions, is recognized for its high number of information and communications technology (ICT) and fintech professionals, and its fintech-friendly labor market structure.

Baltic state Estonia tops the ranking in the business (ranked 2nd) and fintech (1st) dimensions, thanks to its strong unicorn presence per million capita, high number of fintech deals per million capita, and favorable regulatory frameworks.

Finally, Denmark ranks 1st in market attractiveness, supported by its strong gross domestic product (GDP) per capital and private consumption growth indicators. The Scandinavian country takes the 3rd place in the overall ranking.

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