Fintech in Switzerland: How Are We Seen From Abroad?

Fintech in Switzerland: How Are We Seen From Abroad?

by January 18, 2018

Switzerland has a world-renowned reputation for its financial services and banking sector. Now, with the Swiss fintech scene accelerating and the impressive quality of its startups, foreign players and industry experts have taken notice.

An internationally-oriented financial center

Switzerland has a strong, internationally-oriented financial center and has maintained close financial relations with its peers. According to Deloitte, in Europe, only the UK, French and Swiss regulators have signed fintech cooperation agreements with other regulators across the globe.

These agreements aim to deepen bilateral cooperation and enable regulators from the two countries to exchange views on domestic and international financial market developments and policies.

These agreements also intend to facilitate the expansion of fintech startups from one country to the other. And for Swiss startups, having a strategy to expand globally has become a top priority considering the country’s limited venture ecosystem and the market’s small size.

Switzerland has signed such agreements with the likes of Australia, Israel and Singapore.

Zurich, a global fintech hub

As an innovation nation positioned in a central location geographically, Switzerland has nurtured a thriving fintech ecosystem and boasts excellent infrastructure, a solid legal system and protection for consumers.

In particular, Zurich, the country’s largest financial center, has become a global fintech hub, according to a Deloitte report.

The report names Knip and Temenos as Zurich’s notable fintech success stories. Insurtech startup Knip had raised over US$18 million in funding from Swiss and foreign investors before merging with Komparu to create the Digital Insurance Group in June 2017.

Temenos, a provider of banking software, is the classic story of a great entrepreneur becoming an industry leader with core banking platforms.

In 2016, it was a highlight to see Eric van der Kleij bring his expertise to the Kickstart Accelerator in Zurich. Van der Kleij is a notable British tech entrepreneur and the Chairman of the Advisory Group and Adviser on Fintech and Blockchain for The UK Government’s (DIT) Global Entrepreneur Programme.

According to Deloitte, the future for Zurich’s fintech space will focus on strengthening the vibrant ecosystem, expanding internationalization with visits to/from other hubs and doing more to promote the many advantages of Switzerland as a fintech hub.

Zug or the “Crypto Valley”

In recent years, another hub has emerged not so far from Zurich. The Canton of Zug, also known as the “Crypto Valley,” has seen a growing number of blockchain and cryptocurrency startups settling in. All have considered proximity to the financial center of Zurich, the availability of specialized labor and proximity to universities as important factors.

Today, Zug is home to cryptocurrency-powerhouses the Ethereum Foundation, ShapeShift, Xapo, Tezos and Melonport, among numerous others.

Xapo, a bitcoin wallet and vault services provider, moved its headquartered from Palo Alto, California, to Zug in 2015, citing the country’s long history of neutrality and stability.

“With its traditions of international neutrality, national sovereignty and regulatory stability, we believe that among a variety of potential locations, Switzerland offers the world’s best operating, financial and regulatory environment and consequentially the greatest level of protection for our customers’ bitcoins,” the company wrote in a blog post.

In August 2017, popular decentralized mobile bitcoin wallet Breadwallet closed a funding round and announced it had moved its headquarters to Switzerland.

“Switzerland has emerged as a hotbed of digital currency startup activity, and we were attracted by its leadership in conservative financial legislation,” said Adam Traidman, CEO of Breadwallet. “Its strong reputation for financial privacy for consumers is the ideal fit for our charter to empower individuals with the benefits of bitcoin.”

The Crypto Valley Association was launched in January 2017 to bring various specialists in the blockchain and cryptocurrency space together. From an initial tally of 16 at launch, the organization now counts over 550 corporate and individual members.

However, one important open question remains: Why is Switzerland position its country not as THE WealthTech Knowledge center/hub instead of taking the  potential reputational risk position Switerland as a Crypto country?

Featured image via Pixabay.