Switzerland Has the Potential to Become a Fintech Hubby Fintechnews Switzerland October 6, 2015
Switzerland needs to embrace the potential of fintech to redefine the Swiss financial center’s competitive advantages and stay relevant, according to a new report from Nexussquared. “Switzerland Potential Fintech Hub”.
Entitled ‘ACT NOW OR FOLLOW LATER – Why Switzerland Must Seize the Fintech Challenge,’ the report claims that although Switzerland has the potential to become a regional fintech hub, there is a lack of consensus on the center’s strategic direction that is preventing the country from fully leveraging the potential of disruptive technologies.
“Switzerland’s political neutrality, stability, diversity in languages, and favorable geographical location in the middle of Europe are significant competitive advantages,” the report says.
“This together with its strengths in finance, technology and innovation enable Switzerland to position itself as an ideal regional fintech hub.”
Although Switzerland ranks in the top 20 for the majority of key fintech indicators, there are a number of areas in which it could improves its already strong position as a fintech destination.
“Despite Switzerland’s long history and competence in financial services as well as repeatedly topping global innovation league tables, the Swiss fintech scene remains comparatively quiet,” the report says.
Notably, Switzerland is lacking a government-backed fintech initiative.
“With no shared vision or prominent organization taking the lead, the fintech industry remains fragmented, lacks direction and global visibility.”
Moreover, the country’s relatively tougher regulatory environment is holding back the fintech sector. Switzerland needs to “[enable and incentivize] innovative startups through supportive regulation.”
A relevant example is the case of ECUREX, a Swiss-based bitcoin trading platform, which took 16 months of assessment before obtaining legal operating status in Switzerland.
Additionally, Switzerland, but also Europe as a whole, is facing a massive ICT skills shortage. SwissICT, the country’s largest industry trade association, predicts that the industry will be facing a shortage of 87,000 employees by 2022.
To overcome these challenges, Nexussquared recommends three initiatives:
- A blockchain expertise center to “enable Switzerland to position itself as a location of choise for blockchain technology”;
- A ‘next generation’ wealth management hub to strengthen Switzerland’s position as a global leader in the field and eventually develop a new niche in robo-advisory services;
- A continental European fintech hub.
Financial technology is shrinking the role and relevance of traditional financial service providers, but at the same time has the potential to help them create better, faster, and cheaper services.
Most particularly, blockchain technology has the power “to overhaul the financial world” as it allows users to transact with each other without knowing or trusting one another.
“[Blockchain] eliminates the need for a central authority to clear transactions and certify ownership. […] Blockchain technology brings benefits to society because it is decentralized and removes the need to trust third parties, is highly secure and private, instantaneous, and virtually cost free.”
Launched earlier this month, Nexussquared is a Zurich-based fintech accelerator with a focus on blockchain technology and its application to financial services business models. The company is committed to increasing Zurich’s attractiveness for fintech startups as well as engaging with public sector agencies to provide regulatory guidance.
Nexussquared also provides business coaching services and consulting advice.
Image credit: Zürich, Switzerland, Wikipedia.