Switzerland’s fintech is failing to make an impact compared to New York, London, and Berlin, according to research, while Luxembourg and the Netherlands are threatening to overtake the country as a European fintech center. Other countries such as China, India, and Singapore are also making headway in the fintech industry.
According to research group Statistica, money produced by digital transactions could exceed $2 trillion by the end of 2016, and may well expand to $5 trillion by 2020; however, Switzerland only accounts for $16.5 million.
The Global Financial Centers Index has stated that while Zurich is considered number seven in the world when it comes to finance, and Geneva is 13th, this sum amount doesn’t sound too impressive in comparison to other European countries.
Slow to Act
According to Zurich-based consultancy Nexussquared, when researching the different Swiss fintech startups in the country, the company found only one Swiss applicant for its nexuslab accelerator programme out of the eight finalists.
Nexuslab co-founder, Daniel Grassinger, said that while there is a lot of innovation in Switzerland, the Swiss are slow to act on their ideas.
Swiss innovators tend to over-engineer their ideas, keeping them under wraps as they theoretically work on every detail to make them best in class. Then someone else comes up with the same idea and puts it into action.
Despite the fact that the Swiss Financial Market Supervisory Authority (Finma) is now taking notice of digital financial services it still lags behind countries such as Britain.
John Hucker, president of Swiss Finance & Technology Association said that while Britain has done a great job at helping the fintech industry, the hands-on approach in Switzerland is not the same.
[Britain] has developed a flavor of interactivity with start-ups, collaborating with them to adapt regulation. Switzerland, by contrast, traditionally adopts a more liberal, hands-off approach – we don’t see such interactivity here.
There’s Still Hope
All, though, is not lost for the Swiss fintech scene.
The biotech and medtech sectors within Switzerland once started from humble beginnings with many of them struggling to make much progress due to legislation. Swiss Biotech, which started in 2003 by Domenico Alexakis, was one such company. Now, though, the company has grown from 145 members in 2006 to 279 in 2015, helping to generate 15,000 jobs and produce CHF5 billion in revenue.
Alexakis said that it is difficult to get an idea off the ground when big company’s look down on the small startup, but that understanding its impact is important.
The key was presenting the economic advantages of a strong biotech sector. As soon as people understood the potential economic impact, they started to get on board and support it.