Swiss fintechs are “beginning to outpace the [traditional] financial companies”
and are growing at an annual rate of 7%. As the fintech companies make a name
for themselves – particularly in investment management and banking
infrastructure – this has raised the question of whether they pose a threat to
the long-standing banking institutes.
While it may
be true that traditional business models need to be revamped to fit in with the
digital world there are many complex financial services that banks offer which
fintech companies don’t. Here lies the solution to maximising the growth of
fintech while protecting Switzerland’s banks - both markets can prosper when
they focus on their unique services.
HOW LONG CAN A TRADITIONAL MODEL WORK IN THE DIGITAL WORLD?
fintech companies flooding the market there’s been a wakeup call for
traditional banks to apply technology-driven models. This has been answered by
Swissquote Bank who have adopted a blockchain infrastructure and integrated
robo-advisory. As more banks begin to adapt their functions it will leave those
relying on their traditional business model and reputation struggling to keep
pace with the digital world.
many services that the fintech market seamlessly offers - trading in
cryptocurrencies, crowd funding and banking infrastructure – that established
banks do not compete on. Narrowing in on banking infrastructure, it was found
that in 2019 were working in this fintech niche. Banking
infrastructure will continue to dominate the Swiss fintech market as financial
services move over to the digital sphere – a change accelerate by –
and institutions realise their responsibility to seek out systems that protect
sensitive data and shield from potential attacks.
THE HOME OF THE CRYPTO VALLEY
Just as the
US has the Silicon Valley in San Francisco, Switzerland has its own hub of
fintech activity between Zug and Zurich. Known as the Crypto Valley, this
region houses over 800 companies and 4,000 employees - with skills in
cryptocurrency and blockchain - who handle the mining, storing, trading and
investing of currencies such as Bitcoin. Bitcoin hit the market in 2009 and
brought with it fear that digital assets would replace the traditional banking
system but as it became clear that the volatile currencies would never be used
to pay salaries or to take out mortgages, banks recognised they weren’t a
direct threat to their services.
THE START-UP SCENE
With its world-renowned banking market, it’s no surprise that fintech has been crowned an up and coming star in Switzerland. Despite having a small population, the nation ranks based on their fintech business infrastructure and ecosystem quality, competing with the powerhouses that are the US and the UK. More fintech start-ups are springing up each day in Switzerland and though banks have traditionally been wary of investing in new businesses with little capital and unproven business models, they are beginning to get behind the smaller companies as they recognise their disruptive business models are the future.
WORKING TOGETHER AND SIDE BY SIDE
fintech companies operate in the same realm as the banking market, they provide
a distinctly different service and therefore there is an opportunity for the
two to work together and benefit from one another. The two markets can
collaborate on banking infrastructure and by doing so protect maximise and
gain more of their trust. Meanwhile, they must continue providing services that
the other market doesn’t offer, meaning that banks should direct their
resources towards providing complex financial services and fintech companies
focus on supplying currencies that are safe from hyperinflation.
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