Switzerland, neutral? Not in the name of fintech!
Switzerland has broken free from neutrality in the name of fintech.
The race to be the number one global hub has been heating up and FINMA has positioned Switzerland for gold. Recent regulatory proposals have brought the country in line with its competition, but it must do more than match its rival’s regulation to encourage global growth and claim its title.
Late last year, the Swiss Financial Market Supervisory Authority (FINMA) matched its thriving fintech industry with a set of proposed regulations that will establish an ideal environment for future growth. FINMA has adopted a regulatory sandbox, much like that of London or Singapore, to allow disruptive financial firms the freedom to innovate without restriction. Alongside this, the limit for holding money in settlement accounts will be extended to 60 days- vital for business models such as crowd-funding to flourish. A new ‘fintech license’ would also mean that the stringent, expensive requirements under the previous banking license, which often forced fintech out of business, are no longer in place .
Switzerland’s entrepreneurs now have the opportunity to build out an idea without being thwarted by regulation at the first hurdle. Yet regulation alone won’t win the race. The number one fintech hub must, and will, offer more.
Switzerland’s stability, economically and politically, offer advantages harder to match. Uncertainty is a real turn off for growing businesses; five UK organisations have already made the jump to Berlin in light of post-referendum doubt. Switzerland has long been a major player in banking, insurance, wealth management, currency and commodity trading and more than 70% of its population work within the tertiary sector. Its economy has grown steadily; the IMF shows GDP has increased year on year since 2010 with projections up until 2020. This constructs an ecosystem that draws in and retains start-ups and foreign investment essential for a business’s global growth.
Ultimately, all of the fintech hubs have different benefits to offer, but it must be remembered that Switzerland’s success, and that of its rivals, will depend on the ability to foster innovation through regulation and stability.