Swiss Fintech Rides High with Fresh Strengths – Time for Onshore Collaboration?

In economic & business cycles, asset prices gyrate from time-to-time. Many fresh opportunities also emerge from these cycles.  

The aftermath of WWII saw consolidation among financial institutions in Switzerland. Fast forward to the 1960s, there was a sharp increase of financial flows as well as an exponential growth of the Swiss financial centre, fuelled by the rapid internationalisation of Swiss financial institutions. At the same time, foreign banks – bringing with them their own cutting-edge tech established a foothold in Switzerland and contributed to the transformation of the country into a global financial centre. 

Through the 1970s to 1980s, Swiss financial institutions expanded internationally by leveraging on their traditional strengths of stability, security and trust with an eye to innovation.  By the 1990s, mergers & acquisitions marked the order of the day and, Swiss financial institutions were not immune to this global trend.  

With the global dotcom boom that propelled the world from around 2000, a new breed of global players, namely Swiss fintech companies emerged as a dominant force. They seeded new technologies, developed talent and expanded the ecosystem that have come to mark the current landscape.  

Arising from these developments, Switzerland has emerged as a frontrunner in regulating and managing innovative technology for the financial sector. Switzerland’s move to enact regulations for distributed ledger technology (DLT) in the financial sector in 2021, one of the first countries in the world do so, illustrates this leadership. The legal certainty it offers for companies operating in the field of innovative technologies has attracted many to set up shop in Switzerland. 

Today, 10% of all global European fintech businesses have operations or are headquartered in Switzerland, with close to half of them locating their businesses in Zurich, making it one of most vibrant fintech cities in the world. 

Swiss Foundations are Magnets for Global Fintechs 
Switzerland is not alone in the global scheme of things to draw global fintech into its already vibrant ecosystem. However, Switzerland retains the pole position on several counts. 

Innovation-friendly framework conditions and the legal certainty provided by the authorities have allowed the emergence of a unique and globally connected ecosystem. Early movers, such as the Ethereum Foundation which settled in Zug in 2014, were decisive and attracted many more companies to the country’s homegrown ‘Crypto Valley’. Other regions in Switzerland quickly jumped on the bandwagon, so much so that the Crypto Valley stretches from Zurich via Zug to Ticino, and to Geneva. 

Further, given that talent is key to the success of fintechs, Switzerland certainly ups the ante in this regard. According to the INSEAD Global Talent Competitiveness Index, Switzerland leads the world with its renowned research institutes and universities, with many offering blockchain study programmes.  

Simmering Fintech Knowhow in Swiss Industry  
Today, experts claim that Switzerland is regarded globally as a lead player in the area of DLT, amidst a growing fintech and blockchain ecosystem that has flourished in recent years. To date, more than 1,000 companies in the specific area of blockchain operate innovation-friendly framework conditions. Start-ups and established players have rapidly recognised this, and this trend continues.  

Take the example of Swiss-Singaporean company, Sygnum. In October 2023, this digital asset technology group received approval from the Monetary Authority of Singapore for Major Payment Institution Licence. While Sygnum operates seamlessly across these two geographies leveraging on their respective in-country strengths, it garners its core tech strengths for its DLT-based tokenisation technologies from its Zurich headquarter operations.  

Another, Asian financial giant and global lender, Nomura, took the first step in 2022 to set up a crypto subsidiary in Switzerland, citing the country’s attractive talent pool as a driver.  Nomura has said that its move to establish a foothold in Switzerland enables it to stay at the forefront of digital innovation and it is an organisational priority. 

While these financial institutions already see a pathway into Switzerland, Switzerland Global Enterprise (S-GE) continues to provide a one-stop channel for innovative foreign companies to establish themselves in Switzerland. Specifically, it helps interested entrants build up networks in which these companies operate and inform them about Switzerland as a business location – through various personal and digital channels. 

Ms Renee Koh is the Head of Swiss Business Hub ASEAN. The Swiss Business Hub ASEAN  is the representative of the official international trade and investment promotion agency  Switzerland Global Enterprise in South East Asia.