Switzerland has become a leading global FinTech center
The Institute of Financial Services Zug IFZ at the Lucerne University of Applied Sciences and Arts has conducted a comprehensive stocktaking of the Swiss FinTech market for the third time. The study shows that thanks to optimal framework conditions for the FinTech sector, Switzerland has developed into a leading global FinTech center, especially for companies in the field of blockchain and cryptocurrencies.
The "IFZ FinTech Study 2018" of the Lucerne University of Applied Sciences and Arts, published on February 28, 2018, provides a comprehensive overview of the Swiss FinTech sector. The first part of the study describes the FinTech ecosystem: on the one hand, the political and legal, economic, social as well as technological environment is discussed, on the other hand, evaluations of the business models of the 220 Swiss FinTech companies are listed. In the second part of the study, 108 Swiss companies that participated in the study are presented in more detail.
Good framework conditions for the FinTech sector
The current study shows that, as in the previous year, the general conditions for the FinTech industry in Switzerland are very good: In a global comparison of 30 cities surveyed, Zurich and Geneva are again in second and third place, with only Singapore achieving even higher scores. "Switzerland has not yet fully exploited its potential," says study director Thomas Ankenbrand. He sees room for improvement above all in the technological sector. The ranking is based on 72 indicators that reflect the framework conditions of the political, legal, economic, social and technological environment.
"Crypto Valley" in Zug is no coincidence
The excellent framework conditions, together with the accumulation of innovative entrepreneurs, the proactive authorities and leading research institutes, have led to the flourishing of the so-called Crypto Valley. This center allows Switzerland to benefit from the global ICO boom: 271 million Swiss francs were received by local FinTech companies via this alternative form of financing in 2017 (see chart 1). However, investments via the traditional financing form of venture capital also increased significantly in 2017, to a total of around 130 million Swiss francs.
FinTech companies: Growth and maturity
"The FinTech sector has grown steadily over the last three years," says Thomas Ankenbrand. At the end of 2017, 220 companies were operating in this country, representing 16 percent growth compared to the previous year. The average size of the companies, measured by the number of full-time employees, as well as capitalization, has increased compared to the previous year. "The industry has not only matured, it is perceived to have matured: The hype has become reality," Ankenbrand said. Swiss banks no longer perceive FinTech companies as competitors, but seek collaboration.
Customer acquisition as the greatest challenge
Despite the growth, Swiss FinTech companies face challenges according to the survey conducted. The difficulty of finding new customers appears to be the greatest obstacle to further growth in the sector. On the other hand, access to external financing causes few problems (see chart 2). This is also confirmed by the significant increase in venture capital investment volume.
Further growth expected
"2017 was another successful year for the Swiss FinTech market," says Thomas Ankenbrand. "We expect this trend to continue in 2018." This included even higher company values, more jobs in the industry, and the strengthening of certain FinTech products. In addition, the entire financial sector appears to be benefiting from this growth and the associated technological innovations.
