Switzerland launches Green Fintech Network

By on 12/11/2020
Lucerne, Switzerland: a Lucerne University of Applied Sciences and Arts report published in March said the Alpine country’s fintech industry had ‘matured’ - and also that the pace of change in the fintech regulatory environment will ‘likely pick up’ | Credit: Werner Sidler; Pixabay

Switzerland’s government has launched a Green Fintech Network to identify and propose new measures that will improve the operating environment for start-ups involved with sustainable finance and tech.

The network has been created by the State Secretariat for International Finance (SIF). Initial members include fintech and venture capital firms, consultancies, law firms and universities.

State secretary for international finance Daniela Stoffel launched the network at a virtual meeting last week. Its primary task is to come up with measures that could help green fintech, with an action plan scheduled for next spring. The Federal Council – the country’s highest executive authority – sees sustainable finance as a “great opportunity” for Switzerland’s financial sector, SIF said.

The move was welcomed by those in the sector. “We are excited about the increased focus on sustainable financial services,” said Katka Letzing, co-founder and chief executive of Kickstart Innovation, a Swiss innovation organisation that focuses on fintech. “One challenge is to help bring about an increase in impactful investments in Switzerland’s financial sector and beyond,” she added. “We hope that can change.”

Aiming to boost competitiveness

The context for such change is promising. The network’s launch follows the Federal Council adopting a report and guidelines on sustainability in the financial sector that was published in June this year.

At the time, the Federal Council said that it wanted to make Switzerland a “leading location for sustainable financial services”. With this in mind, the executive said it wants to “shape the framework conditions in such a way that the competitiveness of Switzerland’s financial centre is improved and, at the same time, the financial sector can make an effective contribution to sustainability.”

The report examined 13 measures for sustainability in the financial sector. It was prepared by a working group overseen by SIF, in partnership with the Federal Office for the Environment and other authorities.

‘Mature’ market driven by Zurich and Geneva

Switzerland’s fintech market experienced a slowdown in growth during 2019 compared with the previous year, according to a study by Lucerne University of Applied Sciences and Arts, published in March.

But, it added, the industry – whose fintech hubs are the cities of Zurich and Geneva – also “matured”. At the end of 2019, a total of 382 fintech companies were legally incorporated in Switzerland, the study found. This was up from 356 at the end of 2018, and 220 at the end of 2017, according to its figures.

The pace of change in the country’s fintech regulatory environment will “likely pick up”, added the report. Switzerland’s financial services act and financial institutions act, in force since 1 January 2020, are “fundamentally changing Switzerland’s financial market architecture, for both traditional financial services providers, as well as fintech companies,” it said.

Green fintech sector surveyed

SIF, which is overseen by the Federal Department of Finance, published a survey on the opportunities and obstacles facing green fintechs in October this year.

Reported barriers included: high requirements regarding client-onboarding and know-your-customer (KYC) processes; the relatively limited size of the Swiss market; and higher development costs compared with other fintechs, which reduces access to growth capital because it usually takes longer to become profitable.

Recommendations included: mandatory disclosure of environmental risk and impact information for larger companies; and improved co-operation between financial institutions and green fintechs. For example, “open finance” where open banking data-sharing principles are extended to enable fintech companies to access customers’ data across a wider range of sectors and products, would be helpful.

Though geographically located in the heart of Europe, Switzerland in not a European Union (EU) member state. The survey results also recommended the creation of a dedicated work permit for technical experts working in start-ups (for example, non-EU experts who study in Switzerland should be able to found a start-up following their studies).

About Ian Hall

Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.

Leave a Reply

Your email address will not be published. Required fields are marked *