Switzerland’s government has launched a ‘green fintech network’ to help it identify and decide how it can improve its support for the sector.
The network has been created by the State Secretariat for International Finance (SIF) and kicks off with fintech and venture capital firms, as well as consultancies, law firms and universities, as members.
The Federal Council – the country’s highest executive authority – sees sustainable finance as a ‘great opportunity’ for Switzerland’s financial sector, SIF said as it unveiled the network.
State secretary for international finance Daniela Stoffel launched the network at a virtual meeting. Its primary task is to come up with measures that could help green fintech, with an action plan scheduled to be published next spring.
Aiming to boost competitiveness
The network’s creation follows the Federal Council’s adoption of a report and guidelines on sustainability in the financial sector almost five months ago.
At the time the Federal Council said that it wanted to make Switzerland a ‘leading location for sustainable financial services’. It added: ‘In order to achieve this, the Federal Council 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 (which has an executive summary in English) examined 13 measures for sustainability in the financial sector. It was prepared by a working group overseen by SIF, working with the Federal Office for the Environment and other authorities such as the Federal Department of Foreign Affairs and State Secretariat for Economic Affairs (SECO).
‘Mature’ market driven by Zurich and Geneva
A study from Switzerland’s Lucerne University of Applied Sciences and Arts, published in March, concluded that the country’s fintech market had experienced a slowdown in growth during 2019 compared to the previous year. At the same time, however, it said the industry – whose fintech hubs are the cities of Zurich and Geneva – had ‘matured’.
The research said that, at the end of 2019, a total of 382 fintech companies were legally incorporated in Switzerland. At the end of 2018 there were 356 and at the end of 2017 there were 220.
The report also said that the pace of change in the country’s fintech regulatory environment will ‘likely pick up’. It said the country’s financial services act and the 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’.
Green fintech sector surveyed
SIF, which is overseen by the Federal Department of Finance, has already undertaken – and published the results of – a survey on the opportunities and obstacles facing green fintechs.
Barriers identified in a 16-page report 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 to other fintechs, reducing access to growth capital because of the typically longer time taken 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 through ‘open finance’ – the extension of open banking data-sharing principles to enable fintech companies to access customers’ data across a wider range of sectors and products.
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).
Katka Letzing, co-founder and chief executive of Kickstart Innovation, a Swiss innovation organisation that focuses on fintech, told Global Government Fintech: “We are excited about the increased focus on sustainable financial services as we work with local and international later-stage start-ups, as well as established financial organisations, to support new collaborations. One challenge is to help bring about an increase in impactful investments in Switzerland’s financial sector and beyond. We hope that can change.”