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Swiss Fintechs do not have it easy

Swissquote, the online bank, sees tremendous opportunities for digitization and cryptocurrency growth. In an interview with, co-founder and CEO Marc Bürki reveals how he wants to do this.

Mr Bürki, at the end of July 2018, the financial newspaper Finanz und Wirtschaft wrote: Swissquote is doing well. Since then, the stock has collapsed by half. What happened?

Of course, we still do it well. But there were question marks from investors regarding our announcement that we will make 10 million francs less profit this year. However, these 10 million are unique investments that will bring us forward – it does not go backward for the Swissquote. We have been too heavily punished by the market because the growth potential has not changed since mid-2018.

We have made a somewhat cautious forecast for 2019, but this can not be the reason why the stock is losing 20 percent.

The stock definitely has catch-up potential. Short-selling strategies work for a certain period of time. Then the bare business remains the bank’s strategy. Our strategy is right and we have a lot of growth potential. Swissquote has proven this over the past few years. We were surprised ourselves by the strong reaction of the market to our numbers and shocked by how strong the stock has given way.

Business was rather difficult in the second half of 2018, which was probably due to the generally weak market. How did the business development in the first quarter of 2019?

If we take a closer look at the second half of 2018, we see that, apart from the crypto trade, all business units were stronger than in the first half of 2018. To illustrate this somewhat, we have approximately 10 million francs in trade in the five cryptocurrencies throughout 2018 made on our platform. Half of this was achieved in the first quarter. At that time, the Bitcoin rose to $ 20,000 – today it is still worth $ 4,000.

“We grow despite weaknesses in the crypto trade”

Of course, this crash has triggered a very lively trade. The difference between the first and second half of 2018 came about mainly because of the crypto business. Trading in foreign exchange, interest business and also the rest of the business developed positively.

And in the current year?

In the first quarter of 2019, of course, we still have a comparison in the crypto trade with the first quarter of 2018 in the books. In addition, January and February were slightly weaker. Since then, more volatility comes into play again. Of course, the year is still young. But we believe that we will have a very good year in 2019 and that, despite the weakness in the crypto sector, the bottom line will grow 5 to 10 percent.

Last year they surprised us with the announcement of a new building with room for up to 1,000 new jobs. They think in big dimensions.

I have been in this business for 28 years. As an entrepreneur, I always pay close attention to the costs. In recent years, we have made a very strong contribution to the Bank’s profit side, and we will not change that. Our goal is that half of each additional sales franc goes into profit. They do not see this leverage effect in many banks. The aim of the bank is to grow less quickly on the cost side than on the income side.

But we also believe that the digital revolution in banking is not over. We will continue to evolve – but of course not to the extent that we will employ 1’000 people tomorrow. So when we build, we do it for the future.

Your trading boss once said that Swissquote can only offer low trading and custody fees because it consistently automates processes. How do you do something that the big banks always strive for, but hardly achieve?

We consistently invest in our work processes and try to automate everything. This work is never over. Not least because we are constantly developing new services. When we launch a new service, we first look at how successful it is and then we try to automate it.

In Swiss banking, they have to go beyond the country’s borders if they want to be successful. Not least because Switzerland is a small country. If you want to expand into other countries, you need appropriate licenses. And for that, they need employees again. Because they can not work in the whole world from Switzerland. Even if we are well positioned on the process side, we need employees – and they cost money.

Looking at your story and your digital strategy, could you say that Swissquote was an early fintech?

Right. The mentality of a startup or a fintech applies to us – we also have a lot of young employees who start their first job with us. In that sense, the essence of Swissquote is actually that of a startup.

Also published on Medium.

Published inFintech
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