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Who survives the FinTech evolution?

Lucerne University of Applied Sciences undertook a comprehensive review of the Swiss fintech market for the fourth time. The study shows that the local FinTech sector has again grown strongly and continues to gain importance. She also explores the question of how traditional banks deal with digital evolution.

This year too, according to the study published by the Lucerne University of Applied Sciences at the end of February, the fintech sector in Switzerland enjoys good general conditions. In the global FinTech Hub ranking, the cities of Zurich and Geneva continue to rank second and third.

FinTech is important for Switzerland

The FinTech sector grew strongly in 2018. At the end of the year, Switzerland counted 356 FinTech companies, which represents a growth rate of 62 percent over the previous year. As evidenced by the increasing number of employees and the capitalization of companies, the sector has also become more mature and stable. On the other hand, there is a contrast in the traditional financial sector, where the number of institutions and employees is declining.

FinTech Evolution: Fin is local, tech is global

Furthermore, the FinTech study 2019 shows that global innovation drives the FinTech companies forward. There is a certain pattern in the FinTech business units: The tech-driven FinTech companies, especially in the areas of Distributed Ledger Technology (eg Blockchain) and Analytics, are mainly internationally oriented. By contrast, finance-driven companies, such as deposit & lending or payment, are focusing more on the domestic market. This pattern can be seen not only in the local, but also in the international FinTech companies.

Innovation should solve a problem

The goals of technological innovation in the financial industry should be higher volumes, lower costs and / or lower risks to the business as well as higher benefits and / or lower costs for the customers. Well thought-out business models and meaningful implementation are far more important than the use of extraordinary technologies. The financial industry needs solutions that are traceable and accurate for customers and companies. This opens up opportunities for the innovation location of Switzerland.

From the hype about disillusionment to reality

The results of last year’s study showed the path of the FinTech sector from hype to reality. Further maturing of the sector and the larger venture capital transactions confirm the development. By contrast, the market for cryptocurrencies suffered a sharp correction.

Traditional banks need to position themselves or they will become irrelevant

The authors of the study do not expect banks to be ousted by fintech companies. Rather, new technologies will partially replace some of the services and processes of traditional banks. The winners of technological innovation are companies that have the right teams and the right culture to implement new technologies faster and more consistently.

Published inFintech

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