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Who will survive 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.

The “IFZ FinTech Study 2019” of Lucerne University of Applied Sciences provides a comprehensive overview of the state and developments in the Swiss FinTech sector. This year again confirms that the FinTech sector enjoys good general conditions in Switzerland. In the global FinTech Hub ranking, the cities of Zurich and Geneva continue to rank second and third (see chart).

The FinTech sector grew strongly in 2018. At the end of the year, Switzerland had 356 FinTech companies, which corresponds to a growth rate of 62 percent compared to the previous year (see chart). 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.

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 increasingly focusing 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 greater 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.

Published inFintech

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