Finance Technology | Documentary | InsurTech | Finance | Expert Interviews
FINTECH MADE IN SWITZERLAND This is mount Pilatus in Lucerne, Switzerland. More than 100 years ago a group of entrepreneurs developed revolutionary technology and built a railway to get to the top of the mountain faster. It is still the steepest of its kind in the world. The trip to the summit used to take a day on foot and on muleback. Now it was possible in under 40 minutes. This innovation put Pilatus on the map.
A similar revolution is going on in Switzerland today. FinTech entrepreneurs are reinventing the financial sector making it simpler, cheaper, and more convenient. Together with banks, they hope to bring Swiss Banking into the digital age.
I am Swiss and an entrepreneur. I launched my first startup in Switzerland in 1996 founded additional companies in America and Japan and wrote books on finance and entrepreneurship. It seems to me Switzerland as a financial center and FinTech are a natural match, but we also face circumstances quite different from other countries. To get a better idea of the state of FinTech in Switzerland I visited founders of Swiss FinTech startups investors, bankers, and politicians.
They told me about their experiences, challenges, and dreams for FinTech Made in Switzerland. I think the first wave was largely euphoria. It was unclear how we could use technology profitably and disruptively in financial services. There was a lot of trial and error.
We had to wait and see which technology existed and how we could use it. What technology means in general, not just to finance, is that costs of doing things get reduced and things become more effective. Whenever this happens, labor gets freed up which can be used on other things and you will see wealth creation. There are two ways to look at it.
One is the general perception of FinTech. This is largely from the view point of self service, B2C and attackers of the existing financial sector. This is one way to look at it, but there is much more. This is one way to look at it, but there is much more. In fact, this is about digitization
In fact, this is about digitization less of things you see on the front end but how we will create value in the future in the financial sector. If you look at Uber, it is still about driving a taxi but it's so much easier. You press a button, the taxi arrives, you get in, and that was it. I think it will be similar with many financial services.
They will get much easier for customers. We can offer services directly to customers this is the main difference. These aren't necessarily new business models we couldn't imagine a decade ago we certainly knew it was possible back then but customers weren't ready because they didn't have the technology to take advantage. Convenience is certainly what customers will enjoy on a broad spectrum, that's where we're heading. Perhaps less spectacular, but I think if somebody described five years ago how to optimize the taxi business with Uber the description alone probably wasn't that spectacular but if you can use the service today it is very spectacular. If you have a field of business and you are subject to disruption if you're heavily into the taxi business and along comes Uber or you're running a hotel chain and along comes AirBnB or you're running a bank and along comes Bitcoin.
Those who will do well is those who will adapt and those that will not or even turn hostile will become a casualty of history. It is much easier to digitize a media company than a bank but technology is capable of doing that now so it certainly will. Everything that can become more efficient will, as always in economic history. This also applies to the highly regulated financial sector.
The financial crisis certainly harmed the industry's reputation but we can also repair a lot of things. We have to put people at the center and think how we can use technology to make finance work to the benefit of people again. If we can do this, then we have achieved something and will also make a lot of money and it will be a lot of fun, because we managed to build something great. If you have this repertoire you can play wrong notes or you can play Bach. Taking advantage of the opportunity to play Bach and the pleasure to be creative is still missing. People see the danger, but not the opportunity.
We certainly see this as an opportunity. Of course, change can always go both ways. But in general, we see this as a great opportunity. If you look at the recent years it worked really well. We said we put people at the center we use technology to offer new services that were previously unavailable and we bring these services to market.
This has worked very well. I don't see why this should change if we continue on this path. I want to work with something that matters and where you can significantly improve the lives of maybe the whole world population. That's ambitious but 80 percent of the world's population do not have access to banking. So they can't trade with anybody they can't see and thus they are poor. This is something we can do much better.
If finance can't improve the lives of people we have no use for it. It cannot become an ancillary discipline of economics. Finance exists to reduce risks for people to improve returns for people's pensions. Never since the end of the Second World War such great opportunities existed in this industry as today. This is the best time for the financial sector if they take advantage of this opportunity.
I have been an entrepreneur since university for the last ten years. This is my second company. The first couple of months it was a bit difficult to get the first clients on board which I find pretty natural in the financial industry because there's a lot of trust in this industry. Insurance brokering, what we did at Knip neither Dennis nor me had any idea of the insurance business. We started by saying "let's think from the perspective of the customer."
This was the secret of our success because we didn't think like people in the insurance industry who did things the traditional way but we applied digital know-how to the insurance business. The step from a traditional bank like UBS to a FinTech company was not a big step. Finance is finance.
The insteresting thing was how we could use technology to be different. We had a few hundred clients. So we knew that we could sell our product. We decided to take on a little more risk and founded a company exclusively for this product. We also found investors who believed in us. Together we developed the business and in the last two years our client base increased by factor ten.
Because we put great emphasis on flexibility we often tried to come up with a good solution for our clients. Then things started to take off, more clients joined the platform and now all of a sudden we have quite a great growth rate. I often went to the office with a big smile on my face with a rush of endorphines.
On the other hand, as a startup founder you let all this get very close to you. Being an entrepreneur not only means taking risks but also having privileges. Being creative, creating something new.
This has a lot of value. In Switzerland, we should present entrepreneurship honestly, like it really is. The culture of a bank is certainly different from a three year-old tech startup. Some reasons I understand, and others less so.
Many companies in the FinTech sphere that was also how the general public saw it was "these FinTech companies would like to out-compete the banks over the next ten years." "Banking is going to be dead in ten years." But I don't think that is the way to go. Banks have been around for way too long for that to happen the infrastructure is there, the relationship with clients are there. What you have to do to be successful in the market both being a bank or being a FinTech company is to see where your interests overlap and where you can find collaboration opportunities and see how you can grow together. This process took about ten months.
Probably quite fast for a bank but for us it was sometimes a game of patience. But after about a year we released our solution and that was really a milestone for us and also for our customers. All big ideas started in a garage. Apple didn't start in an incubator but in a garage. I first have to prove my solution has legs that it works in test markets and from that big things emerge. When our big venture round came that was an entirely new game.
Also when we expanded to Germany with a market ten times as big as Switzerland. And all this in a very short time. These were all huge milestones that we and our team had to process.
First we were two people, then ten, then thirty, fifty, seventy, 120... That was a big challenge. But also a fantastic challenge. We looked at the margins in our mortgage lending business and quite frankly had a shock.
We needed to do something urgently. Growing in mortgage lending with little risk is tough so we had to think of other options. Digitization certainly lowers barriers to entry.
You can get to the market with a good idea more easily. But the same thing is true for us banks as well. Our approach at Credit Suisse is participating in the relevant topics and seeing how we can integrate ideas coming from startups in our digital offerings. What we did differently was that we began a strong outreach. We approached startups, VCs, consultants technology providers of all kinds also regulators, politicians, or interested clients. Our ecosystem is extremely broad.
I am the only one in our team with a banking background. Everybody else has a totally different background. Media professionals, a physicist, a lawyer an artist, somebody coming from an NGO. A broad selection, so we can have a varied approach. Also people who had their own startups.
Who said "I have an idea, I start a company." Are Swiss customers Internet-savvy enough to get a mortgage online without stepping into a bank? We believed in this business case and it was great to see it took off shortly after launch. Today it is the flagship of our online offerings and it also gave us the reputation as the "most digital bank" in Switzerland. The process is usually more complex than it looks like from the outside. But we have cooperative and proactive meetings and we are looking for solutions. Startups want to work with us and we also want to innovate.
In the end, we find a solution. We have to manage a world of two velocities. A relatively low velocity within the organization to ensure stability but outwardly we have to become more efficient and faster especially with FinTech companies and other tech companies it's not only about FinTech.
What are the mistakes of the media industry what are the mistakes that Kodak made? We try to avoid the same mistakes. We have an advantage we're not the first industry undergoing this paradigm shift. The agility and the mentality of FinTech startups experimenting, being fast, learning also leaving the traditional path. Companies definitely need to do this as well in the future. Why should the customer not replace me? Why am I better? I can work with physical elements that enhance the digital world or I have to be half a step ahead of the competition and anticipate what customers want next.
We shouldn't think customers are slow in the digital world they can be very fast. If we made all these digital offerings just for fun with nothing to show on our balance sheet people would hardly call us the most digital bank in Switzerland or invite us to conferences to present our case. The impressive thing is that we tried something new and we are successful with it. All banks are in motion now. We see this in the associations we are part of. The Swiss bankers' association has an expert group for FinTech Economie Suisse has an expert group for FinTech SECO wants to form expert group.
Now we have a little too many expert groups and are trying to consolidate them. But the pitch has sunk in. "This is here to stay and we have to deal with it." I would strongly advise against using the term "cannibalization". This is a complement to the existing business model and those who won't change will lose. Clinging to traditional business models for too long is dangerous.
On the other hand, it is also unnecessary to let them go too early. With many things you first have to build a foundation and the use cases will follow. All in all, there are a thousand little steps that will develop into something very robust in the end.
We have to goal to establish Switzerland as one of the world's FinTech startup hubs. We can be a world leader especially in the insurance industry but in banking, we have to catch up so Switzerland as a financial center can play a cental role in the future. In recent years associations and conferences have mushroomed to create global awareness for FinTech in Switzerland and also help pressure the regulator. The reason for this is the realization that Switzerland is a bankers' nation, number one in wealth management but we're not on the global FinTech map. From an investor's perspective, Switzerland is certainly no hub today with an extreme draw for FinTech startups. Many models originate in Switzerland like in other places as well.
We have good framework conditions in general because we have a strong financial industry. But we're nowhere near Berlin and London. Startups with more than 100 staff after a few years of operations are scarce in Switzerland. If you look at the number of such startups in Berlin or London you have a mild shock. They hire more people each month than the entire headcount of companies in Switzerland after 3 or 4 years.
We are a small country. We have a very small market. Digital business is primarily a bulk business. It scales with market size.
What we are lacking in FinTech are Swiss companies that succeed beyond the Swiss German or the French German market. Those that want to become market leaders in Europe or in the world in some areas. The thing I'd like to see more of in Switzerland is slightly more "unreasonable" entrepreneurs. Because it's those that have to figure out "How can I as a tiny company really become a world leader in this new field?" That takes an unreasonableness and a turning back on everything that your education has told you you should be. I understand that Switzerland doesn't do industrial policy.
That's a fact that people tell me all the time. One has to accept that, but the world is moving on and other countries do industrial policy for FinTech. What I am missing is the right attitude that has not entirely sunk in yet. This new world is not about an "ego system" revolving around one person alone but an ecosystem where we all work together at eye level. That is still missing and needs more work so Switzerland can catch up. This is completely different in other countries where you have a much bigger community aggressively working on new ideas.
We don't have that in Switzerland. Therefore, the pressure to work together is much lower. We have a bit of a "feel good society" in the financial sector in Switzerland, still. Switzerland as a financial center should collectively make the decision to move forward. Instead, there is a lack of coordination and financial resources.
Some people think everything is OK. This is just not true. When I speak with politicians I find most of them have no clue what FinTech is. I strongly believe a large startup fund would be important for the Swiss FinTech ecosystem. With "large" I mean 500 million to 1 billion Swiss francs. This capital should be available for series A and series B rounds for bigger tickets for Swiss startups.
In my opinion we have the money, for instance from pension funds the only thing missing is somebody taking the lead and orchestrating it. Silicon Valley began like this. It is so successful because of the large amount of venture capital that is available there. It is a close-knit cluster with an extreme dynamism. We have excellent conditions in Switzerland to build something similar in FinTech in the next five years.
If you have all the talent available in this factory why not simply do it? The most frustrating thing is that it needs a relatively small amount of money. Why not invest in young people, young entrepreneurs who give an arm and a leg to create jobs? Why not put only 0.1 percent, such a tiny amount Why not put only 0.1 percent, such a tiny amount in some kind of government fund
in some kind of government fund for Swiss entrepreneurs... I don't get it. I just don't understand. The train has not yet pulled away completely. We absolutely have a chance to catch up but we would have to go at it at full speed. The times in my life when I've achieved the most is when I put myself in danger the most. It is interesting because there is something about the human condition and performance.
In that I believe we perform at our best when we challenge ourselves a little bit. Sure there are obstacles. But I learned to simply ignore them.
Sometimes you have to say "OK, feel free to put an obstacle in my path I simply walk around it and press on." Innovation in business is not coming from inside companies. There must be exceptions, but in general it does not come from within. Topics like crowdfunding or blockchain or sharing economy aren't obvious for a bank. Nevertheless, we began to investigate what we can do with the blockchain how we can integrate it in our business or how to interface with other companies and if this all makes sense. Blockchain is finance and technology so it is FinTech by definition.
Still, it is somewhat separate from the FinTech scene and I often wondered why. One reason is that it is very ideological. Many people with a focus on Bitcoin or cryptocurrency don't want to launch a startup simply to make money or execute a good business plan they want to revolutionize the financial system. It is extremely important for a company to open its doors to accept new ideas and new business models into its own culture.
First we encouraged our employees to submit new business ideas. At some point we realized that we shouldn't restrict innovation to our own staff. The world should be our playground so why not invite everybody to participate? Scouting is relatively straigthforward. That's the case with us, too.
We have a lot of good ideas coming to us from the outside. Many startups contact us and want to collaborate. The real challenge is to accept the ideas into the company.
A healthy business location is like a forest. If you're frantically trying to support all the old trees this is unsustainable. The sustainable approach is to say "OK, sometimes an old tree will fall down because it has become rotten and brittle but new trees have space to grow in its place." The biggest danger lies in preventing the growth of young trees.
For instance, if regulatory overhead is so large that startups can't afford it. I think we were sometimes better off if we took a little more risk. The way forward consists of many small experiments.
Those that succeed will help you develop. You can reach a point that allows you to create new revenue streams or a new customer experience. The one big leap directly into the honey pot... I don't think it exists. If a bank can adapt fast enough I don't think its business model is in danger.
The difficult part is to have the courage to deploy a new technology. Innovation does not begin when you have mastered a technology but when you deploy it in the market. If we look back in ten years in 2026... maybe we watch this video and what we said back then. I think we will have to deal with things that we currently don't have on our radar. The management must learn to live with this tension.
Evolve constantly and if you have enough facts to make a decision make it boldly and go down this path or another or also abandon an idea once in a while. In 10 years, I imagine new technology and blockchain in particular will bring fundamental change that we can't fully take into account today especially in financial intermediation. With this I mean functions of intermediaries that technology could fully replace. In the end, digitization will concern us all.
I still wonder what exactly a digital hairdresser will look like. I haven't quite found one yet. But for almost all other areas I have some idea what digitization will look like.
The changes will be fundamental. We better think about possible scenarios and how we will live together in the future. I also talk a lot about the possibility of doing things. But relatively few people actually do it. For instance, emit a Swiss franc coin on the blockchain or found a digital autonomous organization that performs a service. Some tools are still missing for that which all software developers depend on but in general, what's missing is the spirit to "just do it".
Excellent FinTech companies exist in Switzerland. Not that many, but fantastic companies that managed to team up with large banks and create substantial value. It's a beautiful image: The traditional bank that has existed for 100 or 150 years and the FinTech entrepreneur who is perhaps 30 years old who launched his company just a few years ago. He managed to solve a problem in the market together with a bank. I salute these entrepreneurs, and we need more of them. It's a fantastic opportunity for Zurich as a business location to take advantage of technological innovations in finance.
To think about new ideas and establish them and strenghten the financial sector, in which Zurich is already a leader. The Swiss way to work together is very special. Our distances are short. Somebody from Geneva can come to Berne somebody from Zurich can come to Bern and we can all meet up in Berne. That's different from flying to Singapore or New York.
And using video chat is still not the same as sitting face to face. We have a lot of know-how in this country. Banking is in our DNA not just chocolate and cheese. With UBS, we have the biggest wealth manager in the world.
Blackrock said Switzerland is important strategically. We have a lot of good brands with a lot of know-how. I came to Switzerland three years ago I co-founded Knip and then the association Swiss Finance Startups (SFS). Everybody gave me a heartfelt, warm welcome. I don't take that for granted and I give Switzerland great credit for it.
If you invest a lot of effort on being an entrepreneur and I'm sure you know that yourself you might as well do it on as firm a foundation as possible. It would be sad to invest so many years and sacrifices only to find that you were in a jurisdiction that will pull the carpet away from under you. Switzerland has an excellent jurisdiction not only for FinTech or blockchain technology but in a large number of areas. Topics of privacy, security, digital identity...
We are the country of human rights neutral and politically stable. Perfect for a global solution. Especially in Switzerland, the trust in banks and insurance companies is still massive. Let me ask you a question. If you could have a financial service from Google or Apple or from an established Swiss bank which will you choose? Independent of age or class people have rock solid trust in Swiss banks and insurance companies. If we managed to develop a disruptive business model in Switzerland, perhaps with know-how from a bank and with know-how from Swiss universities this would be an excellent success story for Switzerland.
"A country with eight million people developed a FinTech lighthouse project that people in Singapore enthuse about people in London are watching it starry-eyed..." Wouldn't this be the best marketing? We plan to establish a blockchain research hub in Zurich. I hope we will succeed. This concerns more than the financial sector alone. It equally applies to the insurance industry.
There may be new sectors we don't even imagine for which we can become providers. I think Switzerland has an excellent talent pool. We have knowledge and a reputation that we should put to good use.
The point is to transform "finance" to "FinTech". The financial know-how is here, still. How can we transform it into the future, into the digital world? It's a fact we don't have natural resources like oil or gas. We mainly have our brain and our talent for innovation. These are our strengths and we should build on them. We should cultivate them, and we have this opportunity.
I think we can play a leading role in this market in the world and also strengthen the Swiss financial center. My advice for the Swiss people is the following: Have courage and become entrepreneurs. Take risks and don't feel discouraged in case you fail.
If we have more startup founders, an ecosystem will form. Founders attract investors. They again attract innovation labs from large corporations such as UBS with Level39 in London. This will create momentum that cannot be stopped. I think crypto will help bring transparency to finance but certainly also democratize it. The beauty is we don't have to take on huge risks just be a little less risk-averse than everybody else and we're already the best business location.
People will become more open-minded to financing the business around the block rather than putting money into the stock market. When people become more open around this it creates a different type of community. The opportunity to develop new ideas with innovative clients. It's great fun. An amazing time. That's my wish, that we all work together on the Swiss FinTech ecosystem. There's the ecosystem between banks and startups.
Many are already doing this because it's sexy. But it's also about banks working together among themselves. Not against each other, with each other.
Let's not put our own interests first but think about what the Swiss financial sector needs to catch up. The way forward is taking the strengths of startups and taking the strengths of banks and seeing how they together can create value for customers. There's one characteristic that I think is very interesting here in Switzerland. That you have some of the biggest traditional rivals collaborating. Wow!
The unity Switzerland is showing here is unique and it differentiates itself in the world. This is extremely positive. The government also needs to be part of this cooperation. It needs to create the right structure or a regulatory environment. Banks, FinTech companies, the government, politicians we should all together push this forward.
We have to explain what is happening in Switzerland and why startups should come here. And we should learn from the Americans and the British to make a little more noise and do marketing. Be convinced that we want to be the global hub for FinTech in three or four topics. This is what I wish for.