Table of Contents
1. Definition of the term "FinTech"
There is still no uniform definition of the term "FinTech", but the abbreviation "financial technology" can be used to describe innovations in the financial sector that lead to new financial instruments, services or business models. In the case of FinTech, the term often refers to the company offering the innovation. The company behind LEND (Switzerlend AG) is also referred to as a FinTech.
Financial technology is often considered a disruptive technology because it has the potential to completely replace existing services in some cases. However, the market shares of FinTech companies are still in the per mille range.
The market in which FinTech companies operate and innovate can be divided into the following sub-sectors:
Identity & Security Management
Information & Transaction Platform
Personal & Business Finance Management
Distributed Ledger Technology
Deposit & Lending
2 FinTech: advantages and potential
Start-ups and young companies are largely active in the FinTech sector. The great potential of the FinTech sector lies above all in its agility and the possibility of using technology and thus automating processes to a great extent. This can lead to significant increases in efficiency and consequently cost savings.
As a result, FinTechs offer services at more favourable conditions and compete directly with traditional institutions.
On the other hand, the lean cost structure makes it possible to address business or customer areas that are loss-making and thus not lucrative for traditional institutions. In such a constellation, FinTechs complement traditional institutions. It is not uncommon in such a scenario for the respective FinTech companies to be taken over by the traditional institutions and the service to be integrated into the product portfolio.
The resulting financial innovations offer advantages to consumers in particular, in that they can invest money, take out loans or receive advice with significantly less effort or at lower costs.The areas of big data and cloud computing, as well as the increasing spread of mobile electronic devices such as smartphones or tablets in connection with continuous access to the internet, have an advantageous effect on the development of FinTech companies.
3. FinTech scene in Switzerland
In a global comparison, the USA still plays the leading role in FinTechs. However, the European market is becoming increasingly important. The leading position here is held by the United Kingdom.
The FinTech scene in Switzerland is comparatively small, but can show strong growth figures. This is reflected in the number of companies in this sector, which was 220 at the end of 2017, as well as the increasing investments in this area. In 2017, almost 130 million Swiss francs flowed into young FinTech companies, which corresponds to a six-fold increase compared to the previous year.
Crowdlending was also a major contributor to growth in 2016 and 2017. Crowdlending platforms such as LEND are successfully brokering personal loans and business loans in rapidly growing numbers and increasingly represent an alternative to traditional credit institutions such as banks.
In the recent past, the cryptocurrency sector has also been particularly prominent. Swiss Zug has become a global centre for crypto and blockchain technology and attracts numerous companies.
Switzerland can also score points as a location. Above all, Zurich and Geneva offer the best conditions for young companies due to their political, economic and social conditions as well as their good technological infrastructure.