Encouraging innovation

The future of the Geneva financial centre depends more than ever on its capacity to innovate, especially in technology. The banking industry will have to reinvent itself to meet the requirements of generation Y and Z. This is where FinTech drives competitiveness. Governments can facilitate the process by providing a favourable regulatory framework.

 

 

Competitiveness

Several recent studies show that the financial centre innovated in long before the term FinTech was coined

  • The World Economic Forum (WEF) and IMD Business School rank Switzerland among the world’s most competitive nations.
  • The WEF Global Information Technology Report 2016 places Switzerland in the top ten in terms of technological readiness, thanks in part to substantial investment in digital networks.
  • Swiss banks have fully integrated the digital revolution in their priorities according to the latest Ernst & Young ‘Banking Barometer’, published in January 2016. The majority of banks (67%) understand this technology as a way of developing new distribution channels and have either developed digital strategies or are in the process of doing so. Retail banks are slightly ahead of wealth managers in this regard.
  • A study carried out by the Federal Institute of Technology Lausanne for SIX and Swisscom - "Switzerland's digital future: facts, challenges and recommendations" lists measures to ensure Switzerland successfully meets this challenge.
  • The Lucerne University of Applied Sciences and Arts counted 162 FinTech companies in Switzerland in 2015, up from 24 in 2010. Western Switzerland plays an important role, with 32 firms, a 20% market share.  Thirteen are based in Geneva, which also boasts the first FinTech incubator. The presence of this ecosystem places Geneva at the cutting edge of innovation in finance and banking.

 

 

Regulation

Large financial centres today have vastly expanded their digital capacity. To remain competitive on an international scale, the Swiss banking industry needs a regulatory framework that supports the future evolution of technology.


In the United Kingdom, regulatory authorities have taken a proactive approach: the Financial Conduct Authority plays a key role in promoting economic development by supporting FinTech companies through its ‘innovation hub’ programme.

In Switzerland, the Federal Council recently adopted a ‘Digital Switzerland Strategy’ calling for close cooperation among all economic sectors.  The FINMA, meanwhile, has decided to authorise online identification of banking clients, an important development for an international financial centre like Geneva, and one that is likely to benefit both retail banks and institutions specialising in wealth management.

To ensure the financial centre remains competitive and continues to innovate, government and political leaders must provide a determined regulatory impetus, in order to give Switzerland a legal framework that supports the development of FinTech and does not discourage innovation.