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.

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Regulatory responses to evolving technology

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 has 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.  

 

The regulation of artificial intelligence 

 

The EU Regulation on Artificial Intelligence (AI) came into force on 1 August 2024. The Regulation assigns AI applications to three risk categories. First, applications and systems that create an unacceptable risk, such as government-run social scoring systems, are banned. Second, high-risk applications such as a CV-scanning tool that ranks job applicants, are subject to specific legal requirements. Lastly, applications not explicitly banned or listed as high-risk are largely left unregulated.


In Switzerland, the Federal Council stated on 12 February 2025 that it was pursuing three objectives in this area: strengthening Switzerland as a location for innovation, protecting fundamental rights, including economic freedom, and increasing public trust in AI. In order to achieve these goals, it has set out the following three key points:

  • The Council of Europe Convention on AI shall be incorporated into Swiss law. Its scope primarily concerns state actors.
  • Where legislative amendments are necessary, they should be sector-specific as far as possible. General, cross-sector regulation is limited to the relevant core areas of the law, such as data protection.
  • In addition to legislation, non-binding legal instruments are being developed to implement the Convention. They may include self-regulatory agreements or sectoral solutions.

With this aim in mind, the Federal Council instructed the Federal Department of Justice and Police (FDJP) to draw up a draft consultation document by the end of 2026 in order to implement the Council of Europe Convention on Artificial Intelligence, identifying the legal measures required in the areas of transparency, data protection, non-discrimination and surveillance. 

 

 

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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.
  • According to the IMD World Ditigal Competitiveness Ranking 2024, Switzerland moves up to 2nd place (it ranked 5th in 2023) thanks in particular to its digital infrastructure as well as to the ability of Swiss companies to transform themselvers and attract high skilled people.
  • The "2024 IFZ FinTech Study" places Geneva on the 4th position and confirms that Switzerland has developped from a niche market into a key driver of innovation in the fintech industry.
  • The Swiss Finance Institute (SFI) has examined, through a representative study entitled "Digital Pulse Check 4.0", the current status of digitalization within the Swiss banking sector. Most established banking institutions have recognized the signs of the times. They are digitalizing their existing services step by step or rethinking them from the customer’s point of view. COVID-19 has accentuated this change once again.
  • In its "Survey on Digitalisation and Fintech at Swiss Banks 2019", published in August 2019, the Swiss National Bank points out that the banks view the digitalisation mainly as a source of opportunities, particularly with regard to cutting costs and improving service quality.

 

 

 

 

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The Deposit Token

Swiss Bankers Association White Paper

The Swiss Bankers Association (SBA) has published a white paper on a digital Swiss franc, in which it outlines various designs of “tokenised” deposits on the blockchain. If issued by regulated banks, a deposit token could make an important contribution to Switzerland’s future competitiveness and innovative power, as well as bolster its sovereignty.

 

As the digital transformation sweeps through the economy and society at large, it requires support from efficient, widely accepted and secure means of payment. How can banks best support this development? That question lies at the heart of the current work by the Swiss Bankers Association (SBA) on the concept of a digital Swiss franc. In a white paper written jointly with experts from its member institutions and academia, it presents the idea of a “deposit token” (DT).

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