27 September 2016
Reporter: Stephanie Palmer

Sibos: No holes in Swiss fintech innovation

Switzerland is a hot bed of financial technology innovation, according to speakers at a Sibos Innotribe session in Geneva.

Brigitte Baumann, CEO of GoBeyond, argued that ‘angel investing’ in financial technology start-ups can be considered as a new asset class, and that Switzerland is leading innovation in this space.

Baumann noted that there is a “big need for new asset classes”. She said: “Entrepreneurship is here to stay, and not only to [entrepreneurs] need financing, they need smart money.

Historically, she said, investing in start-ups has been considered as high-risk, with 80 percent of so-called business angels losing either all or most of their money.

This has now been reversed, however, and Baumann suggested that individuals investing less that CHF 50,000 are seeing an average return on their portfolio of 14 percent. Those that invest more than CHF 50,000 are seeing average returns of 16 percent.

Baumann argued that the Swiss ecosystem is supportive of fintech companies, and noted that, in turn, the fintech sector provides opportunities for investors to learn while building their portfolios, acting as hands-on advisors, and developing their own technical knowledge.

She also later noted that angel investing can serve as a way to keep financial services professionals in the 40 to 50 age bracket relevant and up to speed, in an industry that is quickly changing.

In the same session, Johann Gevers, founder and CEO of Monetas, suggested that we need to be developing ‘version two’ of the financial system.

Gevers also named Switzerland as a hub for financial innovation, noting its decentralised nature and its strong ecosystem for ‘cryptofinance’.

He suggested that using blockchain technology in traditional banking could save institutions millions per year, enabling secure voting, digital tokens and digital cash.

However, Gevers said the industry will only revolutionise finance is to create true digital wallets, whereby individuals have digital currency in their personal wallet, rather than in a bank, and can literally transfer it with no intermediary involved, as one would with cash.

This would cut out some of the liability and costs of compliance, allowing institutions to focus on adding value elsewhere through advanced financial products.

Drawing attention to Switzerland’s ‘Crypto Valley’ in Zug, where a lot of firms are developing cryptofinance solutions, he stressed that the industry should not see cryptofinance as a threat, but as an opportunity, offering instant settlements, cost reduction, risk reduction and faster services.

He concluded that companies should not all try to do the same things. While start-ups are good at getting products off the ground, big organisations are the ones that can scale them. He said: “I think that’s a great symbiosis.”

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