The Fintech sector in Switzerland has been growing steadily and has been consolidating this year, a trend highlighted by the rising number of later-stage funding rounds and some of the first Fintech-related exits, according to the IFZ Fintech Study 2020.
In 2019, Series B rounds had accounted for a significant amount of the venture capital activity in the Swiss Fintech space, registering a sizable volume growth of 115% when compared with 2018. The very first market exits also began last year, indicating a movement towards market consolidation.
Switzerland is currently home to at least 376 financial technology firms, according to Swisscom’s Fintech Startup Map (as of December 2020),
In 2020, the Swiss Fintech sector saw many key developments such as updates to the country’s progressive regulatory framework along with the growing adoption of Fintech solutions by traditional banks.
Although this year has presented many socioeconomic challenges due to COVID-19, H1 2020 was still marked with substantial growth and new investments into Crypto Valley (Switzerland and Liechtenstein) across key areas such as blockchain protocols, financial services, and various other applications.
Crypto Valley is now home to at least 919 active blockchain or distributed ledger technology (DLT) companies that currently employ around 4,700 professionals. During H1 2020, 31 firms either left the area or stopped offering services, meanwhile, 51 new initiatives joined the Swiss Fintech space, according to the CV VC Top 50 Report for H1 2020.
In 2020, the digital financial services space continued to grow steadily with the increased adoption of crypto-assets and DLT infrastructure. Many more companies are now looking into blockchain-enabled platforms and digital assets, the report confirmed.
This year also saw the Bank for International Settlements’ Innovation Hub (BISIH) Swiss Centre, the Swiss National Bank (SNB) and SIX finalize a proof-of-concept (PoC) that aims to bring together tokenized crypto-assets and central bank digital currencies (CBDC).
Project Helvetia was notably the very first wholesale CBDC pilot launched by the SNB. It aims to complement the upcoming launch of the SIX Digital Exchange (SDX), which will be a DLT-enabled trading platform (expected to go live early next year).
SIX also announced recently that it would be introducing a digital asset offering for banking institutions and various clients with assistance from Custodigit.
The Institutional Digital Asset Gateway will offer trading, smart order routing and settlement, along with crypto-asset storage solutions with help from Custodigit, a digital currency custody solution provider for institutions. Backed with investments from SIX, Custodigit was established by Swisscom and Sygnum back in 2018. SIX’s management has confirmed that the companies intend to introduce the first services at some point early next year, with plans to add more features or capabilities in the foreseeable future.
In 2020, Switzerland’s traditional banks have continued to make investments into various Fintech projects. UBS introduced a $200 million Fintech venture fund, which aims to invest anywhere between $10 million to $20 million in several different startups. UBS said it intends to retain the stakes for a 5-year period.
Credit Suisse has also introduced a Fintech-focused digital banking solution, which aims to serve tech-savvy customers. The launch makes Credit Suisse the first major banking platform to offer a complete digital package in Switzerland. The new platform provides a wealth management service as well as bancassurance solutions that are being offered through a partnership or with help from AXA.