1 Introduction

  • Total Word Count: 9’369

FinTech is a portmanteau for the words “Financial” and “Technology” and is used to describe “technology-based solutions for innovative digital products, services and processes in the financial sector”1. FinTech companies usually distinguish themselves from traditional financial institutions by taking technologically innovative approaches to complement or replace financial services.

Switzerland is particularly well developed in the financial industry and has earned the reputation of being a trustworthy and innovative financial hub. Together with a technology-neutral2 and innovation-friendly regulatory approach, it has created a fertile ground for a world-class FinTech centre to develop. In fact, Zurich and Geneva currently rank as the second and fourth FinTech hubs in the world3 . In 2021, 3844 FinTech companies are operating in Switzerland, and among them are 14 unicorns5 (including 11 based on distributed ledger technology (DLT) and every tenth FinTech startup is founded in Switzerland6.

In this booklet, we explore how recent developments in financial regulation have impacted innovation in the Swiss FinTech scene. To this end, we begin by giving a general introduction to FinTechs and their regulation in Switzerland (Chapter 2). We then detail recent developments in financial markets regulation through the lens of robo-advisory, an A.I.-based asset manager. In particular, we study the introduction of FinSA7, FinIA8, and FADP9. To gain more insight into artificial intelligence-based asset management, we provide pseudocode for a simplified robo-advisor (Chapter 3). We then nuance our discussion by exploring recent developments in distributed ledger technology (Chapter 4), as well as the current state of regulation in Europe’s second FinTech hub, the United Kingdom (U.K.) (Chapter 5). We finally turn to the voices of the industry through the video interviews of three Zurich based FinTechs: Descartes Finance AG, Relai AG and House of Satoshi (Chapter 6). These interviews are available through their respective hyperlinks.

References

Ankenbrand, Thomas, Denis Bieri, Moreno Frigg, Timon Kronenberger, and Levin Reichmuth. 2022. “IFZ FinTech Study 2022 - an Overview of Swiss FinTech.” Lucerne University of Applied Sciences and Arts.
Flühmann, Daniel, and Peter Hsu. 2021. “Switzerland: Fintech Laws and Regulation 2021.” The International Comparative Legal Guides (ICLG), Switzerland Chapter, 285–94.

  1. “FinTech in Switzerland : Fewer companies, more volume”, accessed 27 April 2022, https://www.hslu.ch/en/lucerne-university-of-applied-sciences-and-arts/about-us/media/medienmitteilungen/2022/03/09/FinTech-studie-2022/.↩︎

  2. Flühmann and Hsu (2021), p. 285.↩︎

  3. Ankenbrand et al. (2022) , p. 26.↩︎

  4. “FinTech in Switzerland : Fewer companies, more volume, accessed 27 April 2022, https://www.hslu.ch/en/lucerne-university-of-applied-sciences-and-arts/about-us/media/medienmitteilungen/2022/03/09/FinTech-studie-2022/.↩︎

  5. “Swiss ‘Crypto Valley’ boasts 14 ‘unicorns’”, accessed 27 April 2022, https://www.swissinfo.ch/eng/swiss--crypto-valley--boasts-14--unicorns-/47291870.↩︎

  6. “Switzerland’s FinTech sector is flourishing”, accessed 27 April 2022, https://www.michaelpage.ch/advice/market-updates/switzerlands-FinTech-sector-flourishing.↩︎

  7. Federal Act on Financial Services of June 15th, 2018 (“FinSA”; CC 950.1).↩︎

  8. Federal Act on Financial Institutions of June 15th, 2018 (“FinIA”; CC 954.1).↩︎

  9. Federal Act on Data Protection of September 25th, 2020 (“FADP”; FG 2020 7397).↩︎