It’s like putting together a gigantic puzzle. Tech freaks, the banking world, government, regulators, and now even the central bank, they all do their part to make the Swiss fintech industry stand out.
The picture took some getting used to. Andréa Maechler, Member of the Governing Board of the Swiss National Bank, side by side with a representative of an English and a Swiss fintech startup, in between Marianne Wildi from the digital mortgage bank Hypi Lenzburg and Marco Menotti from the SIX Banking Services.
The big challenge in payment transactions
To develop a perspective for the access of fintech companies to payments. In her introductory speech, Maechler noted that digitization affects the entire system, “These changes are creating major challenges for all players in the payment ecosystem.”
The most important task of the SNB is not so much to prepare the ground for the new financial industry as to ensure that confidence in a functioning payment system and ultimately in the monetary system as a whole is maintained.
Direct or indirect access
At the beginning of 2019, the SNB presented a tailor made solution to the fintech industry in Switzerland. The SNB opted for the direct solution before choosing whether to include the fintechs directly in the payments infrastructure. Or, whether they have to go via an established financial institution. This in contrast to the European Union.
The SNB thus grants access to the SIC system and SNB current accounts to fintech companies. The prerequisite for this is that they own a fintech license and have a significant business model in payment transactions.
With this system, Maechler hopes to enable small players to gain access via a fintech license, which will be able to test their business model in the real world. If they get bigger, they’ll have to apply for a banking license anyway, Maechler said.
There is another way
In Switzerland, however, there is already a prominent example of how things could work differently. Hypi Lenzburg has chosen the radical path for a bank and opened its interfaces for fintechs.
“Our advantage is that we have a license and experience in dealing with regulators. A bank is more than just payment transactions. We only survive if we can generate added value with our advice,” said Wildi.
In this alternative model, established bank and fintech benefit each other and can thus best play out their strengths.
The solution Twint
SIX manager Menotti, for his part, can not do much with this model because he believes that the interfaces are an important asset for the banks. If the bank loses sovereignty, its business model is in jeopardy and that’s why the Swiss banks have vehemently sought their own payment solution and found it in Twint.
Whether the direct access to the payment infrastructure or an indirect via established banks is the right one will become apparent. It seems important that the SNB retains its strong role in ensuring the payment infrastructure. Even if new players from abroad offer their services. And that the conditions are at the same time designed in such a way that the pieces of the puzzle can come together and that Switzerland can assume or retain a pioneering role in the fintech sector.
Also published on Medium.