“Our local fintech scene is an important source of inspiration and innovation for the Swiss financial industry. We support and promote the development of these creative startups. At Swisscom we are convinced that a collaborative ecosystem of banks, startups and ICT providers will lead to sustainable competitive advantages.”
Johannes Höhener, Swisscom Digital Business, Head FinTech Initiatives
Swisscom has recently announced increased support for fintech and startups. Why are you focusing on these two particularly?
Technology is going to permanently reshape banking – in making decisions, intermediation and in delivering customer service and customer value. We have a choice: we can watch our competitors, buy, build our own solutions, partner or participate and learn. At Swisscom we are convinced that a collaborative ecosystem of banks, startups and ICT providers will lead to sustainable competitive advantages. We therefore support and promote the development of creative fintech startups.
How should innovation be advanced within the company?
Innovation often comes from outside the company. Active co-operation with the Swiss startup scene is therefore crucial. To foster innovation in the fintech context I think it’s crucial to keep the doors open, to cooperate and to invest.
Be open: If innovative technologies are to be integrated within the company, the doors must be open. In other words: it is important to combine internal expertise with ideas from outside.
Cooperate: Instead of only forming alliances with their own kind, financial companies should look around specifically for partners in other industries.
Invest: The companies driving innovation in the field of financial technology are usually startups. These burn up capital. This offers financial service providers the opportunity to use their financial clout to vie for position in the race for new technologies.
You are leading the Swisscom Fintech Cluster. What is this cluster about? What do you do? Can you tell us more about it?
The Fintech Cluster is institutionalizing Swisscom’s co-operation with fintech startups. We are integrating digital creativity into a complex enterprise by creating the optimal organizational conditions for this collaboration. We are focusing on the following topics: collaborative economy (e.g. crowdfunding and B2B lending), access and identification (e.g. identity management for opening an account digitally), blockchain-based financial applications and digitization of SMEs (e.g. digital accounting for SMEs). Our goal is to identify innovations in an early development phase to examine business ideas together with the startups and to make them ready-to- market in collaboration with Swisscom, like we did for example with Run my Accounts for Valiant and wemakeit for Basellandschaftliche Kantonalbank.
We have read about a CHF 10 million fund. What are your plans for this fund?
As a strategic investor, Swisscom Ventures offers young companies financial support as well as access to Swisscom infrastructure and sales channels. Since 2000, Swisscom has invested over CHF 100 million in startups. Swisscom Ventures has now received a dedicated fintech fund of over CHF 10 million. We can use it to create targeted startup partnerships with potential for the financial industry. Swisscom focuses on national and international fintech growth topics and is contributing to early Stage and Series A financing rounds. Our objective is to make between three and five fintech investments per year.
Swisscom is a major player. Why do you think small startups are that important for the fintech industry?
It would be misguided to believe that the new competitors are reinventing the banking industry. The reason they are one step ahead is that they design their business models with a “digital” mindset from the outset and continue to build on this. They know how to leverage modern data analysis methods and the vast amounts of (largely personal) data records to digitally personalize individual financial services to offer greater value for internet-savvy customers in particular. I believe that there is potential for traditional banks to catch up here. The challenge for the banks mainly arises from the increasing speed of innovations and the fearlessness of third parties in penetrating seemingly occupied markets. And that’s why collaboration is the future of fintech. What I mean by that is that banks, service providers and fintech startups can build a sustainable ecosystem that’s mutually beneficial.
And why do you consider fintech so important? Does Switzerland really have to enter the fintech race together with the likes of London and Singapore?
Switzerland has everything it takes to advance to a leading fintech nation. First-class financial institutions, leading banking software manufacturers, highly trustable ICT providers and research departments of ICT heavyweights such as Google and IBM call Switzerland their home. Asian cities such as Singapore or Hong Kong are currently at the forefront, followed by London and New York. Switzerland does not yet appear on the numerous international fintech maps but that might change soon. There has been enormous activity in the Swiss financial services market in the last 18 months, not only through new ventures, but also through large financial corporations and fintech conferences, associations and initiatives like Digital Zürich 2025 and its Kickstart Accelerator program. This places the prospects of the Swiss startup sector in general and the fintech sector in particular in a very positive light.
We’ve heard what Swisscom is doing to support startups and fintech. Do you think this will be enough?
It’s time to “walk the talk”. In the next 2-3 years, we will see a consolidation of national and international fintech companies!
Or do you think the government should also do something? And if so, what are your suggestions?
‘The market will decide whether a fintech hub is formed’ – it was Mark Branson who spoke those words and I share his opinion. It is not the role of the Swiss Financial Market Supervisory Authority (FINMA) to interfere in the free market. However, it is important to remove any unnecessary barriers. Many of the regulations currently in place were established for the risks and business models of yesterday. New business models, however, require new guidelines. It is therefore important for regulators to ensure that the appropriate guidelines are swiftly put in place (crowdfunding regulations for example). I believe that the most important preconditions for a sustainable fintech industry include a well-established education system, world-class universities, access to risk capital and an attractive environment for entrepreneurs. The government can and should add value by further incentivising entrepreneurship (fiscal policy).