After a decline in 2021, the Swiss FinTech sector grew again in 2022. Insights into the dynamic financial technology market are provided by the results of this year’s FinTech study by the Lucerne University of Applied Sciences and Arts.
After a decline of around five percent in 2021, the development of the Swiss FinTech sector returned to its usual direction. At the end of 2022, the sector counted a total of 437 companies, which corresponds to an increase of 14 percent compared to the previous year (see Figure 1). The greatest growth was recorded in the product areas of investment management and banking infrastructure - not surprisingly, this is also where most FinTech companies are found overall. A trend toward sustainability can also be observed in the FinTech market: As of the end of 2022, 7.3 percent of all Swiss FinTech companies were strategically focusing on sustainable products and services. The focus of these companies is on solutions to support data and analytical insights for sustainability assessments in the financial sector, followed by so-called green FinTech companies, most of which are geared toward combating climate change.
Best general conditions in Singapore, followed by Zurich and Geneva
Since the first FinTech hub ranking in 2017, Singapore has had the best conditions for FinTech companies (see Figure 2). This lead was further extended in 2022. The two Swiss cities of Zurich and Geneva, together with Stockholm, form the first chasing group, but with a striking distance to the leader from Southeast Asia. Moreover, there is a direct correlation between the framework conditions in place in a location and the size of its local FinTech sector - even if this is corrected for country-specific effects. Venture capital and joint venture activities correlate most strongly with the size of a FinTech sector, which shows that the environment for investment and cooperation plays an important role.
Switzerland escapes the downward trend
While financing activities in the FinTech sector declined worldwide last year and the amounts of venture capital, token sales, acquisitions and IPOs decreased, Switzerland shows a comparatively more positive and stable development. In 2022, a total of 84 financing rounds were counted by Swiss FinTech companies. This corresponds to a total volume of CHF 605 million (see Figure 3). In a year-on-year comparison, this means that although the number of financing rounds in 2022 decreased slightly, the amounts invested increased by 36 percent. However, the study also shows the challenges: "Although Switzerland was able to largely escape the global downward trend, access to funding for FinTech companies also became more difficult on average in this country," says study leader Thomas Ankenbrand.
Swiss banks become more digital
In 2022, many Swiss banks have also increased their IT resources, as a survey conducted as part of the study shows. These resources are increasingly being invested in the transformation of banking business, for example the digitization of business processes, and less in the pure maintenance of day-to-day operations. These developments point to increasing innovation in the otherwise rather traditional Swiss financial industry. With regard to Data Science at Swiss banks, it is evident that the corresponding team sizes and the tools, providers and programming languages used vary. The most common use case is currently fraud detection.
Open Finance: an evolution rather than a revolution
In connection with Open Finance - the secure exchange of financial data between the bank and trusted third-party providers - there have been various developments in Switzerland. These include support initiatives and new platform solutions, for example. "The Swiss financial infrastructure is already very well developed, especially in terms of payments and trading," Ankenbrand said. "For open finance platform providers, he said, it is therefore crucial to develop products that integrate well with the existing infrastructure."
What is FinTech?
FinTech is the abbreviation for financial technology and describes technology-based solutions for innovative digital products, services and processes in the financial industry. FinTech solutions improve, supplement or replace existing financial services. Examples of FinTech solutions are mobile payment apps, robo-advisors or exchanges for crypto assets.
IFZ FinTech Study 2023
The Lucerne University of Applied Sciences and Arts publishes the ’IFZ FinTech Study’ every year. For the seventh time, the study offers a comprehensive overview of the Swiss FinTech sector. You can order the study by sending an email to email@example.com.