Swiss Fintech: Overview

May 24, 2023

In Swiss law, there is no definition of such a term as the Fintech-industry. But the Fintech in Switzerland is understood by many as a peculiar crossbreed of creative technologies that are applied in the monetary industry. Most often Fintechs is associated with:

  • digital-banking;
  • AI-advisory assistance;
  • crowdfunding operations;
  • e-payments;
  • online-financial activities;
  • cryptocurrency processes.

The fintech`s corporations with the use of assistive technologies that help organize monetary cybersecurity processes. The use of cloud-services, artificial-intelligence, online registries, and blockchain`s are also included into Fintech.

Is innovation possible in the Swissland monetary sector?

The Swissland government is probably the most liberal in the world. That is why the economic system of this country has been considered the most reliable and modern for many years. Because of this, the fintech industry is actively developing in the region. In particular, there are constant changes to local lawmaking for the use of new outcomes and services in this area. Previously, the laws were aimed at helping large financial associations. Because of this, many small startups couldn`t fulfill the conditions to operate in the market. But today a great system has been created with the support of the Central Bank and the Innovation Center. Now local startups are subject to low taxes and can work on financing investment ventures. This all has a positive effect on the undertaking of imaginative projects in the fintech-sphere.

Is it critical to acquire a license for fintech corporations

As mentioned above, Swissland has no legislation that regulates the fintech industry. However, the country is open to use of time-honored or imaginative means. This shows that local officials are carefully studying modern consequences for the financial-industry and want to understand which of them should be used in systemically important areas of the state. But they are careful not to overload local laws with controversial amendments and further prerequisites.

It is often possible for fintech-companies to offer their services and create new technologies without being limited by the financial`s prerequisites markets legislation. But this process is very unique. For example, fintech companies will be able:

  • transfer funds between accounts both owned by the company and registered to other legal entities, but they need to have registration as a financial-intermediary company or an insurance-broker;
  • to receive transfers from 20 and more legal entities provided these entities hold relevant banking permission;
  • to conclude insurance contracts against the risks of other individuals if they have the relevant`s permission;
  • pooling of assets to secure the profitability of investor projects or managing such assets, as long as the investor is licensed to do so (as prescribed by the law controlling economic associations);
  • give acquisition advice and permission for the promotion of e-protection without violating the lawmaking on financial`s services.

As you can see, each type of fintech industry is subject to different laws and may require one or more permits to carry out this format of activity in Swissland.

Online fintech-services

Swissland corporations in the fintech-industry can be managed online without any direct presence of investors or founders in the country. The only exception is for companies with collective investments. In this case, it is most appropriate to appoint a third-party agent or instance who will stay in the country regularly. In all other cases, it is allowed to work and organize online due diligence by the FINMA-Circular 2016/7.

In the field of Fintech, Swissland lawmaking is so advanced that corporations do not need to conclude a written contract. It is only concluded in cases where companies prescribe this condition. But for banks and financial`s institutions such contracts are not mandatory. They are drawn up in an online format and secured with an e-signature. Representatives of companies may not even be in the same office to conclude such a contract. Another important exception is loan agreements between a financial institution and its client. They must be signed in ink by the corporation and the client.

Large corporations have also been using cloud services to store electronic versions of contracts for many years. This way of storing info is also used in fintech by banks and other corporations. But it is important to properly manage such services and maintain professional secrecy. If third parties get hold of info about an agreement and publish it, the fintech corporation that signs such agreements will be held liable to the fullest extent. Therefore, corporations need to use modern data safeguard technologies and follow the rules spelled out in the applicable law.

New data safeguard legislation

A new law in this area will come into effect this fall. It brings the country’s legal requirements nearer to the GDPR. The main difference is lower fines than in the current decree. According to the amendments, fines will not exceed a quarter of a million francs.

This is a very high amount, which will force companies to work transparently, honestly, and responsibly. To ensure this, corporations need to improve their cyber-security and monitoring and controlling all risks. Otherwise, the penalties will not take long to be imposed.

To avoid such penalties, we recommend protecting your assets with the help of real professionals. Our employees are ready to help you with advice on complying with all Swiss government requirements and correcting any deficiencies in your security system.

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