Financial digitalization, fintech, and the collaborative economy
Source: Springer Link
This article is co-authored by Henri B. Meier, John E. Marthinsen, Pascal A. Gantenbein and Samuel S. Weber.
Faced with competition from FinTech, InsurTech and RegTech companies, Swiss banking and insurance institutions, some of which are centuries old (e.g. Credit Suisse or UBS), are in the midst of a major transformation in the face of new technologies such as smart contracts, artificial intelligence (AI), big data or blockchain technologies (cryptocurrencies, Distributed Ledger Technology (DLT) or Decentralised Finance (DeFi)).
In the banking sector, some companies are focusing on specific business models for both B2B and B2C. These business models relate to process management, while others relate to the provision of technology, infrastructure, data management and analytics.
The insurance sector has also evolved. The insurance sector has been able to implement new technologies such as AI, big data or blockchain technologies. According to a report published on 2 December by the Institute for Financial Services Zug (IFZ), out of 598 registered insurance companies on the European continent, Switzerland ranks fourth with 58 insurance companies.
Although the IFZ notes an increase (+8) in Switzerland compared with the previous year. However, Switzerland still lags behind France (72 companies) and Germany (103 companies) and far behind the number one, the United Kingdom, which alone has 168 insurance companies (28%).
The combination of these different business models and the introduction of new technologies has enabled the Swiss banking and insurance sectors to modernise their operations.
This is partly due to the adoption by the Swiss parliament of a federal regulation, the "Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology", which will come into force on 1 August 2021.
This regulation modernised, consolidated and simplified previous regulations and formalised the use of DLT and DeFi in validation processes. It also allowed for the regularisation of cryptobanks (Seba Bank and Sygnum) and cryptocurrencies with the aim of combating money laundering.
This article appeared in the book Swiss Finance (full access here, in open edition).