Swiss regulator amends rules to allow fintech to flourish

Swiss regulator amends rules to allow fintech to flourish

Swiss financial markets watchdog Finma has pushed through a raft of new initiatives in a bid to stimulate further growth and innovation in the country's emerging fintech sector.

Among the changes include new rules on client onboarding to cover video and online customer identification and the introduction of a less onerous licensing category for financial innovators alongside a license exempt 'sandbox' for start-up companies.

Finma says the adoption of video and online identification is an important first step to reducing obstacles faced by innovative business models for the provision of banking and financial services.

The new licensing category, similarly is directed at encouraging businesses which carry out some banking activities, but with limited acceptance of client assets and no lending activity.

"Because the risks are lower and the scope of business limited, the licensing requirements would be less extensive than for a banking license," says the watchdog. "For example, financial services providers who do not accept more than CHF 50 million in deposits could apply for this type of financial innovators’ license provided they hold 5% of the deposits and at least CHF 300,000 capital as collateral. The issuance of such licenses would lower the entry threshold for providers of payment systems, applications for managing assets digitally and crowdfunding platforms."

It goes on to note that a fully licence-exempt environment would be conceivable, particularly for start-up companies, up to a deposit threshold of CHF 200,000 and irrespective of the number of depositors.

Finma says it is currently discussing a range of ideas with the banking sector and the competent authorities. It has also established a dedicated Web page to help companies navigate the regulatory landscape and act as a focal point for discussion.

The actions follow the publication last month off a report by Ernst & Young and Swiss Finance+ which warned that Switzerland's potential as a European fintech hub is being damaged by lack of Government and bank support and a shortage of investment capital.

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