Swiss fintech enthusiasts repeatedly critized the country's regulators for its perceived lack of support for the fledgling offshoot of the financial market. Mark Branson, the director of Switzerland's regulator Finma, has finally thrown off the gloves.

Fintech experts frequently attacked the Financial Market Supervisory Authority for an approach they felt was too passive relative to countries such as the UK or Singapore, sometimes complaining that Finma was outright obstructive in its approach to technological innovation.

In line with their reputation, the Bernese supervisors have been rather shy of taking an active role in their approach to fintech, leaving them in the shadow of the UK's Financial Conduct Authority, which openly encourages fintech start-ups to move their base to London from Switzerland, complete with a package for support.

Singapore's Promotion of Innovation

And the Monetary Authority of Singapore (MAS) went a step further still, founding a fintech innovation group. It is being funded specifically to promote the development of what it envisages as smart financial centre.

So when Finma Director Branson steps into the limelight to outline a strategy for fintech in Switzerland, the tag «finally» seems somehow inevitable. He presented his masterplan in a speech held at the Business Club Zurich.

From Dotcom Hype to Fintech Hype

Branson first of all thinks that fintech supporters tended to exaggerate the importance of the phenomenon: «We've left the era of dotcom hype behind us and have entered a new era – of fintech hype,» he said.

Nevertheless, Bern is interested in supporting innovation in a digital world: «As a supervisory authority, our first priority is to apply the law as it stands. However, we have a vital interest in developing and adapting regulation to the needs of a digital world.»

Promise of Easing of Regulation

Perhaps more importantly for the fintech industry, Branson promised to remove regulatory hurdles to create space for innovation:

1. Video Authentication

The revision of the money-laundering regulations at the beginning of 2015 included rules for online-authentication (as reported by finews.ch). Branson promised the introduction of video-authentication, a decisive factor for fintech.

2. Easing of Requirements for Due Diligence

The requirement for due diligence for payments of small amounts have been eased. The main beneficiaries are digital providers. Retailers in Switzerland can offer cashless payment methods for goods and services up to 25,000 francs a year without the need for formal client identification.

3. New Licensing Category Under Consideration

Fintech companies are subject to the anti-money laundering regulation and any company accepting deposits of more than 20 clients must have a banking licence. This applies also to crowdfunding platforms and digital currency providers. Branson said that the licencing requirements seemed to expensive for most of these companies during the start-up period, which was why he gave «serious considerations» to a new licencing category with lower requirements.

Three Established Principles

Remarkable words from the director of Finma: It would be the first time since the financial crisis that the regulator accepts an easing of demands. More than this Branson can't really do based on his legal mandate. To become more of a promoter, in line with Singapore's MAS, is out of the question.

Branson will adhere to three established principles:

  • Regulation must be neutral as regards technological change and should neither encourage nor hinder it.

  • The principles-based approach to regulation tends to provide a good basis for the development of the digital business sector. It does not matter whether an analogue or digital channel is chosen, as long as the actual principle of regulation is preserved.

  • It is vital to prevent the emergence of technology-based regulatory gaps which threaten client protection and the system as a whole.