Switzerland is one of Europe’s most forward thinking countries, particularly in the world of payment innovation. The Federal Council is looking to amend the Banking Act and Banking Ordinance, which would introduce new fintech regulations moving forward. These will be positive revisions, though, as the barriers to entry into the fintech market will be lowered significantly.
Switzerland Proposes Positive Regulation Change
Lowering the barrier to market for fintech startups and entrepreneurs remains a critical issue all over the world. Switzerland wants to lead by example and modify their existing Banking Act and Banking Ordinance to improve competitiveness in the Swiss financial sector. A consultation has been initiated – which will run until May 8 – to collect valuable feedback regarding this upcoming change to the regulatory system.
Three major changes have been proposed, although they are not turned into a decree or law just yet. First of all, the Federal Council wants to provide an exception for the acceptance of funds for settlement purposes as part of the Banking Ordinance. The new regulation would apply explicitly for settlements within 60 days, rather than those within seven days. A more than welcome change for fintech startups and entrepreneurs, that much is certain.
Secondly, the Federal Council wants to establish an official innovation area. Accepting public funds for up to CHF 1m should not be regarded at as operating on a commercial basis. This change would make it possible for fintechs to do so without further authorisations. In the overall fintech world, this change should allow for more business models, which in turns brings more competition to the financial sector.
Last but not least, banking licenses in specific Swiss cantons will need to be revised. Companies accepting public funds will be able to benefit from simplified authorisation and operating requirements moving forward. A lot of startups may accept up to CHF 100m in public funds, yet would not be active in the lending business under the standard definition. Less strict requirements related to minimum capital required, own funds, and liquidity for fintech startups will benefit the ecosystem over the coming years.
Switzerland wants to remain a financial center of Europe and the rest of the world. Easing off on regulation in the fintech sector will bring some significant changes to the table. Moreover, the country would set an example for the rest of Europe, and even the world, where fintech regulation is concerned. It will be interesting to see what types of feedback will be provided between now and May 8, 2017.
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