Banks in danger of falling behind

If the finance minister wants more “crypto and blockchain beacons from Switzerland,” that doesn’t bode well. Ueli Maurer (71) said this during the summer when he received the “Fintech Influencer of the Year Award”. Maurer’s worry is a bad omen for the Swiss financial center, which is still one of the most important in the world – but now it’s in danger of losing touch with the future.

One of the attentive listeners of the awards ceremony was Rino Borini (49), who has been interested in the digital transformation of the financial sector for ten years. “The train hasn’t fully left yet, but it’s already starting to leave the station hall,” says the fintech and crypto expert, assessing the situation. “We have to run now so we can still jump.”

Grown-ups hesitate

Swiss banks are leaders in asset management of classic investments such as stocks, funds or foreign currencies. But, according to Borini, Bitcoin and Co., especially for regular private customers and small savers. There is no proposal for trading and management of cryptocurrencies such as

Postfinance, one of the larger institutions, was the first to announce that it wants to enable its approximately 2.6 million customers to trade cryptocurrencies through its platform. However, nothing has been finalized yet.

Borini is uncomfortable with not receiving any support from his own bank for his crypto investments. “Most banks are very skeptical and even afraid of getting involved in crypto,” Borini says. And he speaks of a missed opportunity, because especially young people – the customers of tomorrow – are very interested in dealing with cryptocurrencies.

Desired market shakeup

What is particularly missing, according to Borini: Crypto banking has not yet reached the board of directors, that is, at the point where decisions regarding future business models are made. Another problem: A new payment option always carries the risk of money laundering.

Rino Borini is also aware of this danger. He hopes that the current crypto crash – bitcoin’s value has fallen by more than half since April – will clean up the industry: “These market distortions aren’t all that bad, as a result, bad offers will disappear from the market.” And with that, perhaps dubious and counterfeit products that don’t have a financial system revolution in mind but just want to extract money from their victims’ pockets!

Unlike most crypto trading platforms, banks in Switzerland have an invaluable currency – trust. A great opportunity for the financial center: Many customers prefer to carry out their crypto transactions through a bank rather than any anonymous platform.

Financial center is moving

In every banking transaction – be it payment, investment or foreign currency purchase – the counterparty, the partner behind the transaction is known. Not so when trading cryptocurrencies. This works completely anonymously via the blockchain.

Even if there are still a few mature projects from established providers: the financial center is on the move. The Swiss Financial Market Supervisory Authority (Finma) is also feeling the effects. According to an interview with Blick, the number of banks contacting Finma for services in the crypto sector and seeking to clarify regulatory issues has roughly doubled in the past two years.

Pioneer Hypi Lenzburg

Finma points out that there are about 20 banks operating in the crypto sector in Switzerland. These include Seba and Sygnum, two private crypto banks with appropriate banking licenses. “Thanks to clear regulatory requirements, a relatively large number of banks in Switzerland are active in the blockchain technology space,” the supervisor says.

Also because of bank bosses like Marianne Wildi (57) from Hypothekarbank Lenzburg. Your bank has been developing Finstar banking software for 20 years and can benefit from its extensive know-how. For this reason, curiosity, not skepticism, is the focus in Lenzburg. “We didn’t want to miss the train, so we jumped in to understand the technology in general,” Wildi explains in an interview with Blick.

“Hypi” offers Finstar clients the option to store tokenized securities or cryptocurrencies. However, the custody of cryptocurrencies for private customers is not yet available.

Wildi says this is just the beginning. “Blockchain makes it possible to handle capital increases and stock offerings much more efficiently.” This means a scale that is cheaper and particularly interesting for SMEs. Something I’m sure the finance minister wants.