More Companies But Fewer Investments in the Swiss Fintech Industry

The Swiss fintech industry is going forward, but with a bit of a headwind. That is the conclusion of the ninth Fintech study by the Lucerne University of Applied Sciences (HSLU). According to the annual study, the local fintech landscape consisted of 483 active companies in 2023 – more than ever before, as the HSLU notes.

This corresponds to an increase of 11 percent compared to the previous year, and compared to 2015 the number of companies in the Swiss fintech industry has even tripled. In the current study edition, the HSLU also took a closer look at the fintech landscape of the Principality of Liechtenstein for the first time, where it counted 22 fintech companies.

A bar chart shows the number of Swiss fintech companies over time: in 2015 there were 161, last year 483. In 2023, the HSLU will now also count fintechs in Liechtenstein – 22 in number.

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The number of fintech companies in Switzerland increased again in 2023

But back to Switzerland. In the Swiss fintech ndustry, the HSLU noted the greatest growth among companies that have a strategic focus on sustainability. They make up around ten percent of all Swiss fintech companies. Their number increased by around 50 percent in 2023, making it the strongest growth of all categories.

But there is also a noticeable headwind in the local fintech industry. The relative increase (plus 11 percent) in companies at the end of 2023 is lower than the year before (from 2021 to 2022 the number grew by 14 percent), but is still better than the minus of 5 percent that the HSLU estimates determined at the end of 2021 .

Stockholm is rushing forward

The study authors point to venture capital activities, i.e. the number and volume of financing rounds, as an indication of the slowdown in the industry. Both decreased in 2023 compared to the previous year , writes the HSLU.

A bar chart shows the financing volume in millions of francs as well as the number of financing rounds over time: In 2022, there were still 84 financing rounds in the fintech sector in Switzerland – with a total volume of 605 million francs. However, last year there were fewer, namely 68 rounds with a total volume of 457 million francs.

Fewer financing rounds and lower investment volume: Although the Swiss fintech industry grew in 2023, there is a cooling trend in financing activities

Specifically, last year a total of 457 million francs (around a quarter less than the 605 million francs from the previous year) flowed into 68 (2022: 84) financing rounds. According to study leader Thomas Ankenbrand, it will only be possible to say in the next few years whether this decline is a structural slowdown or is driven by a temporary interest rate effect.

Things look a little worse for the Swiss fintech industry compared to other locations. Here the HSLU puts together a ranking of the cities most attractive for fintechs. Since the first edition of the study, Singapore has come first. And in the most recent survey, Singapore also leads by a large margin, wrote the university.

However, Stockholm overtakes Zurich and Geneva in the latest rankings. The Swedish capital is now in second place, meaning Geneva falls off the winner’s podium. In addition, other cities such as Amsterdam have opened up, noted the HSLU.

A ranking of the most attractive fintech locations: Singapore is at the top, Stockholm is in second place and Zurich is in third place. According to the graphic, the ranking is based on political, legal, economic, social and technological conditions.

In the ranking of the most attractive fintech locations, Stockholm has pushed the Swiss cities of Zurich and Geneva out of second and third place – cities like Amsterdam have caught up

Study director Thomas Ankenbrand said: “The third and fourth place placements prove that the general conditions for fintech in Switzerland continue to be good.” The analysis carried out in the study would also show that leading international fintech locations have become more attractive than Switzerland in the past year.

“Although the Swiss fintech industry has developed from a niche market into a significant provider of innovation for traditional financial service providers, the potential for optimizing the financial value chain has not yet been exhausted,” added Ankenbrand. Embedded finance, i.e. solutions for the seamless integration of financial services into various application areas, have only been implemented sporadically so far.

The HSLU lecturer sees great potential for the financial sector in the area of ​​artificial intelligence. Dynamic adaptation to new technological developments would bring advantages to Switzerland and the local fintech sector.

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(Featured image by ChiemSeherin via Pixabay)

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