This European country is the center for FinTech startups


Switzerland landscape and flag


Switzerland may typically be known for snow-capped mountains, delicious cheese, and luxury watches, but there's much more. The nation is increasingly becoming a magnet for financial technology, known as FinTech.

FinTech is the fast-growing industry where businesses use technology to disrupt the financial sector, essentially cutting out the middlemen by connecting buyers and sellers directly.

Cryptocurrency startups - early-stage companies developing or working with digital currencies - are a key part of this movement, and many are honing in on Zug, one of Switzerland's 26 cantons (territorial districts). In fact, the small, German-speaking canton is Europe's Silicon Valley for cryptocurrency.

Why FinTech companies are flocking to Switzerland

For many FinTech startups, operating in Switzerland makes a lot of sense. The nation boasts an incredibly stable economy, a strong reputation for innovation (it's ranked No. 1 in the Global Innovation Index), and an emphasis on security and privacy. On top of that, the Bitcoin is a legitimate foreign currency there, meaning there is no legal uncertainty about using it within the country.

In fact, the Swiss Financial Market Supervisory Authority (FINMA) authorized the Bitcoin stock exchange (ECUREX) in May, facilitating the exchange from Swiss Francs to Bitcoin. The new draft of the provision will address virtual currencies and go into effect at the beginning of 2016.

According to Switzerland Global Enterprise, other advantages include the nation's liberal laws, loosely regulated labor market, high security, and excellent free-trade policies.

All of these factors contribute to Switzerland being an established business hub, and several major companies, including tech giants like eBay and Google, have offices there. In fact, Google's largest engineering office outside of the US is based in Zurich.

US companies are increasingly expanding into Switzerland with regional EMEA offices or production facilities, further strengthening the relationship between the Swiss and American business and technology communities. On September 14-15, a major Swiss delegation represented the connection between the markets to observe the growing ecosystem of startups active in the U.S. and Switzerland.

Zug's transition from agriculture to "Crypto Valley"

Located south of Zurich, Zug transformed from a relatively poor farming town into one of the wealthiest, most desirable cantons in Switzerland. The main reason behind this shift: In 1947, the canton drastically reduced its tax rates to draw in companies. The tactic worked. Over the past decade, the number of companies operating in Zug jumped from 19,000 to 30,000. (Consequently, the unemployment rate in Zug is very low - below 2%.)

Zug's reputation as "Crypto Valley" developed in part because of Johann Gevers, CEO and founder of Monetas, a digital transaction platform. Gevers, who is also the co-founder of Bitcoin Association Switzerland, has been rallying to bring other cryptocurrency companies to Zug.

This is spurred by Gevers' belief that the existing, highly centralized financial system - in which every purchase is funneled through multiple banks, both big and small - is slow, expensive, and ultimately outdated. That's why he's tried to make Zug, and Switzerland as a whole, a breeding ground for cryptocurrency companies that try to avoid this financial bureaucracy.

Today, the canton is moving beyond the Bitcoin and developing new trading markets, encryption methods, and decentralized currencies, including the Ether - a blockchain-based cryptocurrency launched by a company called Ethereum.

FinTech startups in Switzerland

Here are a few Switzerland-based FinTech and cryptocurrency companies that are disrupting the market:

  • Xapo: A "Bitcoin wallet" that is essentially a secure Bitcoin storage platform with three layers of security protection. The company even offers 100% insurance for all Bitcoin funds kept in its virtual funds.
  • Monetas: An advanced digital platform that connects everyone to the global economy. It also boasts lightning-fast transactions at the lowest cost.
  • Knip: An app that manages digital insurance by detecting individual savings potential, enabling users to electronically change tariffs, conclude new insurance contracts, and more.
  • Squirro: A Zurich-based market research company that markets intelligence in real-time and explains the "why" behind industry data.
  • InventGlass: A private banking resource that relies on machine learning to give investors personalized information.

Various upcoming events will focus on cryptocurrencies, including the International Crypto Finance Tech Conference on November 3 in Zug. (For more information, consult the local associations Swiss Finte.CH and Swiss Finance Startups.)

Learn more about FinTech in Switzerland.

This post is sponsored by Switzerland Global Enterprise.

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