Connecta – what to expect from fintech companies

During this year’s edition of Connecta Bern, which was once again held as a digital event, the digitization of the banking sector and development of fintech companies were a major focus. We summarize the highlights of the event for you here.

Over the past few years, digitization has scarcely shaken up an industry in the way it has the finance and banking sector. Start-ups that focus on the financial sector with modern technology, i.e. fintech companies, are veritably showered with funds all over the world from VC companies. What are the current trends, and what challenges do traditional banks face in this context? The experts at Connecta provided answers to these questions in the form of blog posts and interviews on Connecta TV.

Banks should listen to what their customers want.

Someone who knows what makes a fintech company successful is Markus Schwab, CEO of Yuh Ltd, the app for paying, saving and investing. According to a statement by the company, the app has already won over 20,000 Swiss residents. No doubt because the app also had the backing of two renowned partners in the form of Swissquote and PostFinance. Just as you would expect, this inspires confidence amongst customers.

As Markus Schwab explains in the interview, there is a huge gap between what customers want and what many traditional banks actually offer. Customers use their smartphones a lot, they want low fees and a service that is ideally available round the clock and can provide the information they need in real time. This is precisely where the potential for start-ups to be successful lies. The market is, by his own estimates, very diverse, and is set to become even more so in the near future as more and more new providers emerge that focus on a specific target group. Yuh, however, has deliberately decided against this “vertical banking” approach, and aims to be a product for the wider public. Just how exactly do you achieve success in this field? “Inspire your customers,” responds Markus.

Interview with Markus Schab, CEO of Yuh Ltd (in German only)

Switzerland tends to see innovation on a smaller scale

Prof. Dr Andreas Dietrich, Head of the Institute of Financial Services at the Lucerne University of Applied Sciences and Arts, presents in an interview the results of a study that looks at the digital services provided by Swiss banks. Unsurprisingly, the biggest institutions are at the forefront here. After all, they possess the human and financial resources needed to digitize quicker. On a global level, Professor Dietrich considers Switzerland to be in the upper third or fourth of international financial centers. Truly revolutionary innovations and new technologies tend to be more common abroad, for instance in China and the USA. Switzerland, by contrast, is better known for smaller-scale innovation. He sees potential for fintech companies and for advances (along the lines of, say, Germany) in areas such as “embedded finance”, i.e. approaches where the banking element or the payment process is part of a different business, and it takes place in another company’s ecosystem. “Open banking”, i.e. the creative use of account data (naturally only with the customer’s consent) through defined interfaces, and “banking as a service” (BaaS), which enables companies outside of banking to offer their customers banking services.

Interview with Prof. Dr. Andreas Dietrich, Lucerne University of Applied Sciences and Arts (in German only)

Fintech companies are increasingly becoming partners

Sandra Lienhart, Member of the Executive Board at PostFinance, has a similar view. For her, major new areas in the coming period will be “vertical banking”, and also “impact investing”. And of course the global trend of “Buy now, pay later”, or payment by invoice or by instalment. In the background discussion (LINK), Sandra stresses the idea that we are increasingly seeing a trend that suggests greater cooperation and less confrontation between traditional banks and fintech companies. Meanwhile, start-ups try to develop close ties with banks, seeing as they have a lot of reach. And the products start-ups offer, which are characterized by a good user experience and innovative features, are often the perfect addition to the product portfolio of traditional banks.

Interview with Sandra Lienhart, PostFinance Ltd (in German only)

Payment transactions are the new “sexy”

In an interview, Bernhard Lachenmeier, Head of Shopping & Merchant Solutions at PostFinance, points to an area where there is potential for fintech companies to grow significantly, seeing as banks have neglected it. Payment transactions were just seen as a cost item, and it’s not just in Switzerland where they were foisted off to others. Now, however, “payment transactions are the new sexy”, as he explains. And the success stories of companies like Klarna and Adyen no doubt prove his point. This is putting banks in a tight spot again seeing as they realize they have lost that proximity to the customer by outsourcing the business. The takeover of Concardis by Nets and then of Nets by Nexi, or the integration of the former SIX Payment Services (together with PAYONE) into Worldline has created an opening for a Swiss payment transactions provider. It is certainly true that some banks do want to get closer to retailers again by offering niche services, but currently in Switzerland there is only one full-service provider as far as payment transactions are concerned, namely PostFinance.

Interview with Bernhard Lachenmeier, PostFinance Ltd (German only)

Due to the current situation, Connecta Bern was held as a digital event once again in 2021. Connecta is renowned for shining a light on the diverse nature of digitization and this year was no different with content presented across the three formats of Connecta Blog, Connecta TV and Connecta Talk. Find out more here: www.swisspost.ch/connecta.