A new study shows Switzerland’s Fintech industry is growing and maturing. That’s positive for Liechtenstein because both countries’ ecosystems are strongly interconnected.
Over the past years, Liechtenstein has positioned itself as a Fintech hub in the heart of Europe, with a strong focus on blockchain and crypto technologies. What started as an idea has worked out well so far. Companies from all over the world are flocking into Liechtenstein to take advantage of the country’s unique ecosystem.
Besides innovation-friendly institutions, a progressive regulatory framework, and its membership in the European Economic Area (EEA), another factor that makes Liechtenstein attractive is the proximity to neighboring Switzerland, which is home to a thriving banking and Fintech community. Liechtenstein’s Fintech industry benefits from this close-up connection in many ways: The availability of know-how and talent, synergies between companies, access to funding sources, and knowledge exchange are some of the advantages.
The Lucerne University of Applied Science and Arts has now released the 2020 edition of its annual IFZ Fintech Study, providing insights into the Swiss Fintech ecosystem and its position in the overall global market. It paints a promising picture.
Study highlights: healthy growth and consolidation
In late-2019, 382 fintech companies had set up shop in Switzerland, which represents a 7% increase compared to 2018. 70% of those fintechs offer solutions in the area of investment management or banking infrastructure, with the most commonly used technologies being process digitization, automation, and robotics, as well as distributed ledger technology (DLT).
Growth has been slower than in the previous year. However, funding indicates that Swiss fintech companies are maturing and have developed past the seed stage. Series B funding volumes have grown by a rate of 115% compared to the previous year. Some of the largest Series B rounds in 2019 were Numbrs Personal Finance (CHF 40 million) and Loanboox (CHF 22 million).
The Swiss Fintech ecosystem had also seen first successful exits in 2019, and there were at least four acquisitions. Both indicates that the industry is getting more consolidated and may predict increasing IPO activity in the coming years.
Token sales have decreased compared to 2018
The overall funding volume, however, has decreased by 35% in 2019. In particular, ICO token sales have gone down, like in most parts of the world, with only four major token sales raising a combined US$ 10 million. This figure, however, looks at ICOs, which have generally lost steam since 2018.
Looking at the CV VC Crypto Valley 50 report, however, the local crypto community still shows strong growth. The number of blockchain businesses in the region has kept growing throughout the last year, more than 1,000 jobs have been added, and the first crypto banks have launched, two of them in Switzerland. Thus, even if ICO volumes dropped in 2019, it is likely that token sales will pick up again and grow over the next years, although they will probably come in the form of STOs rather than ICOs.
The IFZ study also placed Swiss cities on the global map, with Zurich ranking as the second most significant Fintech hub, after Singapore, and Geneva is ranking third.
Altogether, the report paints a positive picture and shows Switzerland’s importance in the global Fintech industry. All of that is certainly also positive for Liechtenstein-based Fintech businesses, which are strongly interconnected with their Swiss-based counterparts.