Over 240 representatives from the world of business and politics attended talks and a subsequent discussion evening on the subject of “Private Equity in Zug” organised by the Zug Chamber of Commerce in cooperation with the Swiss Private Equity and Corporate Finance Association and held at the GIBZ School of Commerce last Friday evening.
Among those speaking at the event (as can be seen from the left in the photograph) were Jörg Sandrock, the CEO of Neon-free, Thomas Dübendorfer, a member of the board of Diamond Digital AG, Mark Branson, the director of the Swiss Financial Market Supervisory Authority (Finma), and Heinz Tännler, the cantonal director of finance, along with Peter Letter as presenter.
Fintech is the term used to cover all those companies which offer digital and/or technological financial innovation, an area which has become increasingly significant in Zug in recent years and been subjected to much coverage in the press. One question all those involved in it have to ask is whether regulation hinders or promotes innovative services.
For his part, Branson outlined how Finma was dealing with the new technologies. Normally regulation related to problems of the past and the authority was rather cautious when it came to innovation. Then there was also the risk that regulation might distort competition as fixed costs would be higher and the bigger players in financial services would be able to lobby more strongly. He emphasised it was Finma’s aim not to stand in the way of innovation in the Swiss financial services sector, it pursuing a neutral policy when it came to technology and competition, in strong contrast to the policy of much greater involvement of the regulator in the United Kingdom, where competition by certain technologies is explicitly promoted, a policy which Branson thought meant greater risk of distortion. He mentioned, too, that the more neutral policies pursued by Finma were more future-oriented, not that this meant it was more passive, going on to explain how a so-called Fintech Desk had been set up several years ago and that, since January of this year, a new licence for Fintech companies had been introduced, the authority having also specifically worked out guidelines for Initial Coin Offerings (ICOs) within existing legislation.
Of course, the new technologies alter the types of risks involved, with crypto-currencies and the anonymity they offer meaning greater difficulty when it came to pursuing cases of money laundering and fraud. In fact he said cyber risks were currently the greatest operational risk when it came to money business. Then, with the current trend for financial services to be outsourced to third parties, there were greater risks relating to concentration.
Heinz Tännler, who is not only director of finance in the canton but also chairman of the Swiss Blockchain Federation (SBF), outlined the significance of the innovative financial industry for Zug as an economic location, adding how the SBF contributed to the maintenance and extension of the attractivity and competitiveness of Switzerland as a centre for blockchain technology. He felt the greatest challenge in the area was the creation of legal certainty, favourable framework conditions and a broadly supported eco-system.
Two Fintech firms then presented their innovative products, Neon-free explaining how it was able to offer a bank account though an app. In fact in cooperation with the Hypothekarbank Lenzburg, the company is able to offer the digital opening of a bank account for no fee.
Secondly, a representative of Swissdiamondcoin outlined the possibility of holding diamonds digitally within portfolios of asset managers and institutional investors. In fact it is through asset-based crypto tokens, which make use of blockchain technology, that the keeping of diamonds as an investment can be made simpler.
This is based on an original article by Peter Letter himself.