Insurtech has its first rollup as Knip and Komparu merge to create Digital Insurance Group.


An exit is when the rubber meets the road. All valuations up to that point are only on paper. So we like to track exits to see what they tell us about broader trends. Knip, one of the well known Swiss Fintech ventures, was recently acquired by Digital Insurance Group. It is also an “exit” for a Dutch venture called Komparu.

If you have never heard about Digital Insurance Group, don’t feel bad. It was formed from the merger of Knip and Komparu. The terms of the deal were not disclosed (which can mean it was not very much). It reads like the creation of a platform for a rollup and we believe it is the first rollup in Insurtech.

This does not seem like a cash out exit (which is why I call it an “exit” in quotes). It is probably more like a postponed exit. To get scale, a couple of ventures are brought together and the bigger entity can raise more money to do more acquisitions. In short this is the initial platform for a rollup. It makes sense as a strategy. One can find equivalents of both Knip and Komparu in virtually every market. Most of the things they need to do are the same in  each market. Local nuance matters of course but it is likely to be 90% standard and 10% local (like changing the menu slightly in a fast food chain to accommodate local tastes).

It also makes sense because Knip is what we call a Robo Broker and Komparu  is more of a comparison engine. A Robo Broker needs a comparison engine so the two are complementary. Comparison engines are easy to build and market but have low barriers to entry. So the combination makes sense.

Mergers always create a problem of who will be boss. It looks like they resolved that.   Dennis Just will step down as CEO of Knip, while Komparu’s Roeland Werring will become Group CTO and Ruben Troostwijk remains CEO of Komparu, focusing on B2B business opportunities as well as launching Knip in the Netherlands. Ingo Weber becomes the new Group CEO of the Digital Insurance Group. Ingo Weber comes from the VC world. He seems like the architect of the rollup strategy. He comes with a strong background in insurance, technology and business building.

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Bernard Lunn is a Fintech deal-maker, investor and thought-leader.

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Tradeplus24 CHF100m Fintech raise in Switzerland signals Insurance move into SME Lending 


Note: the deal was done in CHF which is about parity with USD, so you can read that as $100m.

When I first started looking at the Swiss Fintech scene in 2014, my post was called: Zurich Fintech fans look jealously to London (I did point out that while London might have more VC, the Swiss trains and mountains were better).

A lot has changed in that time. A more updated view of a much more vibrant Swiss Fintech scene was captured here two years later:

In the two years between those two posts, four things happened:

  1. Swiss regulators drafted perhaps the most progressive Fintech License anywhere. That took almost everybody surprise. A prediction along these lines would have got only cynical laughter in 2014.
  2. Bitcoin became respectable because it is legal tender and can be bought at any train station and used to pay taxes and other government bills. The legality was known for a long time thanks to the strange history of the WIR (as we reported in March 2015) and that legality led to respectability and both are prerequisites for mainstream adoption.
  3. London suffered Brexit (what soccer fans call an “own goal”) making other places in geographic Europe more attractive.
  4. Some potentially great ventures are starting to emerge from Crypto Valley. Lykke is one to watch in our view – a proven entrepreneur using disruptive technology to execute on an ambitious vision.

A $100m Fintech raise in Switzerland in 2014 would have been inconceivable. In 2017 it is noteworthy as another sign of a rapidly maturing Fintech community in Switzerland.

The Tradeplus24 news has a big number to get our attention. However, it is the innovation behind that number which gets our scrutiny today.

I could only find the Tradeplus24 news on German language sites, so if that is an issue for you, here are the key facts:

– they raised CHF100m debt

– The debt is for lending to Swiss SME (note: they refer to KMU which translates to SME). This makes them a balance sheet lender, like Avant, not a marketplace lender like Lending Club. This means they have assured capital to offer rather than simply matching on a best efforts basis (our take is the latter is the better model long term but that you need balance sheet based lending to get a market going).

– The lender is a boutique investment firm called OceanoOne that connects lenders to what they describe as “sourcing engines” (which is how they categorize Tradeplus24). Lending platforms consistently tell us that the demand from lenders far outstrips the supply of good quality borrowers. Lenders are hungry for high quality debt with a good interest rate. OceanoOne’s proposition is having relationships with the sourcing engines that deliver that high quality debt (what OceanoOne calls “short duration, secured working capital finance”).

– Kessler & Co AG, a Swiss Insurance broker, is listed as a partner

– AIG, the global Insurance carrier that got into trouble in the Global Financial Crisis is also listed as a partner.

It is the role of the last two that is interesting. This is Insurance getting into SME Lending and that could be game-changing.

A Credit Rating for SME?

Classic Supply Chain Finance (see this interview with Orbian for an example) works very well if the buyer is a credit agency rated corporate. That gets something like 150 bp spread over LIBOR.

That is great for an SME who is at the final stage in the supply chain that supplies to a credit agency rated corporate. What about an SME that is further down the supply chain or that only sells to other SMEs?

The rest of the SMEs currently rely on one of two types of solution:

–      Receivables Financing, Factoring, Invoice Discounting. Whatever you call it, the credit rating is based on the seller not the buyer and the APR % compared to Supply Chain Finance is massive.

–      Credit approval based on bank processes. Lots of ventures have made this process more efficient by digitizing it, but it still relies on the data that banks have traditionally asked for such as tax returns and audited financial statements which are at best one input to a credit model. That can work in America and Europe where that data is easily accessible in digital format, but it is not game changing. It is far harder in the Rest of the world.

All of this goes away if SMEs can get a credit rating as easily as a corporate.

In the interview with Dianrong, we see an approach to this problem in China.

The Tradeplus24 approach is different. It brings Insurance into the mix. AsOceanoOne put it “An insurance or equal protection of investment grade quality against credit loss and fraud is in place for all pre-financed receivables. The purchase of the receivables occurs only when a credit insurance or an equal protection is in place and confirmed by the relevant protection provider.”

The role of AIG is critical. We cannot see the details yet, but credit market work with Insurance. Think of the Credit Default Swaps (CDS) that are credited with the Global Financial Crisis and in which AIG played a much criticized role. A cynical knee jerk reaction might be “here we go again, this must end badly”. Our take is that there is nothing wrong per se with securitization or the insurance of securitized debt. Both can lead to more efficiency and lower cost financing. The issue is data transparency and now, nearly 10 years after the GFC, we have had the Big Data revolution and that transparency is now possible. If that makes financing cheaper for millions of SMEs we can all cheer.

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Bernard Lunn is a Fintech thought-leader, investor and deal-maker. 

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The WeFox #insurtech story is about augmenting rather than replacing agents


When we did our roundup of the top InsurTech ventures by money raised, we missed WeFox (fka FinanceFox) and their $28m Series A in September 2016 (the news as reported in Techcrunch is here).

This week we dig more into the WeFox story. When a venture raises a big round from some smart VCs, they are probably doing something right. You don’t get $28m for a story, they must have serious traction.

Our research reveals that one bit of conventional wisdom about InsurTech maybe wrong. It also tells us more about the reality of the European venture scene.

Conventional wisdom says Insurance Agents are fading.

In one sense this is literal. The average age of an insurance agent or broker has steadily increased from 37 years in 1983 and is now 59. They will be retiring soon, are not digital native, built their business pre digital and see no reason to change now. In this post Amy Radin, outlined the pain very well when she wrote:

“The Agents have a poor survival rate: only 15% of agents who start on the independent agent career path are still in the game four years later. Base salary is negligible and it’s an “eat what you kill” business. This is a tough, impractical career path for most, and has become less attractive over time.”

So who would want to build a business catering to those dinosaurs? That is what WeFox is doing. They are clearly getting traction, so maybe conventional wisdom is wrong.

Conventional wisdom says replace agents with a digital system. That might be as simple as a comparison engine – which is doing well in emerging markets where first time insurance buyers need a lot of help- or as complex as a Robo Agent.

There are two reasons – other than WeFox traction – to indicate that conventional wisdom may be wrong:

  • A lot of the momentum in AI is in human augmentation, rather than in human replacement. When the stakes are high human augmementation is often more sensible – think driver assistance rather than driver replacement or doctor assistance rather than doctor replacement. This may also be true with insurance agents.
  • “Relationships are the one thing you cannot commoditize” (quote from Wikinomics). You want your agent empowered to offer better, faster, cheaper service. An App can simply leave you doing the hard work – and you might also like your agent.

What WeFox tells us about the European venture scene

WeFox is a Swiss company, founded in 2014. But they are based in Berlin (as per their Crunchbase profile. That is not even all in the European Union.

This trend to multi-location startups (which we first wrote about here) is one sign of closer integration within Europe. Moving from Zurich to Berlin may soon be no more remarkable than a venture moving from Kansas to New York. Culture and language ties will beat the simple mechanics of regulation.

This shows that the post Brexit landscape is becoming decentralized. There is no single hub. Instead we are seeing networks emerge with each node in the network serving key functions. In this emerging reality, corridors become key. These corridors such as between Zurich and Berlin as illustrated by WeFox, are more important than individual hubs.

Switzerland and Germany share a language (as does Austria). The WeFox site is all in German. At this time there seems to be no desire to sell to English speakers. My German is not good enough to write my posts in German, but was happy to have Google Translate do the job. Even better was that  Karlheinz Passler (founder of, offered to do the job properly and translate this article properly. Danke Karl. Check out what Karl is doing at


Als wir unsere Übersicht der InsurTech Startups mit den höchsten Finanzierungsrunden erstellten, haben wir WeFox (ehemals FinanceFox) mit seiner im September 2016 durchgeführten 28 Millionen US-Dollar Series A Finanzierung vergessen (Techcrunch berichtete darüber).
In dieser Woche schauen wir uns die WeFox Story mal genauer an. Wenn ein Startup eine so große Finanzierung von mehreren etablierten VCs erhält, wissen die Investoren wahrscheinlich genauestens was sie tun. Für eine reine Luftnummer erhält WeFox keine 28 Millionen US-Dollar. Die müssen schon was ernsthaftes vorzuweisen haben.
Unsere Untersuchungen zeigt auf, dass unsere bisherige Einschätzung bzgl. InsurTech falsch sein könnte. Die Ergebnisse zeigen uns interessante Einblicke in die Praxis der europäischen Finanzierungsszene.
Die allgemeine Meinung ist, dass Versicherungsvermittler an Bedeutung verlieren werden

Ein Argument für diese These ist offensichtlich. Das durchschnittliche Alter der Versicherungsvertreter und Makler hat sich kontinuierlich von 37 im Jahr 1983 auf nun 59 Jahren erhöht. Da diese Vermittler nicht digital affin sind und bald in den Ruhestand gehen, haben sie auch keine Veranlassung ihre Agenturen zu digitalisieren. Im folgenden Beitrag von Amy Radin skizziert sie diese Probleme folgender maßen:
“Vermittler haben eine geringe wirtschaftliche Überlebenschance: Lediglich 15% der Vermittler, die diesen Karriereweg beginnen, sind vier Jahre später noch mit dabei. Die Basiseinnahmen sind so gering, dass es gerade zu Beginn der Tätigkeit darauf ankommt Abschluss-Provisionen zu erzielen, um das eigene Überleben zu sichern. Dies ist für die meisten ein zu harter und wenig attraktiver Karriereweg, der in den letzten Jahren weiter an Attraktivität verloren hat.”
Welcher Investor will diese Dinosaurier am Leben erhalten? Nun, WeFox tut es. Sie scheinen erstzunehmende Ergebnisse vorweisen zu können. Anscheinend liegen wir mit (unserer) allgemeinen Einschätzung bzgl. #Insurtech falsch.
Die langläufige Meinung ist, dass klassische Vermittler durch digitale Prozesse und Systeme ersetzt werden. Das kann zum Beispiel mit einem relativ einfachem Vergleichsportal – was in Wachstumsmärkten gut funktioniert, wo Erstkäufer noch relativ viel Hilfe benötigen – oder mit Hilfe von deutlich komplexeren Robo-Advisors umgesetzt werden.
Jedoch gibt es zwei Gründe – anders als bei der WeFox Traktion – die aufzeigen, dass die herkömmliche Einschätzung falsch sein könnte:
Eine Schwerpunkt im Bereich der künstlichen Intelligenz (AI) liegt in der intelligenten Unterstützung von Menschen, statt diese zu ersetzen. Wenn es um wirklich wichtige Dinge geht ist die Unterstützung der handelnden Personen sinnvoller. Wir denken dabe an Fahrerassistenz-Systeme als an Fahrerlose Systeme oder die Unterstützung von Ärzten, statt deren Ersatz. Dies kann durchaus auch für Versicherungsvermittler gelten.
“Soziale Beziehungen kann man nicht programmieren” (Zitat von Wikinomics). Sie möchten, dass Ihr Versicherungsvertreter und Makler dazu im Stande ist einen besseren, schnelleren und preiswerteren Service anzubieten? Eine entsprechende App kann ihn dazu befähigen diese anspruchsvollen Aufgaben besser durchzuführen.
Was WeFox über die europäische Venture-Szene verrät

WeFox ist ein schweizer Unternehmen das 2014 gegründet wurde. Mittlerweile ist es in Berlin ansässig (gemäß ihrem Crunchbase-Profil; Anm: Schweiz ist nicht einmal Mitglied der Europäischen Union.)
Der Trend, dass Startups mehrere Niederlassungen nutzen (was wir hier geschrieben haben) zeigt den hohen Grad der europäischen Integration auf. Ein Umzug von Zürich nach Berlin ist für ein Startup bald nicht bemerkenswerter als von Kansas nach New York. Die starke kulturelle und sprachliche Verbundenheit überwindet somit die Hürden der nationalen Regulierungen.
Schweiz und Deutschland haben eine gemeinsame Sprache (wie auch Österreich). Die WeFox-Seite ist zur Zeit ausschließlich auf Deutsch. Aktuell scheint es kein Wunsch zu sein im englischen Sprachraum zu vermitteln.
Dies zeigt uns deutlich auf, dass die Post-Brexit-Landschaft in Europa dezentraler wird. Es gibt keine zentralen Drehkreuze mehr. Stattdessen sehen wir zunehmend Netzwerke mit Knotenpunkten die wichtige Funktionen für das gesamte Netz übernehmen. In dieser neuen Welt nehmen Korridore eine Schlüsselrolle ein. Diese Korridore wie z.B. zwischen Zürich und Berlin (Aufgezeigt durch WeFox) sind wichtiger als bisherige Drehkreuze.
Da mein Deutsch ist nicht gut genug ist, um meine Beiträge auf Deutsch zu schreiben, habe ich Karl Heinz Passler (Initiator von gebeten diesen Artikel für mich zu übersetzen.


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Reporting from #InsurTech2016 in Switzerland – the first country where Bitcoin may go mainstream


Daily Fintech is a global business that happens to be based in Switzerland. Our Subscribers (over 13,800 as I write) are from all over the world, pretty much tracking the growth of Fintech globally. 

So we don’t take sides in the Fintech capital of the world debate. I have enjoyed living in London, New York and Singapore and have always looked to San Francisco for the new innovation. I moved to Switzerland for lifestyle reasons (great skiing and great place to raise kids). Daily Fintech now has the bonus that Switzerland is emerging as a major Fintech center.

So on Tuesday I bought a ticket and hopped on a train to Zurich (the train is part of the story) to attend the InsurTech 2016 event run by Finance 2.0.

The conference was about InsurTech, so I went looking for insights about Insurance as it relates to Bitcoin, CryptoCurrency and Blockchain. Zurich and Zug are the two ends of Crypto Valley. Zurich is also a leading center for Reinsurance and Zug is home to fast moving global capital pools (aka Hedge Funds) that are moving into Reinsurance. So this promised to be a stimulating conference.

Why Switzerland may be the first country where Bitcoin goes mainstream

Last year we reported on an event that took the innovation business by surprise – the first Silicon Valley company (Xapo) moving to Switzerland (as opposed to the normal flow going the other way) because the laws in Switzerland are better for the protection of cyber assets (which is what Xapo is selling).

Last year we also reported on a more obscure fact, but one that is critical to Bitcoin going mainstream in Switzerland. At a MeetUp in Geneva in March 2015somebody mentioned Switzerland being officially a multi-currency country and that led me to understand the WIR. This is an obscure currency in Switzerland used by very few people that was created after the Great Depression. Despite its obscurity, it is legal tender. So other currencies can be legal tender. That includes the Euro; often prices are displayed in Euro as well as Swiss Francs. More interesting for us Fintechers is that Bitcoin is also a legal currency in Switzerland.

Adoption is NOT in countries with failing currencies

Many people were drawn to Bitcoin by dreams of stateless trust based on math replacing more authoritarian governance. So the meme got established that Bitcoin would first go mainstream in countries like Argentina; we debunked that theory here.

Then we indulged in science fiction fantasies around Greece or Scotland adopting Bitcoin in a breakaway from the Euro or the Pound.

None of this came to pass.

The use of Bitcoin in Switzerland could not be more different. The Swiss love the Swiss Franc, as do investors globally who are concerned with long term wealth preservation. The Swiss Franc is as far removed from being a problem currency as you can get.

Recent news from Switzerland indicate that exactly the opposite may come to pass – mainstream adoption happens first in a country where citizens have an unusually high amount of trust in their currency and the government that issues the currency.

Two news items show Bitcoin moving mainstream in Switzerland:

Swiss Railway ticket booths become Bitcoin ATMs.

Residents in Zug will be able to pay taxes and government services in Bitcoin.

The latter is still a pilot and limited to one area. If it gets extended and is copied by other regions it will be a game-changer. 

The former is a national rollout in a few days (11 Nov).

Swiss Railways and the toothbrush test. 

Even rich people use public transport in Switzerland so it will always get investment. You can get to a remote part reliably in comfort with just a few changes. The mobile app that guides you through this process passes the toothbrush test

That background matters for American readers who might be ready to dismiss this as Amtrak offering Bitcoin – that would be both unlikely and probably ineffective. SBB (short hand for Swiss Railways) is a core part of life in Switzerland.

So when SBB moves into Bitcoin it is a seriously big deal.

Settlement Latency in Insurance and Blockchain

Switzerland is a leader in a) Blockchain technology (Crypto Valley) and b) in Reinsurance. So it is natural that the two should come together. Two talks at the InsurTech 2016 event in Zurich focussed on this intersection.

One talk was from Burak Yetişkin (Accenture) and the other was from Paul Meeusen (Swiss Re). From this we learned about the Blockchain Insurance Industry Initiative (B3i), which has Aegon, Allianz, Munich Re, Swiss Re and Zurich as founding members. This is a bit like the R3 consortium in the banking realm. The aim is to work on standards to reduce the Settlement Latency in Insurance. The potential pay off is huge. Big processes and all the related costs will be eliminated. Even bigger is the pay off from reduced counterparty credit risk for all the players in the stack (broker to insurance to reinsurance). If settlement takes 4 months (from claim to cash), then all the companies in the process have to manage counterparty credit risk.

Even bigger than this is the big pay off for consumers. This is missing from the move to real time settlement in the capital markets. Going from T+ 2 or T+3 to real time is good but going from 4 months to a few days or few hours is massive. Imagine putting in an insurance claim and getting a message a few hours later saying “your claim has been approved, with some deductions detailed below, you will be paid tomorrow”.

Now connect to the Bitcoin story and and imagine an extension to that message that says “if you gave us a Bitcoin wallet address you should already find your cash in there”. When you have suffered a tragedy that kind of immediacy is critical.

This becomes feasible because we move from a consumer defining the event (crash, fire, hurricane etc) to those events being validated data events stored on the Blockchain. Then the consumer simply says “policy # xxx suffered a loss of yyy in event aaa”, with each of those being verified data points in an immutable database that all have access to.

All the participants – customer, broker, insurer, reinsurer – will apply their processes to those data points.

No amount of improved mobile front end will make much difference to the full lifecycle experience, but bringing the time from claim to cash from 4 months to days or hours will be a total game-changer. That is why we envision Blockchain getting its first big use cases in Insurance (before we see big rollouts in banking).

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Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge platform.

Happy Birthday Switzerland searching for crypto in valleys and alps


Image courtesy Eiger Hotel

Today is Swiss National Day, so although Daily Fintech is a global business and we do not take sides in the Fintech Capital of the world debate, today is a day to celebrate all things Swiss. First, a personal note, I chose to live here for family and lifestyle reasons and love being in Switzerland. The country is almost perfect, which makes it a lousy laboratory for startup experiments; entrepreneurs want problems to solve and so an almost perfect place is terrible. Switzerland is only # 19 in nominal GDP ranking and you would not describe the consumers here as early adopters.

However Switzerland is a great location for a global business (such as Daily Fintech Advisers).

Last year I wrote about the opportunity for Switzerland to take the lead in financial transparency for investors. While there are many interesting initiatives, progress has been disappointing. The core of the wealth management business has seen little change in a year.

SIBOS this year is in Geneva in lateSeptember. 8,000 bankers and their vendors flying in for 4 days. See y’all there. The last time it was in Switzerland was 2002 and before that 1993, very different eras. Last year while writing the Swiss Fintech birthday post, I was getting ready to moderate a session at SIBOS in Singapore (what many call the Switzerland of Asia) on Fintech Hubs. This year, we are in a post Brexit landscape where the Brits are looking to Switzerland to understand how to navigate the global economy as an independent country.

Crypto Valley

The confluence of expertise around Zurich and Zug has turned into a real ecosystem with bankers and crypto guys mixing easily and cooking up game-changing plans. Plus the regulatory environment is good (Switzerland has strong privacy and data protection laws and is formally a multi-currency country thanks to the strange history of the WIR). These were big factors in Xapo moving from Silicon Valley to Zurich and Ethereum setting up its Foundation in Zug. Oh and Zug has the biggest concentration of Family Office wealth in the world.

You can see some of the Crypto Valley leaders here.

These are global ventures that just use Switzerland as a base.

People here talk a lot about the lack of VC. I do not think it is a big deal where the venture funding is located. Capital flows to innovation. If it temporarily flows the other way, you can be confident that will change. Today we have that temporary dislocation, where Swiss investors fly to London to meet Swiss entrepreneurs to do a deal. With all those great Swiss hotels, one assumes that a congenial meeting place could be found within the country!

Is diversity a strength or a weakness?

There are now a reasonable number of Swiss Fintech startups as this recently published list shows.

The number of Fintech and Finserv associations, networks and accelerators has grown a lot in the last year. This diversity can be a weakness. If you fly into Switzerland for a day, who do you go and see? More basically, where do you go – Zurich or Geneva or maybe even Bern (seat of Govt and regulator)? If you go to London or Luxembourg, it is much easier – only one city and the techies and the bankers and the regulators are all there. However diversity can be a strength – innovation usually emerges from that messy brew called free markets. Somebody asked me which one of the associations, networks and accelerators was the “official” one. I looked at the person blankly, because there is no official one and I don’t think that matters.

I do still think that financial transparency for investors, based on rigorous engineering, will be the Swiss financial brand that scores big. It may use Blockchain technology and other technology to get there.

In the meantime, I am heading out into those lovely Alps (where I do not expect to see any crypto, that stays in the valleys for now).

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Bernard Lunn is a Fintech thought-leader.

Swiss Fintech made a big step forward last week

By Bernard Lunn

Last week I went to see the unveiling of the SIX F10 Fintech Incubator and the inaugural Swiss Fintech pitch event, both in Zurich.

Both would have been routine in London, but are newsworthy in Zurich. This feels like the sort of activity that one saw in London a few years ago. This is early days for Fintech in Switzerland, but the key ingredients are in place for an ecosystem to take off.

As Paul Graham of Y Combinator famously said,

“You only need two kinds of people to create a technology hub: rich people and nerds. They’re the limiting reagents in the reaction that produces startups, because they’re the only ones present when startups get started. Everyone else will move.”

Switzerland has lots of nerds and rich people thanks to:

  • Great educational establishments creating a pool of developers/engineers/inventors/quants. In short – lots of nerds.

The SIX F10 Incubator is noteworthy for two reasons:

  1. SIX call it an Incubator rather than the more trendy term Accelerator. This is accepting that the need is to fund the earliest stage of a venture. Plenty of investors are ready to fund a venture once it reaches Product Market Fit (PMF). Post PMF, Supply (of capital) exceeds Demand. Pre PMF, it is the other way around. Given how cheap it is to create a Minimum Viable Product (MVP) today it makes sense to fund the early stage with lots of little bets that can produce a small number of winners.
  1. SIX has a far bigger functional footprint than is normal. SIX has 4 divisions that are usually independent companies in other markets such as America:

– Payments

– Stock Exchange

– Securities Data provider (the old Telekurs business).

– Post Trade Services (including Clearing and Custody).

This is like combining Visa and NYSE and Reuters and DTCC and State Street into one company.

Whether this is an advantage (integration) or a disadvantage (focus) is an open question. What is surely true is that this bigger footprint will be an advantage for ventures in their Incubator. The SIX F10 Incubator should be able to offer a greater depth and breadth of expertise as well as the data and test environment that early stage ventures need before getting their product to market.

The Swiss Fintech pitch event was remarkable because this was a highly professional event that was created by volunteers (with some cash from Sponsors). I have noticed in a village in the Alps (dependent on tourism) how much activity is created almost entirely by volunteer energy. This is the same spirit that has created so much value in open source (which I can relate to because Daily Fintech is an open source research site monetized through Daily Fintech Advisers).

These were the ventures at the Swiss Fintech pitch event:


Working capital finance


Online Insurance broker for Swiss market


Real estate crowdfunding


Alternative assets access

Go Beyond Investing

Angel Investing crowdfunding


Smart securities on Blockchain


Mobile E-commerce connecting clicks and bricks


Data analytics for compliant marketing


Structured securities products


Comparison site for Remittances

We will cover these as part of our research in different domains (Investing, Insurance. business banking, consumer banking). For now I want to focus on 2 themes:

The absence of investors in the room. Hopefully that will change. If not, both Swiss investors and Swiss entrepreneurs will continue to fly to London in order to meet. The nerds and rich people should be connecting in Switzerland. I think this will only change once we see some exits from the current batch of startups or at least a big funding round that demonstrates a big step in valuation. Yes, that is a chicken and egg problem!

The debate about how Swiss to be. Some great Swiss Fintech ventures from an earlier generation such as Temenos and Avoloq were in the room. They built before venture capital was so plentiful. Times are different now. Now that we have billions of people with mobile phones, ventures that get traction scale at an incredible speed. Patient execution to get to Product Market Fit is followed by intense and rapid scaling. If you don’t scale at that speed, another venture from elsewhere will do that and your early success becomes a footnote in history. That needs large pools of risk capital.

The Swissness debate has three aspects. The easiest one is capital. This is easy because capital is mobile and will follow success.

The second is talent location. This part is also relatively easy. Switzerland is expensive, so the team has to be global from day one with nearshore, offshore and close to market teams ready to kick in during the scale phase. That is pretty much accepted.

The third aspect is harder. It is risk aversion. This relates to the lack of early stage investors. In Silicon Valley most rich people became rich backing early stage ventures. The risk aversion of Swiss investors will change when they see some exits or big funding rounds. The risk aversion that is much harder to change is the risk aversion of Swiss consumers who are risk averse for a lovely reason – most things work pretty well in Switzerland (so there is little reason to take a risk on change).

So I think the success stories will come from global plays, specifically global plays that leverage Switzerland’s strength as a global Wealth Management center. Fintech ventures seeking expertise, partners, distribution and clients have plenty of choice in the Wealth Management space. If that combines with the kind of jurisdictional advantages that made Xapo and Ethereum choose Switzerland, one can envisage Fintech in Switzerland taking off like the proverbial rocket.

Daily Fintech Advisers (the commercial arm of this open source research site) does Market Discovery and Development. Contact us to start a conversation if you are breaking into a new market.


Happy Birthday Switzerland where Wealth Management 2.0 is being built on transparency

By Bernard Lunn

Tomorrow is Swiss National Day. I feel very lucky to be living in this wonderful country and to be celebrating the birthday up in those glorious Swiss mountains.

I think Switzerland is becoming one of the world’s major Fintech Hubs. I have to be careful not to take sides in the Fintech Capital of the world debate. Daily Fintech is global blog. I am a Brit who married into an American family and lived in Asia before moving to Switzerland. Efi Pylarinou, another Founding Partner of Daily Fintech Advisers who covers Investing Tech is a Greek who used to work on Wall Street and now also lives in Switzerland. I will be moderating a session at SIBOS (in Singapore in October) on Fintech Hubs.

So while being as neutral as Switzerland I do want to celebrate Switzerland’s growing strength in Fintech on Switzerland’s birthday.

Most of the Fintech Capital of the world debate is media driven. The reality of global trade is the emergence of specialization. To put it more simply, it is “horses for courses”.

I do not think it is a big deal where the venture funding is located. Capital flows to innovation. If it temporarily flows the other way you can be confident that will change. Today we have that temporary dislocation where Swiss investors fly to London to meet Swiss entrepreneurs. With all those great Swiss hotels, one assumes that a congenial meeting place could be found within the country 🙂

With so many Family Offices and Wealth Managers based in Switzerland, the trip to London to invest in innovation may be a temporary phenomenon.

What matters is innovative customers who will use the new services created by entrepreneurs. That innovation is what attracts both entrepreneurs and investors. That is the single native ingredient. Everything else (including capital and talent) can be imported.

Switzerland scores low when it comes to innovation from mainstream consumers. The reason is the lovely problem that things mostly work pretty well in Switzerland, so consumers have little reason to innovate. American consumers have been great early adopters. So have UK consumers. In different ways, consumers in Asia and Africa are driving innovation today.

However in Wealth Management (aka Private Banking) there is both a great motivation to innovate as well as the expertise to innovate effectively.

The easy world of Swiss Wealth Management 1.0 is morphing into something more complex to which we can affix the 2.0 label. This transition is full of opportunity and risk. Therein lies the motivation to innovate.

Swiss Wealth Management 1.0 was more Private than Banking. To keep transactions secret, banks offered numbered accounts and “hold all mail” capability. Keeping the money hidden was more important than delivering good investment returns.

Post FATCA and GATCA, that secrecy USP has gone. Now the challenge is how to deliver good risk adjusted returns.

The transition from Swiss Wealth Management 1.0 is the transition from secrecy to transparency.

I don’t mean transparency to governments. That is the realm of FATCA, GATCA and KYC/AML. Swiss Wealth Managers will be as transparent as they have to be by law – no more and no less.

I mean transparency to customers (aka investors/traders). This is where Swiss Wealth Management has a big opportunity to rebrand and offer a unique value proposition.

To understand this one has to go back to those wild days in September 2008 when the global financial system had a cardiac arrest (and nearly died). The problem – the clogged arteries if you like – was very simply the lack of transparency.

Look at the two biggest problems manifested during the Global Financial Crisis. Both were fundamentally transparency issues:

1. Subprime Mortgages. There is nothing wrong with Subprime Mortgages – if the risk is priced properly. If the data is opaque, risk cannot be properly priced. In other words, an investment bank saying “buy this lovely bundle, it is AAA, no really it is AAA and we know its is AAA because we say it is AAA” is not transparent. Transparent means being able to drill down to whatever level of granularity you want and apply whatever algorithms you want. In short – the issue is transparency and transparency is a data problem.

2. Madoff. He said “our returns are consistently x% per annum and no, I cannot tell you how I do that because it is a secret”. In short – the issue is transparency and transparency is a data problem.

This is NOT a regulatory issue. Sure, regulators are demanding greater transparency as a baseline. However any bank that sees that as a cost burden only is missing the point. The opportunity is to get ahead of the regulators by offering a level of transparency that customers would be asking for if they knew that it was technically possible – which it is.

The reason that Switzerland can seize the initiative on transparency is that Switzerland was only a bit part player in the Global Financial Crisis. Of course there were Swiss banks that bought and sold Subprime Mortgages recklessly. Of course some Swiss Wealth Managers failed to do their due diligence on Madoff. However that was true everywhere. Switzerland was certainly not the epicenter of the Global Financial Crisis. That dubious prize went to New York and to a lesser extent London.

Of course that does not stop a bank or Fintech venture in New York or London rising to the challenge of offering transparency to investors . However it may be harder to do this in London or New York because ventures arise out of a culture and the trading culture that led to the Global Financial Crisis in those places is all about opaqueness – the opposite of transparency.

It is hard for incumbent to give up the revenue streams from the old way of doing things.

Swiss Banks have a hard time giving up the revenue streams related to secrecy. Consider something as simple as banks keeping customer statements and correspondence in-house. “Hold all mail” was not only essential in delivering secrecy, but was also a significant revenue stream where banks could more easily bundle other fee-based services such as brokerage.

This is the same as in all technology driven disruptions. Newspapers for example, had to keep print revenue going as long as possible while concurrently investing in digital lines of revenue.

Global Wall Street (which includes Canary Wharf in London) has an equally difficult time giving up the revenue streams based on opaqueness to investors. This is why there is so much resistance to the regulatory push to move derivatives from OTC to exchanges. Once data moves to exchanges it becomes transparent and low cost. Therein lies massive opportunity to add value higher up the stack as well as massive risk to the incumbents.

Swiss banks are invested in secrecy to governments. They are not so invested in opaqueness to investors.

Switzerland should be a major Fintech hub. It has both the Fin and the Tech. It has a big and vibrant financial services business – the Fin – and great universities turning out the people who create the Tech. It is also a big deal that Bitcoin is legal tender (thanks to the legacy of the WIR which I spotted this week “in the wild” in a sports shop in a remote mountain village)

WIR sign

That legal status for Bitcoin as well the legal protection for privacy is why we see ground-breaking moves such as Xapo moving their HQ from Silicon Valley to Switzerland and Ethereum choosing Switzerland as the jurisdiction for their Foundation.

Fintech is of course a global market. However Fintech is different from other markets because of regulation. Bits don’t stop at borders, but money has to show its passport. In Switzerland that means Bern, the sleepy old capital that is half-way between those two vibrant financial centers of Zurich  and Geneva. The Fintech MeetUps in Zurich (German-speaking) and Geneva (French-speaking) take place in English as befits a global market and are run by people with deep background in Wealth Management (John Hucker in Zurich and Al Gaillard in Geneva).

Fintech grows out of a culture. The Fintech that grows in New York and London will suit both institutional trading as well as innovative consumers. The Fintech that grows in Singapore and Hong Kong will suit the innovation coming from the growth of Asia. The Fintech that grows in Switzerland will suit the massive wealth management business. Where this intersects with institutional trading, Switzerland Fintech will be competitive with New York and London.

I think a single-minded focus on transparency for clients (whether individual or institutional) will be the key to Switzerland rebranding its financial services business and competing with London and New York.

I am heading out to enjoy those Swiss mountains.