Evolution or Revolution? The Innovation Dilemma in the FinTech Industry

Von Michele Forte - 17. Februar 2016

Evolution or revolution? It is the classical question everyone in the innovation business has ended up with when working on promising new technologies. Of course, the underlying hope is to reshape the industry and to provide new ways for the business to better serve customers’ expectations. The FinTech scene has been hyped for some years now - media outlets are pushing out article after article about a FinTech revolution and talk of a guaranteed disruption for the financial industry’s existing top dogs: banks and financial operators. In the eyes of some, FinTech will even replace traditional banking altogether and anyone that doesn’t adapt will inevitably disappear.

But what is the factual reality behind the hype? How and to what extent did FinTech change the financial industry in Switzerland these past few years? Surprisingly, the existing market leaders are still very successful – at least if we look at the figures and numbers in their books.

According to the Swiss Banking Association, the operating net income in 2015 rose by 1.2% to 61.2 Billion CHF. Between 2014 and 2015, the aggregated balance sheet rose by 3.3% to a total of 3233 Billion CHF. Additionally, 86% of all interviewed customers state that they are between “satisfied” and “very satisfied” with the existing services the banks are providing.

At the same time, “True Wealth”, the most active Robo-Advisory platform in Switzerland, predicts that they will be able to reach 1 Billion assets under management by 2017. This anticipated number only represents 0.00015% of all existing assets under management in Switzerland’s traditional banking industry.

As stated by a study conducted by the Hochschule Luzern, the crowdfunding industry in Switzerland has raised around 15 Million CHF in 2014 – an insignificant number when compared to the traditional volume in the small credit industry of 12.5 Billion CHF.

So where is this wave of digital disruption and why should banks worry about the existing FinTech revolution? In my opinion, banks and financial institutions do not fear the competition of startups at all and rather than seeing them as a threat, have instead decided to take advantage of the wave of innovation. They do so directly by making use of the optimization that FinTech can add to their offered services. Indirectly, the rise of FinTech has also started changing the internal organization of traditional financial institutions with consequences such as the closing down of branches.

Going back to the title: the hype around FinTech seems to be an organic evolution of the financial industry rather than a revolution - at least for the time being, at least according to the numbers and at least in Switzerland.

Now, this may sound like I have no faith in FinTech but I assure you, quite the opposite is the case. I’m a FinTech guy and I believe the disruption exists and is applied – the benefit is simply falling inside the system rather than outside. So where is the economical space for a FinTech startup in a country like Switzerland with a small and saturated market? In a follow-up article I will investigate the intrinsic value of Switzerland as a hub for the FinTech industry.

  • Michele Forte

    Michele Forte has worked at ti&m for six years and is responsible for startup collaborations and innovation, particularly in FinTech. He has over twenty years’ experience as a software architect in a variety of sectors such as finance, insurance, and space travel. He is driven by his enthusiasm for technology, ans his expertise enables him to recognize potential in innovations and new ideas quickly.


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