Swiss fintech rebounds to rude health

It’s official. Funding of Swiss fintech companies has rebounded back to rude health. As if to celebrate the news, UBS bank promptly shelled out $1.4 billion on a late Christmas present: the US fintech firm Wealthfront.

Of course, those sentences are something of a contradiction. UBS has plenty of reason to target the US wealth market and no wealthtechs of this size exist in Switzerland (Wealthfront has 470,000 clients and $27 billion signed up to its platform).

The point is that financial technology is back in big demand throughout the world. Not least in Switzerland, where only last year the brokerage Crypto Finance was bought for a “moderate three-digit” million sum by the Frankfurt stock exchange.

According to market research group CB Insights, venture capital fundingExternal link of fintech start-ups globally shot up from $49 billion in 2020 to $132 billion last year. That’s the fastest growing category of all industries surveyed.

And it’s a similar picture in Switzerland, where total start-up funding mushroomed 44% to break the CHF3 billion barrier for the first time in 2021. In the same time frame, VC funding of fintechs quadrupled to CHF858 million, according to the Swiss Venture Capital ReportExternal link.

To be fair, Swiss fintech funding was dominated by the CHF584 million cash injection into insurtech company Wefox. But already this year, the two Swiss digital assets banks Sygnum and SEBA have raised some CHF200 million between them.  

It’s easy to see why venture capitalists came out of their shells last year compared to a relatively fallow first pandemic year.

In 2020, the shock of the arriving pandemic was enough to knock anyone out of step. Venture capitalists were telling me that they were putting their spending plans on hold to keep their existing start-up portfolio companies afloat.

Even fintech companies suffered in those first few months of Covid-19. It’s all very well being digital, but many Swiss fintechs supply traditional financial companies with their services, rather than the general public.

And many of these companies, I’m told, were putting their fancy innovation projects on ice to deal with the immediate challenges on hand.

As UBS and those VC funding figures show, it didn’t take long for that to turn around with a vengeance.