Financial technology and digitalisation (2015)
FINMA supports an innovative and competitive Swiss financial centre. One trend offering major innovation potential is financial technology (FinTech), which means companies tapping into the potential of digital know-how for the financial industry. FINMA has been dealing with financial technology and digitalisation since 2013 through bitcoins and crowdfunding.
Dialogue with business
FINMA has been reviewing the regulatory and supervisory regime to lower competitive barriers and enhance technology-neutral regulation. It has established dialogue with FinTech start-ups and the associations of established financial service providers to discuss initial ideas for FinTech supervision and regulation.
Proposal for a new licensing category
FinTech companies in Switzerland may come under the Anti-Money Laundering or Banking Act. The Banking Ordinance stipulates that anyone who receives money or other assets – known as deposits – from more than 20 clients has to apply for a banking licence. Obtaining the requisite banking licence often presents a major hurdle to these companies.
Furthermore, FinTech includes business models and certain characteristics that do not match any of the usual banking risk profiles. FINMA is therefore considering introducing a new licensing category with less stringent requirements than those currently applicable under the Banking Act. The granting of such a licence would be contingent on the institution refraining from maturity transformation, which is common practice in the banking sector. In other words, short-term deposits may not finance long-term loans. The total volume of deposits is also to be limited. Capital and organisational requirements can be lowered for these institutions to reflect the reduced systemic and client risk. Bona fide improvements in the supervisory environment for technological innovation may well require changes at statutory level.
Technology-neutral regulation in the context of digitalisation
Supervisory law should be neutral as regards technological advances, i.e. neither promote nor hinder them. The aim of regulation is to enable fair competition between all market participants, whether they offer an analogue or digital service. Any illegitimate barriers to new service providers or offerings need to be removed. FINMA has analysed its rules to see whether they need to be amended in this respect. Principles-based regulation as applied in Switzerland is conducive to digital business growth.
Progressive regulation in the FINMA Anti-Money Laundering Ordinance
A series of targeted easements were made during the revision of the FINMA Anti-Money Laundering Ordinance to bring it into line with the digital age. FINMA incorporated acceptance of video and online identification through a new circular drafted and submitted for consultation before the end of 2015, which will facilitate establishing business relationships (onboarding) through digital channels. This means that, subject to certain conditions, appearing in person will no longer be necessary.
Protecting clients and the financial system remains key
Supervisory gaps in client and system protection must be avoided at all costs. This includes gaps resulting from technological progress.
Improved access to information through the FinTech desk
Dialogue with FinTech start-ups has shown that companies which are new to the financial market and its regulations have a particular need for centralised access to information. In response, FINMA is launching its first online tool72 to assist navigation through the regulatory landscape. A FINMA FinTechspecific information channel will also be set up in the first quarter of 2016.
(From the Annual Report 2015)
