Swiss fintech start-ups have been urged to raise their ambitions and shake up the established titans of the financial industry. That’s the challenge set down by insurance heavyweight Swiss Re at a Zurich conference on Monday.
“There are no attackers in Switzerland coming forward to disrupt the insurance industry,” Evangelos Avramakis, Head of Digital Ecosystems at the insurance giant, told the FINTECH+ summit. “Everyone is being too relaxed and nice to each other.”
The two-day FINTECH+ conference which ends on Tuesday brings together fintechs and traditional financial companies to better understand how to make use of each other’s strengths.
“I see no change in the way insurance firms are interacting with their customers. I have not seen any revolutionary new products changing the market.”
More than 200 fintech start-ups are now established in Switzerland. While some have made inroads offering efficiency-boosting services to larger companies, none have come close to achieving the success of German digital payments firm Wirecard that now matches the size of some of the country’s largest banks.
The conference heard that larger established financial companies prefer to come up with their own digital solutions. Swiss insurance giant Zurich, for example, has saved $50 million and 40,000 working hours a year with its own artificial intelligence system that reads complex medical reports associated with health claims in a fraction of the time it takes a human.
Part of the reason large companies like to update IT in-house is that they understand their own culture and specific requirements, said Gero Gunkel, Group Head of AI at Zurich. “It’s not good enough to just come up with an algorithm,” he said. “You have to think through the whole work flow and understand how it will eventually interact with customers.
“We are lacking business translators to provide a link between the science and the business side.”
But all is not lost for Swiss fintech start-ups. Big companies, such as Zurich, Swiss Re and Credit Suisse, are now looking more to outsource digital solutions to innovative, agile firms, the conference heard.
“A few years ago, insurers were closed to outside innovation and were not used to working with partners,” said Alexander Bojer, founder of Swiss insurance comparison platform Anivo. “But companies are now opening up to collaborations with younger firms.”
OpenMetrics Solutionsexternal link, a young spin-off company from the Federal Institute of Technology, helps pension funds to continuously adjust investments to achieve the best ratio between risk and return. The platform, which was present at FINTECH+, has landed contracts with two large Swiss funds, including Publica that has CHF40 billion under management, to use the OpenMetrics portfolio risk management algorithm.
According to Chief Technology Officer Tobias Setz, the established industry can be a tough nut to crack, but the company proves that it can be done.
Among the most successful Swiss fintech firms are the likes of Temenos and Avaloq that provide software platforms that accomplish much of the mundane repetitive back office functions at banks and other financial institutions.
These firms have signed up a significant number of Swiss private banks that use the platforms to free themselves from time-consuming tasks, allowing them to concentrate on innovation. The technology providers are also among the few Swiss fintech firms to have made inroads into markets outside of Switzerland.