The Swiss Federal Council has recently published a public consultation documentation on amendments regarding the Banking Act and Banking Ordinance in the FinTech area. The purpose of the revision is to boost FinTech business models. Accordingly, the proposed amendments to the Banking Act (BankA) and Banking Ordinance (BankO) have the objective of generally regulating FinTech and other firms which provide services outside normal banking business according to their risk potential. The intention is to lower market entry barriers for FinTech companies and to strengthen the competiveness of the Swiss financial centre.
As a consequence, a form of deregulation with three supplementary elements is being proposed:
- An exemption for settlement accounts will be created. This will allow companies, inter alia, to hold funds in a settlement account during 60 days without the operation of such account being deemed an activity subject to licensing under the BA.
- An innovation space shall be created allowing companies to conduct bank-like activities without having to obtain a bank license and with the permission to hold public deposits in the amount of up to CHF 1 Mio.
- Finally, companies not active in the lending business holding public deposits of not more than CHF 100 Mio. can be granted a bank license with facilitated licensing requirements.
The consultation will last until 8 May 2017.
A dynamic FinTech system can contribute significantly to the quality of Switzerland's financial centre and boost its competitiveness. Against this background, the Federal Council called for an easing of the regulatory framework for providers of innovative financial technologies on 2 November 2016. This easing should reduce barriers to market entry for providers in the FinTech area and increase legal certainty for the sector overall.
Due to the rapidly progressing digitisation in the financial sector, in particular in the blockchain area, it can be assumed that business models will develop which are not yet conceivable today. The Federal Council will follow these developments closely also in the future and will swiftly propose the necessary regulatory adjustments if required.