Fintech: New offers from proven players on the way!

Fintech is one of the current buzzwords in the digital transformation. While Europe is lagging behind developments in the United States, mainly due to regulation, offers and innovations are mainly expected from new providers. However, anyone who relies exclusively on this has done the math without the traditional banks. They are currently positioning themselves to follow suit.

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The financial industry is undergoing a huge process of change, especially in Switzerland. Proven business models are increasingly being phased out and immense regulatory requirements are forcing companies to become more productive. In addition, the market environment is changing fundamentally as part of the digital transformation.

The cantonal banks in Switzerland are to some extent comparable to the savings banks in Germany. They are regionally anchored banks that generally have state guarantees and are widely accepted by the population. They are therefore perceived as more traditional, staid institutions where, for example, mortgage financing is often calculated using a calculator and paper.

It was therefore all the more surprising that Basellandschaftliche Kantonalbank (BLKB) was the first bank in Switzerland to launch its own crowdfunding platform in December. In April, it was also announced that Zürcher Kantonalbank had already developed an app for the Apple Watch. These initiatives show that the smaller and medium-sized players are capable of developing innovations and initiatives.

I was able to speak briefly with Thomas Bieri, Project Manager in the Digital Division at BLKB, about the development, experiences and further plans for the crowdfunding platform:

Thomas, please briefly describe what exactly your platform “miteinander-erfolgreich.ch” does?

The miteinander-erfolgreich.ch platform enables many people to finance projects and ideas together with others and thus realize them. The platform works according to the “all or nothing” principle. If a project does not reach its funding target, the project is not realized and the payments made are refunded to the supporters.

BLKB is not exactly known for innovation in the digital sector and does not stand out negatively among the cantonal banks. Many services cannot be requested online, let alone obtained online. So why is BLKB now taking the plunge with a project that is certainly a pioneer in Europe?

I have to disagree… We were the first bank to launch the e-mortgage (in collaboration with Swissquote), we were one of the first banks to actively use social media and our online annual report is also very digital: http://gb.blkb.ch/live/. This shows our innovative strength in the digital sector.

Where did the company’s internal motivation for this project come from? Was it difficult to convince senior management of the idea?

We have an “Innovation Factory” that examines precisely such innovations and proposes them to the management for implementation. They were very quickly convinced by the “crowdfunding” innovation and the project was launched and implemented.

When I heard about miteinander-erfolgreich.ch, I thought it was clever: now BLKB can offer alternative forms of financing for companies with negative credit decisions and still retain and develop the customer. However, if you look at the media release or the BLKB website, miteinander-erfolgreich.ch seems to be aimed exclusively at private customers. What is the thinking behind this?

The reward part (sponsoring) is aimed at private sponsors. Associations, foundations, companies, start-ups, etc. can also submit projects. Of course, a customer who has not received a loan from us, for example, can publish their project on the platform if it meets the guidelines. If he finds enough backers, all the better.

What is the business case behind it? What values were monetized in the evaluation of the return?

We have calculated a business case that shows that we will break even in a few years.

The 8 current projects are all well and good, but none of them are really spectacular or innovative. Are you running a pilot phase first and then allocating the necessary marketing budgets? What does the planning look like?

With our launch in December 2014, we marketed the launch together with Swisscom (technical partner/hardware/software provider). We are expanding our expertise and consolidating our operating structures for the crowdfunding sector. Various marketing measures are planned for this year. We will launch further activities with the introduction of crowdlending in mid-2015.

The conditions state that a supporter may only contribute CHF 3,000 across several projects. This rule makes the platform rather unattractive, especially for commercial supporters beyond pro bono. Why have you designed it this way?

Regulatory challenges in the banking sector have prompted us to make this restriction. We have to comply with many rules in order to operate a crowdfunding platform as a bank.

What were the reactions from other banks?

Our involvement in crowdfunding is attracting a great deal of interest from many banks. In particular, the area of lending, as this involves a fairly high level of complexity in terms of regulatory challenges and reputation.

How do you see the future of miteinander-erfolgreich.ch?

We want to continue to grow and expand our platform. We will take another important step with the introduction of lending. There are other possibilities, and we are currently evaluating them.

Are further projects on the horizon? Does BLKB have a digitalization roadmap?

We have many innovative projects in the pipeline. Unfortunately, I can’t give you any more details. We want to continue to position ourselves as an innovative bank in the market and actively shape the transition of traditional banking activities to electronic platforms.

Thomas, thank you very much for the short interview.