Strong Swiss roots
Michael A. Welti,
Head Zurich, Managing Director - Wealth Management, Reyl & Cie Ltd,
We are right at the start of an exciting development. Various governments, central banks, NGOs and private organisations are working on innovative solutions to organise processes more efficiently, cost-effectively and safely. They thereby bring both new business opportunities and also support in regions that are in great need of it. Until a few months ago, it was widely believed that blockchain and its decentralised solutions were the only potential approach to many types of issues. Special focus was placed on replacing centrally managed banks worldwide and their function as a “trusted party”.
However, we now know that blockchain is not the only solution for all problems. Not everything labelled blockchain has proved to be ‘true’ blockchain, and the ‘crypto winter’ has proved difficult for many companies. At the same time, the regulator’s responsibilities have widened in remit and political support has increased. This led to natural selection, whereby real solutions with good governance prevail.
Regulation is gaining momentum and the blockchain community can certainly see this as a success. It is an unmistakable sign that this movement is now on its way to being a successful business model. The vision is slowly but surely becoming reality.
Many now acknowledge that the sought-after revolution in financial markets has ground to a halt. Fintech entrepreneurs recognised the potential of blockchain early on, positioned themselves and pushed ahead with active development. This movement took place in Switzerland, with the migration of talent, mainly in Zurich and Zug, and we are now in a position to produce the highest-calibre of blockchain specialists. For blockchain, Switzerland is one of the trendsetters, attracting global attention and positioning itself as an innovation driver, as a business hub for example with business hubs. Switzerland is again perceived as “go-to destination” in business – thanks to the unshakeable belief and drive of blockchain innovators and entrepreneurs.
Decentralised versus centralised
However, one thing is often completely ignored: it doesn’t matter who wins the race for innovation. It is irrelevant whether this is the centrally organised financial institutions or the thousands of start-ups and established companies who are working intensely on decentralised solutions. Above all, it must be a solution that offers relevant advantages for clients. The ‘crypto winter’ should be seen as a chance to promote dialogue about how banks and blockchain companies can work together to offer the best solutions for clients.
Challenger banks have already shown that it is possible to break away from traditional models. This started with product offerings that first and foremost targeted millennials, and now established HNWIs and UHNWIs are developing a taste for this. Starting with credit card solutions that were long overdue, further progress is now being made with efficient investment advice, robo-advisers, trading functions and much more.
Innovators from the fintech field are running banks off their feet and established banks must now drive innovation themselves. However, with no immediate deadline on the horizon, they are under no pressure to bring their ideas to the table. There is much at stake for established banks: existing clients and their trust, banking licences, proven procedures, investors, reputation and jobs. Start-ups can act with greater agility and take greater risks. The potential returns are therefore often much higher. Every organisation and its investors must determine and take responsibility for the risk-reward ratio themselves, and competition should create added value for clients in the long run. Ultimately, this is about offering better solutions for everyone, bridging the gap between banking and blockchain. The two fields must come together and combine “the best of both worlds”.