The beginning of 2019 saw the introduction of a new regulatory licence category into Swiss law with the aim of facilitating or enabling novel business models in the financial marketplace. Figuring in the law under the term "promotion of innovation" (Innovationsförderung), the new licence has been informally dubbed the "fintech licence" or "banking licence light". The entering into force of the legal framework of the fintech licence marks the completion of a three-pillar fintech programme initiated by the Swiss Federal Council (the federal government of Switzerland) in November 2016. It had the goal of adapting Swiss financial regulation to the business needs of the fintech industry, while adhering to the concept of a technology-neutral regulatory regime, as far as possible. Fintech licence holders are allowed to accept deposits from the public on a professional basis - an activity previously limited to banks - subject to a deposit ceiling of CHF100 million (approx. $99 million), but are precluded from investing those deposits, paying interest on them or otherwise conducting traditional commercial banking business. In turn, they profit from significantly relaxed regulatory requirements when compared to those applicable to holders of a fullyfledged banking licence. The lowering of the market entry barrier for eligible businesses seeking to establish operations in Switzerland is intended to further stimulate the strong Swiss fintech ecosystem. That said, the new licence is available to any business fulfilling the applicable requirements irrespective of the level of innovation or use of technology.
The three-pillar approach
The Federal Council's three-pillar fintech programme revolved around various aspects of the regulated activity of deposit-taking in the context of typical fintech business models, such as payment services and crowdfunding. Specifically, the goal was to create a broader space within which such businesses can operate without triggering a full banking licence requirement (the latter being perceived as a showstopper for most companies in start-up mode). The two previously implemented pillars of the fintech programme referred to: (i) the extension of the maximum holding period for third-party funds in so-called settlement accounts (ie the time period during which such funds do not yet qualify as deposits) from seven days to a much more useful span of 60 days; and (ii) the establishment of a regulatory sandbox for innovative companies to test out their business model within clearly limited boundaries outside of a prudential licence requirement. Both measures were put into effect on August 1 2017 through amendments of the Federal Banking Ordinance (BankO). The fintech licence in addition required an amendment of the Federal Banking Act (BankA) and constitutes the third and last element of the programme.
Implementing the fintech licence within a comprehensive financial law reform
The Swiss regulatory framework for financial services is currently undergoing a major overhaul revolving around two major new federal acts adopted in June 2018: the Federal Financial Services Act (FinSA) and the Federal Financial Institutions Act (FinIA). The introduction of the new laws will bring with it a variety of additions and amendments to the existing framework of financial regulation to accommodate and integrate the new rules, some of which have been modelled after EU legislation such as Mifid II. Separately, the legislative process of the FinSA/FinIA project has been used as a fast track to implement the fintech licence. The legal basis for the new licence category was created by introducing a single new provision, the new article 1b, into the BankA, allowing the latter to be applied analogously to persons active in the financial sector that have a business need to accept limited deposits from the public, but do not engage in traditional commercial banking. The specifics of the new licence are detailed in a revised BankO. Both article 1b BankA and the new fintech licence provisions of the BankO entered into force on January 1 2019, a full year ahead of the FinSA and FinIA, which are expected to follow in 2020 together with their implementing ordinances. At that point, among other potential implications, fintech licence holders may...