10 million for fintech start-ups

10 million for shares in fintech companies: How Swisscom intends to equip itself for changes to the banking sector knows Johannes Höhener, Head of Fintech Cluster.

Hansjörg Honegger, 

Dialogue Magazin: Swisscom is setting up a fintech investment fund totalling CHF 10 million. Why would a telecommunications service provider do this?

Johannes Höhener: At first glance, it might come as a surprise. Swisscom Enterprise has, however, been providing comprehensive services for banks for many years now. More than 200 banks are Swisscom customers, and we operate platforms for more than 80 banks. However, the banking industry is going through upheavals, and is just starting its digital transformation. Fintechs create solutions to help this transformation and these are very disruptive. We want to be involved, help with development, and create solutions for the banks. We can do so with our new fintech unit in the Swisscom Digital Business division.

A 10 million stake so you can try out a few new things?

No, not at all! Our Banking Think Tank e-foresight deals with trends in banking on a daily basis. We therefore know exactly what is going on and are able to assess developments accurately. Furthermore, 10 million is a sustainable investment which must yield a profit, a so-called evergreen fund. What we earn is reinvested. There’s not simply a budget that can be topped up again once the money’s gone.

Johannes Höhener

Johannes Höhener is responsible for digital banking at Swisscom. He assumed responsibility for setting up e-research AG in 2012, a new cooperation between the cantonal banks in the field of digital technology and integrated this company into Swisscom in 2014 as e-foresight Trend Scouting Services. He was a partner at COMIT AG and was subsequently a member of the management board of Swisscom IT Services Finance AG and CEO of Sourcag AG.

“10 million is an investment which must yield a profit”

Who decides in which companies investments will be made?

The final decision is the prerogative of the investment board of Swisscom Ventures, which is the venture capital arm of Swisscom Ltd. Since being founded in 2007, it has invested in more than 40 companies (20 in Switzerland, 20 overseas, primarily in the USA). The team has a lot of experience. At the fintech cluster, we apply for investments, issue recommendations and advocate our ideas.

Major companies are not likely to be possible with 10 million.

That's true, it’s not an overly high sum. As a strategic investor, we not only offer companies financial support, but also access to our technical infrastructure and to our sales channels. Our fintech fund is therefore primarily focussed on fintechs that are still in the early stage of development.

Companies from Switzerland only?

No, we also have an international focus. We have good fintech companies in Switzerland, all of which operate internationally. Only operating on the Swiss market is practically impossible. Switzerland is simply too small.

What are the criteria that allow a company to attract your attention?

The management team and existing investors need to convince us. We are looking for experienced start-up entrepreneurs who are pursuing new, disruptive solutions for existing problems, and when possible have already founded a company – and maybe even failed with it. The “young upstarts” usually have more innovative capacity and entrepreneurial staying power than former bankers who have founded a fintech company or invested in one. By the way, we will be publishing a fintech radar on a quarterly basis in future, showing which fintech start-ups are the most promising from our point of view.

However, trust alone isn't enough...

Of course, expert competence is also very important, a business plan that makes sense, and there must already be a lead investor on board.


A lead investor must always make an active commitment to a company, and help steer it. We don’t want to do that, and we can’t. We are concentrating on cooperating on the same topics with a start-up, and want to use it to create added value for both companies. Another key criterion is that a start-up is solving a problem.

That is the very least we expect.

That might sound simple, but it isn’t. For instance: There are numerous innovative payment solutions. Only: Did you have a problem paying at the supermarket today? Probably not. Real added value would require the integration of additional services that extend way beyond a pay-only function. This is why the payment apps have failed to be successful so far.

Not even Apple Pay?

Of course, it’s wonderfully simple and convenient, focussed on customers' needs.

That brings us to an important point: Large software companies are also involved in the fintech sector, and they have billions in their coffers. Does a local payment system have a chance at all?

Yes. Paying for something is still very much a local activity. People in Scandinavia pay differently to people in Vienna, and in Zurich it’s different to New York. This is where it comes down to finding the local requirements and satisfying them in order for a Swiss payment system to have a chance.

What do your strategic objectives in the fintech sector look like?

We are aiming to be a leading entity in topics related to selected areas: We have identified collaborative economy as a major trend on which we wish to focus. Peer-to-peer lending is the key issue. The second area is blockchain applications in the finance industry. This technology affects Swisscom itself, as blockchain will result in a change to the basic infrastructure. The third area is access and identity, which is about secure access to information and verifying identity. The last area is the digitisation of interfaces to the SMEs, which is a very important focus for us.

Do you have partners, or is Swisscom going it alone?

We are looking to work together with the fintech start-ups and to support young entrepreneurs with our start-up challenge. There are always a number of highly promising fintech start-ups participating in this competition. Furthermore, we are an important partner to Digital Zurich 2025. What I’m particularly happy about: In the last few years, most digital banking innovations emerged by working with start-ups. We have learned a lot and been able to demonstrate that good cooperation can function well. To improve this cooperation, the fintech cluster has now been formed at the Swisscom Digital Business unit.

So there are already specific examples?

Of course! We have just procured software from “wemakeit”, made it suitable for banks and are now marketing it together with the Basellandschaftliche Kantonalbank as a software as a service product. We have learned a lot from this crowd funding project, and have positioned ourselves well. A second example is video identification and digital signature, which allows an account at Valiant to be opened from home. This involved teaming up with WebID, a fintech from Germany. The digital trustee as a service for banks, also already in use at Valiant, is being implemented with a solution from RunMyAccounts. We are also successfully working together with a start-up on our product, We are calling for – and promoting – this type of close cooperation.

Where does Switzerland stand in the international comparison in fintech-related matters? Zug is already being talked about as a blockchain hotspot.

It always depends on what you compare it with. The growth of fintechs in Switzerland has, to date, been slower than it has been overseas. It feels like Switzerland is not even present in the international fintech competition. In Europe, London, Berlin and Scandinavia are the leaders. Tel Aviv is important in the security area. And of course, the USA – and more importantly: Asia. Athens is also a newcomer on the European field. That’s where it's happening. Less than 1% of domestic venture capital has been invested in fintech start-ups to date. Boosting Switzerland as a location for fintechs would be a more-than-welcome development. Initiatives like the planned Innovation Park in Zurich, or “Digital Zurich 2025”, can only support this growth.

“Switzerland will be a leading player in the fintech industry in 10 years’ time.” 

Why doesn’t Switzerland, with its large banking centre, play a larger role?

The answer is in the question: Digitalisation is granting completely new players access to the banking industry. Switzerland, as a traditional banking centre with excellent service, currently lacks the pressure to innovate. I am, however, convinced that Switzerland will be a leading player in the fintech industry in ten years’ time. The innovative companies, our reliable regulations, and the stable political situation all speak for that.

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