«Is Switzerland prepared for digitalisation?»

Dr. Urs Rüegsegger

SIX

About the author

Is Switzerland prepared for digitalisation?

Switzerland is one of the most competitive national economies in the world. Nevertheless, digitalisation presents the country with new challenges. It still has not succeeded in turning traditional strengths into a leading role as regards digitalisation. To this conclusion comes the study “The Digital Future of Switzerland – Facts, Challenges and Recommendations for Action” published in 2016, which was commissioned by SIX and Swisscom from the Collège du Management de la Technologie of the Swiss Federal Institute of Technology in Lausanne (EPFL).

Digitalisation is changing the world. It takes place in the field of tension between several inter-dependent factors. Network infrastructures form the basis of being able to save and transmit information. This information, in turn, is subject to a more or less strictly formulated data protection. Incubators, accelerators and innovation hubs are often the drivers of digitalisation and foster the capacity of the start-ups to innovate. On the other hand, public institutions curb the start-up environment through laws, taxes etc. to a significant manner. The preparedness to digitalise within the entire society depends not least on cultural attributes.

«In the promotion of start-ups, in the field of e-government as well as the digital capabilities of the population, Switzerland is lagging behind in international comparison.»

Change brought about by digitalisation is not as well advanced in all countries to the same degree. Whilst Switzerland is one of the most competitive national economies world-wide and considered as a leader in many fields, it is not yet fully taken account of in relation to information and communication technologies as well as the digital economy. In the area of data protection in the widest sense, that is to say, in terms of transparency and trust in the data management of public authorities or private enterprises, the country may belong to the top 3 in terms of server security but the large data centres are primarily located in the USA and Great Britain, however. Also in the promotion of start-ups, in the field of e-government as well as the digital capabilities of the population, Switzerland is lagging behind in international comparison. As a result of the observed shortcomings, the study lays out recommendations for action for Switzerland. They concern network infrastructure, data protection, the start-up environment, public authorities and the society.

Important driver - network infrastructure

Network infrastructure is the foundation of all digital solutions and services. It is the backbone and the driver of all technological development. Over and above that, through standard protocols, it guarantees global inter-connection. In general, the network infrastructure refers to information and communication technology (ICT), i.e. the hardware and software which are necessary for the connection, for communication and exchange of information. Progress in virtually all sectors driving the future, such as e-health and Fintech, is thus only possible with an outstanding well-developed and reliable infrastructure.

The EPFL bestows a certificate of good ICT infrastructure on Switzerland. However, in order to assume a leadership role globally, it recommends the following priorities be set in the coming years:

Consistent focussing of services on the growing mobile use by smart devices.
Thereby promoting the development of mobile broadband, as well as Wi-Fi hotspots, for instance in public transport and areas.
Switzerland is a leader regarding the stability and reliability of ICT infrastructure. The constantly high level of pressure to innovate has led, in addition, to a competitive financial-market infrastructure. Now it is important to focus the entire infrastructure on the rapid changes brought about by digitalisation, primarily regarding agility and flexibility (anytime, anyplace, any device).
Participatory design as well as design thinking – i.e. the customer is the focus of the development of new products and services – help digital services of the future to fully exploit not only the potential of ICT but satisfy the users’ actual needs.
Furthermore, the attractiveness of the Swiss infrastructure especially for finance-oriented services should be promoted on a targeted basis.

Fintech: opportunity for a “Swiss approach”

The present study identifies Switzerland as a potential innovation driver particularly in the Fintech area. In addition to the presence of globally active financial institutions, the quality of the related infrastructure is responsible for this. Fintech centres, such as Singapore, Hong Kong, the USA with New York and Great Britain with London are still ahead of Switzerland and Luxembourg as well. EPFL, however, sees an opportunity for a “Swiss Approach” – for example in connection with blockchain technology – which does not simply copy the mechanisms of Silicon Valley.

Also for SIX, as an operator of the financial-market infrastructure, digitalisation brings challenges and opportunities: small start-ups as well as international technology groups from outside the sector enter the market, new business models are born. The relationship of the customer to his/her bank, for instance, is more highly automated and more mobile. New demands on the financial-market infrastructure are the result.

With the Fintech movement, conventional business models in the financial sector are being critically questioned and a new philosophy has set in. Primarily young bank customers no longer go to a branch, but wish to conduct their banking business in a mobile manner and online to the greatest extent possible.