By Helmuth Fuchs
Moneycab: Mr. Brahimi, we do have an abundance of accelerators, incubators and initiatives right now. What made you decide on spending your time and ressources with Swiss Finetch Innovations and what are your goals with this initiative?
Lamine Brahimi: Swiss Fintech Innovations is an association created by financial institutions with the goal of making Switzerland a leading center for Fintech. What we appreciate is that Swiss Fintech Innovations regroups some of the most important financial institutions of the country, banks and insurance, and is still growing. We believe it is a great platform to learn and cross-fertilize ideas with peers, academia, and fintechs.
The story of Paymit and Twint and outside forces like Apple Pay would insinuate that Switzerland would be best advised to combine efforts from the very beginning and strive for international cooperations. How do you assess this within your own strategy and the one for Swiss Fintech Innovation?
When it comes to building national standards, I agree with you that it is wiser to have one, not two standards, first to satisfy consumers and second, protect ourselves against potentially competing standards.
«Switzerland is quite sophisticated and diverse. What’s important is that we speak with each other and join forces in areas of common interests.» Lamine Brahimi, Board Member Swiss Fintech Innovation, Head Digitization Lombard Odier
When it comes to supporting the country adapt to a new environment, it is normal to see several advocacy groups that emerge. Switzerland is quite sophisticated and diverse. What’s important is that we speak with each other and join forces in areas of common interests. I’m happy to see that Swiss Fintech Innovations has built bridges with all major stakeholders in the country. I will give you three examples. SFTI has institutional relationships with Swiss Finance Start-ups Association, which is represented in our Advisory Board. SFTI is also represented in the Fintech Experts Group of the Swiss Bankers Association. Last, SFTI is regularly talking to Digital Switzerland.
Since September 2016 you are the representative for Private Banks in Fintech Expert Group of Swissbanking. How much attention and weight do the two groups (Private Banks and Fintechs) have in the Swissbanking association?
The Swiss Bankers Association Experts Group has the mandate to act as a Platform that brings together the different actors in the Fintech ecosystem.
«Technology is more here to serve Bankers than to replace them.»
As any other group of banks, private banks are members of the Association and are represented at all levels of the organization. This allows our positions to be heard on any issue surrounding the banking sector, including Fintech. It is important to recognize that the issues surrounding Fintech are as diverse as the banking business itself.
In relation to Fintech companies, they are legally not members of the Swiss Bankers’ Association but the contacts are very close at both company and institutional levels.
A lot of Private Banking Relationship Managers see Robo-Advising as a tool for themselves and not as a replacement of their services. What is you view on this?
I share their views that technology is more here to serve Bankers than replace them. Before entering into the details, I would just like to distinguish between online Robo Advisors, which are in my view neither Robots nor Advisors, and Advisory business within Banks. Regarding the former, they are, in my view, a type of discretionary portfolio management services with automated rebalancing.
Regarding the latter, the advisory business is getting increasingly difficult – Bankers need to take into account their client preferences, which can evolve over time, new regulatory requirements which are increasingly complex and different per jurisdiction. It is almost impossible for a human being alone to perform these tasks flawlessly and efficiently. This is where technology comes into play.
Best practice use of technology supports Bankers, provide personalised investment advice to the right client, at the right moment. It will allow Bankers better serve their clients while at the same time saving significant amount of time and reducing risks.
Banks are known for adapting, sometime slowly, innovations from the outside (mobile payments, online banking, robo-advice…). How big is the potential for genuine innovations within banks, which innovations do you see in you environment that will shape your business in the coming years?
There is no single answer, it depends on each bank. In my opinion, the main drivers are company culture and C-suite commitment to innovate and adapt quickly to the very volatile environment we live in.
«I personally believe we are at the dawn of a revolution in relation to artificial intelligence and use of data.»
What I observe from financial institutions that take innovation seriously is that they put in place a series of initiatives that range from adapting internal organisations – creating senior innovation roles with key decision responsibilities – to opening up externally to Fintechs. They typically fund incubators external or internal, set-up strategic venture funds and collaborate with top university labs. Those banks are actually quite innovative.
Related to the second part of your question, I personally believe we are at the dawn of a revolution in relation to artificial intelligence and use of data.
Blockchain has the potential as a general ledger to dramatically reduce costs (and earnings) for banks. How do you see the potential benefits and risks of blockchain for a Private Bank?
The Financial sector, including Private Banks, is generally expecting two things from distributed ledger technology (DLT)
1) reducing costs
2) increasing speed.
Some interesting applications and pilots in the areas of cross-border payments as well as clearing and settlement are already “live”. Swiss Fintech Innovations has also launched a working group, where Lombard Odier is represented, to further investigate DLT technology.
In my view, the technology has the potential to radically benefit any sector embracing it but is still in its early stages – for example standards on how data is structured and stored as well as some regulatory issues need to be clarified before we can foresee widespread adoption. I therefore do not expect DLT technology to truly benefit the Private Banks or their clients before a few years. Security will always be a paramount dimension Private Banks will assess before making a technology available to their clients.
The other huge potential of blockchain is the technical basis for crypto currencies like Bitcoins. How important could these currencies become in the years ahead for your international clients?
The market cap of the top 600 crypto-currency represents < 0.05% of world GDP. There are some useful applications in the remittance area where cross-border bitcoins payments could cost a fraction of what regular transfers do. But this is not really the core business of a Private Bank.
A lot of Fintech startups have their roots in Switzerland but move to another country for the phase of growing and maturing. What has to be done to keep the companies in Switzerland and also participate in the benefits of their success?
Great question, we could write books on it. The start-up CEOs I speak with tell me that they need access to capital, fair regulation, and be better supported when it comes to partner with industry players.
From a capital perspective, we have seen steady growth in terms fund-raising over the last 5 years, particularly in Suisse Romande. I believe we could still improve as statistics are usually distorted by 2-3 big deals. Young start-ups still need easier access to seed capital. More mature ones too through for example a “fonds suisse pour l’avenir”.
«The start-up CEOs I speak with tell me that they need access to capital, fair regulation, and be better supported when it comes to partner with industry players.»
From a regulation standpoint, the DFF legislation changes aiming at reducing obstacles to Fintechs, which was published on Nov. 2 2016, go in the right direction.
Last, the feed-back we hear from young entrepreneurs is that they often need multiple meetings to talk to the right persons within banks. We should continue working on facilitating contacts between the industry and young start-ups. The swiss fintech ecosystem that is being built at this very moment and where the SFTI is an active player is helping solve this problem.
If you would have limitless resources at your disposal, what kind of business would you start tomorrow, what would it offer or produce?
I think I would have loved running a top sports franchise or building low-cost health-systems in remote areas. Nothing in common, I know.
At the end of the interview you are granted two wishes. What are they?
More peace and more education in the world. This is “badly” needed these days.
Msc. EPFL, MBA Insead, CFA Charterholder
Lamine Brahimi spent a few years at McKinsey & Company before joining Lombard Odier, most recently as Deputy COO and Head Digitization. He represents Lombard Odier at the Swiss Fintech Innovation’s board and Swiss private banks at the SBA Fintech Experts Group.
Das Interview entstand mit Unterstützung von Swiss Fintech Innovations