LONDON — The head of securities and exchanges at the Swiss stock exchange says his biggest piece of advice for fintech startups that want to work with established financial services companies is for them to “learn the regulations.”
SIX Group’s Thomas Zeeb told Business Insider: “I go to conferences and people say: what would you tell us to be more successful? One thing, learn the regulations.”
Fintech — or financial technology — has grown from a niche industry to a multi-billion dollar sector globally that can often attract the best and the brightest. It covers everything from online lending to new methods of credit scoring and even digital currencies and tokens.
Many established banks and financial services firms are now turning to fintech startups to help reinvigorate their businesses or to keep up with rivals. Witness Barclays’ recent partnership with UK fintech MarketInvoice or JPMorgan’s longstanding partnership with OnDeck.
However, these partnerships can be a tricky business, Zeeb says.
“There’s so many great ideas in the fintech space,” Zeeb told Business Insider.
“One of the biggest problems we have as traditional firms is dealing with this regulation ran amok over the last 10 years that generates a whole series of questions for fintech firms and managers with great ideas.
“You say: what about this? What about this? Have you thought about CSDR [Central Securities Depository Regulation, a piece of EU law]? Usually, they look at you with a blank face.”
If startups haven’t already considered the regulatory implications of any proposed partnership, then the likelihood is that any deal will prove financially costly, Zeeb said.
“The idea is cool but building that bridge back into the financial world to make it financially viable is still a lot of work.”
Zeeb says SIX Group, which owns and operates the Swiss stock exchange, wants to help startups to better understand the regulatory landscape so that collaboration and partnership is easier.
“I’ve got lawyers, regulatory people, lobbyists,” he said. “We can build that bridge and then that ecosystem starts to live on its own and that’s when it becomes really interesting. And that’s going to take a few years. I don’t mind investing in that.”
Zeeb is heading up SIX Group’s efforts to build a new digital asset exchange that can process digital tokens structured like ethereum or other cryptocurrencies. As part of this project SIX is building a team to work with fintechs who may want to participate in the market.
“We already have the start of a team — and we’re building it out as we speak — that will work with fintechs and with banks and anyone else who wants to work in the ecosystem to help them bridge that and use it going forward.”
Zeeb compared it to Apple’s developer kits, which are tools published by the tech giant that anyone can use to make compliant apps for the app store.
Zeeb envisages a whole range of new fintech companies providing services to companies on the new Swiss Digital Asset Exchange.
“There’ll be reporting companies, there’ll be market makers, there’ll be liquidity guys — who knows? There’ll be all kinds of different things, right?” he said. “Stuff we can’t even think of at the moment.”