Page 2 of 2

Insurers haven't just taken on insurtechs to digitize their stale business models, but have also bought themselves access to new client groups thanks to related activities. The point of an ecosystem? Customer loyalty. The client should feel comfortable enough to spend his or her money in an interconnected web of various products and services. Apple's Itunes is the holy grail of an ecosystem, with its linked-up world of products and services in one place.

Why do banks have to build one? Prices for commoditized products will hit rock-bottom when digitization takes over. Advice will become so expensive that only an exclusive clientele will opt for it, and finance's role as an intermediary will become sidelined through rising peer-to-peer networks.

That's why banks must seek revenue and profits outside their natural habitat. Switzerland's financial firms have thus far shown very little inclination to do so. This year, banks will be prodded out of their comfort zone to face completely new business models.

3. Selection und Consolidation: The End in Stages

Switzerland houses a vibrant fintech and insurtech scene of more than 200 start-ups. But only one part offer the specialized type of technology they can sell to banks or insurers. A healthy share of Swiss fintechs offer applications for banks and insurers to white-label solutions to their clients.

A further share targets retail clients – through lending platforms, payment apps, or as robo advisors. One of the biggest challenges for Swiss providers is the tiny home market; successful fintechs like Contovista or Bexio have sought a financial injection from more powerful and established partners, because expanding abroad as a minnow is too pricey and risky.

Contovista was taken over by Aduno, while insurer Swiss Life bought Bexio. Digital wealth manager Truewealth fled to the arms of Basellandschaftliche Kantonalbank, a state-backed regional lender.

This year, fewer and fewer fintechs will go it alone. Banks will want to adopt those with a functioning business model in order to help build their own ecosystems. Fintechs will increasingly seek safe harbor of their establishment peers in order to fund their own growth. This process will also weed out unsustainable fintech business models – 2018 will see more fintechs fail than in prior years.