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Nicolas Bürer, Managing Director digitalswitzerland discusses topics with leaders in Switzerland in the fields of technology and innovation.
Digital transformation is here to stay. We must therefore constantly foster dialogue to increase awareness for all that is and will become digital. Digitalisation brings not only opportunities, but also risks that need to be addressed and taken seriously. In my series “Dialogue Interviews” I discuss these topics with leaders in Switzerland, from our member organisations to digital shapers and the brightest minds in the fields of technology and innovation.
In this edition, I talked to Sébastien Floure, Co-founder and CEO of Inilab.
Nicolas: Sébastien, you founded Inilab, a provider of e-democracy solutions. Could you start by explaining why e-democracy is so effective in helping organisations – whether corporates, administrations or academic institutions – to improve their internal culture?
Sébastien: In civil society, democracy refers mainly to the exercise of civil rights. E-democracy is therefore often associated with that process (e-voting is one example). Our vision is that digitalisation can enhance democracy processes beyond just voting. We’re addressing it in civil society with INILAB Citoyen.
In the corporate world, democracy is until now an undiscovered treasure. With less impact from hierarchies, real co-construction (or co-creation) improves projects, processes and organisational transformation. But workplace democracy can bring much more. Some advantages include:
INILAB Pro is a tool to extract this treasure, enabling interaction with all stakeholders on a high level.
Nicolas: What are the main opportunities and challenges related to e-democracy implementation within organisations?
Sébastien: The main opportunities lie in the combination of technological and societal developments. These allow us to create positive, secure and transparent interactions between individuals. They also mean we can all be actors and collaborators rather than just employees, customers, inhabitants, etc. The result is that we find more meaning in what we do. Finally, consideration of everyone’s contribution boosts individual and collective wellbeing and the sense of group belonging.
A main challenge is how to motivate decision-makers to embrace the new way of working together. They need to understand the advantage of replacing clear hierarchies and focusing instead on the collaboration and transparency that is so important for effective participation.
We have worked hard to create digital tools that save time and achieve an organisation’s goals. It is vital to strike an ideal balance between wide participation of relevant actors and easy orchestration of processes. It’s also important to get the right mix of (sometimes necessary) confidentiality and transparency, which encourages everyone to get involved. Our platform offers dedicated approaches for municipalities, cities, corporates, universities, political parties and others organisations.
Nicolas: Where would you place Switzerland in terms of e-democracy penetration within organisations in comparison to other countries? Which country is your role model as of today and why?
Sébastien: There is no well-established role model. There is a lot still to be built and tested.
In 2018, France adopted an Action Plan for the Growth and Transformation of Enterprises (PACTE), which officially focuses on corporate democracy. In the USA, a revised Workplace Democracy Act was proposed in 2018. In Europe, a similar process was followed in early 2019 with the More Democracy at Work movement.
The direction is clear. Switzerland may have a starring role to play. While most organisations still follow a rather vertical model, based on a hierarchy, we have a well-established culture of democracy and consensus building in our society. The meeting of these two cultures could prove very fertile ground for the emergence of more fluid, efficient, resilient and fulfilling organisations. Switzerland has all prerequisites to lead this change. Organisations that have understood this – and act accordingly – will get a head start.
Sébastien: Nicolas, what possibilities do you anticipate as a result of digitally supported and democratically founded cooperation? Which organisation sectors might benefit?
Nicolas: I personally believe that digital and democratic tools and cooperation could make every single employee more important. We’ll have less top-down leadership from A to Z. Of course, we still need a strong vision, ownership of the implementation lies with the organisation itself. Organisations that do this will win the race in the next decade, since they will be able to better leverage their assets (their employees).
Sébastien: How can stakeholders (management, staff, shareholders and members) be persuaded to implement more democracy and participation in their organisation?
Nicolas: I see three reasons why more democracy and participation brings added-value for an organisation:
Sébastien: Do you see any advantages for Switzerland’s position internationally as a result of establishing Swiss workplace democracy?
Nicolas: I see plenty. Switzerland enjoys a strong position in terms of sovereignty, trust and direct democracy. If we’re successful in merging our strength in democracy with our economy and workforce we will put Switzerland on the worldwide map. I’m convinced the world is getting more decentralised and more democratic, our country has a big opportunity to act as role model. My hope is to see Switzerland within the top 3 as a hub for workplace democracy in two to three years.
Last week, the second edition of the “Digital Competitiveness Summit” was held in Lausanne. This event was jointly organised by IMD and digitalswitzerland. Representatives from academia, politics and business were invited to interpret and evaluate the latest results of the “IMD World Digital Competitiveness Ranking” for Switzerland. Switzerland was able to defend its 5th place overall. However, participants agreed that this was no time to be resting on our laurels. On the contrary, it is now critical to further improve these scores and take the country to the next level, because there is still much to be done.
By far, the most frequently mentioned factor during the Summit on how to improve Switzerland’s position was education and lifelong learning: “If we are not able to educate the next generations of children to be digitally ready, if we are not able to engage productively with the education system, then we will not have the impact that this topic deserves and requires in a modern society like Switzerland”, declared Martin Vetterli, President of EPFL. Marcel Salathé, Professor at the EPFL joined the chorus: “Digital upskilling is key. A digital illiterate society is one that’s at higher risk. Thanks to organisations like digitalswitzerland and others, this awareness is now widespread. We must advance lifelong learning.”
The shortcomings that currently strain Switzerland’s digital competitiveness are in the areas of training and education, regulatory framework, business agility and capital.
The Digital Competitiveness Ranking seeks to assess the capacity of an economy to adapt and explore new technologies that change businesses, government practices and society. This is measured by three factors:
Switzerland ranks 5th among 63 countries. This can be broken down as follows for the three categories: Switzerland came in second in the category of “knowledge” and in the categories “technology” and “future readiness”, Switzerland is in 10th place. Looking at the sub-factors, Switzerland performs well in terms of the scientific competencies that are available in the country and IT integration (7th place). The flip side of the coin shows how difficult it is to set up a company in Switzerland within the regulatory framework. Immigration legislation is also not very technology-friendly. As in many other European countries, the market capitalisation of IT-related companies is very low.
“Europe does not have the power that Asia or North America have. With regard to Switzerland, there may be problems related to the regulatory framework and also doubts, especially among individuals, as to how they can use this technology”, said Christos Cabolis, Chief Economist & Head of Operations at IMD World Competitiveness Center.
The capital available for digital progress is more moderate compared to other countries. The use of big data in the private sector is also inadequate. In the area of training and education, Switzerland is only in the upper midfield (15th).
Cabolis explained that there is not one strategy that actually makes an economy competitive in the digital world. But every economy must invest and draw its strengths from its own competencies. Education is undoubtedly a very important component. The five leading economies (USA, Singapore, Sweden, Denmark and Switzerland) invest heavily in education and knowledge is a very strong factor.
Eastern Asia, North America, and Western Europe are the regions that have been able to adapt to and explore technological innovation. North America and Western Europe are high in respect of ranking but they have remained more or less unchanged. In contrast, Asia is growing much faster in terms of understanding and using these technologies.
Fathi Derder, National Councillor also pointed out the enormous competition, especially from Asia, and how Switzerland must react quickly. “With everything changing so rapidly, we must be able to modify regulation in less than one to three years. That is almost impossible today. If we want to stay number five, or better become number one. We don’t have any other choice than to focus on strategic issues, talent, venture capital and we need to be more agile and invest more than we do today. First and foremost, in education.”
Kamila Markram, CEO and Founder of Frontiers referred to the challenge, that there is a lack of talent in Switzerland. Universities have a great opportunity to train more people in big data analytics and artificial intelligence. It is extremely important that there is also the free movement of talent across borders. In addition she also emphasized that technological innovation is not enough. Only business model innovation can take full advantage of performance and technology.
Nicolas Durand, CEO Abionic expressed his regret about the state not investing more in research and development. “They want to cut the research budget but R&D is the core of every single company. If you cut the R&D budget, you try to kill the company.”
Nuria Gorrite, President of Canton de Vaud shared the digital strategy of Canton de Vaud. Three principles are of central importance: sovereignty, security and solidarity. For the digital transformation to be accepted by the population, it must be legitimate. Therefore, the e-ID or the protection of personal data must remain within the framework of public legislation. It must also be ensured that those who are less able to participate in the digital transformation are protected from possible negative side-effects. Education should be harnessed so that the population has the necessary competences to act in this digital world. “Digital transformation must not remain an issue that is shared by the privileged few. To be sustainable, digital change must be just. The benefits of digital transformation must be redistributed across social classes, age and gender. This is ultimately also in the interest of business and enterprises.” In addition, data protection, the necessary infrastructure, people and business support as well as funding innovation are crucial.
Martin Vetterli, President of EPFL dismissed the participants by punctuating the following circumstances that urgently need to be improved in order for Switzerland to stay ahead: “Although Switzerland remained number 5, some of the results are alarming, not only since this year. I am very concerned about talent. The EPFL is a place where we try to foster talents who enter the Swiss or global economy. This presupposes that Switzerland remains a very open country. We also really need more entrepreneurs. We need more gross funding and we must achieve gender equality.”
EPFL will be hosting the third Digital Competitiveness Summit on 1 October 2020 in collaboration with digitalswitzerland.
Digital transformation is here to stay. We must therefore constantly foster dialogue to increase awareness for all that is and will become digital. Digitalisation brings not only opportunities, but also risks that need to be addressed and taken seriously. In my series “Dialogue Interviews” I discuss these topics with leaders in Switzerland, from our member organisations to digital shapers and the brightest minds in the fields of technology and innovation.
In this edition, I talked to Dr Urs Christoph Hofmeier, CEO of Schweizer Salinen AG.
Nicolas: You are the CEO of Schweizer Salinen AG, the only salt manufacturer in Switzerland. I find it very interesting that your company is also affected by digital transformation. Can you give me some concrete examples of digital projects currently under way at your organisation?
Urs: One of the most obvious digitalisation projects stems from client demand for an integrated order to cash process, including transfer of product data during delivery. But there is much more to come. With more sensors delivering data from decentralised and client salt storage, weather forecasts and AI analysis of historic salt use patterns, we are already thinking about predictive delivery. It means we can prepare before our clients even know they will have a shortage. This will allow us to increase the efficiency of our logistics quite dramatically.
Nicolas: One of the threats of digital transformation is that it lowers the bar for new competitors to enter the market, especially tech companies. Do you anticipate disruption for your company in the next 5-10 years and why?
Urs: I was told to concentrate on the possible disruption not on the disruptor. I see threats mainly as coming from logistics platforms which can leverage customer and distributor data to gain cost efficiency and customer experience advantages.
Nicolas: Which digital technologies do you think will be the most important for your company in the next 3-5 years? Will you be exploring data analytics, IoT, blockchain for supply chain, etc.?
Urs: I see two areas. One is the salt production with energy-intensive technology. Using IoT based sensors, we will be able to optimise our plants based on simulations with related digital twins. Process optimisation as well as predictive maintenance will be supported by AI using operational data tested against the digital twins. The other area concerns new possibilities in terms of client services. We will see much more salt being ordered directly online by the related equipment, e.g. the water softening installation in private homes. This development will allow us to grow with new services.
Nicolas: Last question, how do you see the impact of digital technologies on the Swiss manufacturing industry in general and how good are we in comparison to others, like our neighbouring countries?
Urs: The impact will be overwhelming, but Switzerland is well positioned. Beside the natural resource salt, Switzerland has access to a wealth of well trained and highly educated young people. In addition, our universities generate a large number of start-ups developing new technology, including in the growing area of sustainability.
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Urs: Nicolas, let me ask you a few questions. My biggest operational concern is how to mobilise valuable senior staff with vital knowledge but severe resistance to digital transformation. Is there any best practice?
Nicolas: Excellent question. This is a pattern we’re observing at many organisations and we often get asked how to deal with the need for digital skills combined with an attitude of severe resistance.
First of all, there is talent in the labour market around us. They seek organisations that are themselves “state-of-the-art”. To attract them, you need to offer modern and exciting conditions like flexibility, ownership, a flat hierarchy, etc. If the organisation itself can transform, it will be able to recruit experienced and talented people.
Second of all, no one should stop learning. As Einstein said, the day you stop learning, you start dying. It means that all experienced workers need to keep learning, every day – about digital skills, but also resilience, soft and cognitive skills. These will be more important in the next few years.
Urs: Current data and experience shows, that the competitive advantage of large platforms is unbeatable. Do you see a solution to the dilemma between open and free markets and the cry for regulation?
Nicolas: Indeed, in a global and liberal market and with strong scaling effect, the giant tech companies seem unbeatable. During previous important transformations, the majority of big companies were in trouble and new companies took their place. Is there going to be a fifth revolution where new companies take the lead over the GAFA and other giants? I think so. But nobody knows when. Will it be in 20 or 100 years? Now, in the short term, I’m not sure we need strong market regulation but I think some geographical tax adjustments should be undertaken as a next step (for example as in Europe currently).
Urs: A key technology for the digital transformation will be 5G. There is a significant risk of a broad emotional movement against 5G. How can we mobilise an even broader alliance to support the fast 5G coverage?
Nicolas: There is currently a mobilisation against 5G in Switzerland indeed. There is no study proving that 5G may impact health. But the opposite has not been proven as of today either. It’s important to stay rational, rely on facts and avoid becoming emotional. 5G is a huge opportunity for Switzerland, as we are one of only two countries in the world currently implementing 5G, beside South Korea. I hope we will be able to build an alliance in the next few months and bring back the discussion to a rational level, showing the advantages for our economy and society, while also discussing the impact on health, privacy and data protection of people.
Digital transformation is here to stay. We must therefore constantly foster dialogue to increase awareness for all that is and will become digital. Digitalization brings not only opportunities, but also risks that need to be addressed and taken seriously. In my series “Dialogue Interviews” I discuss these topics with leaders in Switzerland, from our member organisations to digital shapers and the brightest minds in the fields of technology and innovation.
In this edition, I talked to Michael Hilb, an entrepreneur who serves on various boards and teaches strategy, entrepreneurship and corporate governance at universities in Europe and Asia. The conversation focuses on small and medium-sized enterprises (SMEs) and what challenges they face in times of digital transformation.
Nicolas Bürer: Michael, you are an expert in digital transformation and especially dedicated to defining and evaluating skill sets for board members. How would you rate the average digital skills of Swiss SME board members?
Michael Hilb: As digital transformation is an overused term these days, let’s try to briefly define its meaning. To me, it is all about two key developments that will eventually affect most companies and industries: platformization, i.e. the redrawing of industrial boundaries, and datafication, i.e. the emergence of data as the key asset of economic value creation. In respect to these phenomena, I observe a growing interest and a determination to better understand these underlying trends. While, at the same time, maintaining a healthy level of skepticism toward digital fads.
Nicolas Bürer: How can SME board members improve their digital skills and better understand the importance of the current digital transformation for their companies?
Michael Hilb: First, I observe the emergence of an increasing number of training programmes focused on digital transformation specifically tailored to board members. Second, I see tremendous potential to learn from each other. There are a number of very impressive digital pioneers among Swiss SMEs who can teach a lot to the rest of world – and not just to other SMEs. And finally, and most importantly: practice, practice, practice. Successful digital transformation has a lot to do with having the courage to think and act outside the box.
Nicolas Bürer: There are certain pessimistic forecasts with regards to the current digital transformation and its potentially disruptive influence on SMEs. What is your stance on this?
Michael Hilb: A majority of SMEs, the backbone of the Swiss economy, have always shown a strong determination and ability to adapt to change. Just think back to the “Frankenschock” four years ago. They have proved to be highly resilient not out of desire but out of necessity. Let’s not forget, many Swiss SMEs compete in global markets and therefore have to be able to constantly think one or two steps ahead to survive. I am confident that most Swiss SMEs see and realise the opportunities of digitalisation to become stronger and more competitive. SMEs often have a strong advantage over bigger companies: Agility and entrepreneurship are embedded in their DNA.
Nicolas Bürer: What do you consider be the most important nationwide measures to execute in order to sensitise a majority of Swiss SME board members about the digital transformation they face?
Michael Hilb: Apart from the critical measures, such as world-class infrastructure, future-proof education and smart regulation, I see a fourth set of actions that can help empower Swiss SMEs but also requires the involvement of all parties: to establish a common understanding and a strategic position of Switzerland in light of the two dominant digital superpowers, the USA and China. A smart and unique positioning of Switzerland as a global digital hub will ensure that Swiss-based SMEs can enjoy a competitive advantage in a global race.
Michael Hilb: To foster dialogue, digitalswitzerland has done a fabulous job in bringing together leading companies, start-ups, civic organisations and public institutions all committed to one mission: Digitalisation. How could SMEs best tap into this highly valuable network?
Nicolas Bürer: I want to state two things to answer this question: first, about 30 SMEs are members at digitalswitzerland and can benefit from all activities and connections within our initiatives. Of course, we hope to welcome many more SMEs in the coming years. Secondly, we are also thinking about launching projects specifically tailored to Swiss SMEs. We do not offer consulting or transformation services, but rather act as enablers: by addressing topics and sensitizing SMEs. One example is our project “Atelier adapt” that launched pilot projects in Romandie this year. More project will follow, hopefully.
Michael Hilb: You are meeting many colleagues from all over the globe at international conferences: What role do SMEs play in other digital ecosystems? What could Swiss SMEs learn from their peers?
Nicolas Bürer: Leading hubs like Israel, the Silicon Valley and the Shenzhen Area are focused on enabling start-ups to globally scale. They are trying to influence political frameworks to make this possible, acquire venture capital volume, crown unicorns and realise IPOs. Those are fine initiatives, and also to a lesser degree true for Switzerland: our start-up ecosystem is growing well. But the country also has a strong SME tradition. I am talking about businesses with a high innovation level, owned by their founders or managers and without Venture Capital Investments. For this reason, we cannot just focus on enhancing the start-up ecosystem, because we have too much to lose if our SMEs struggle. Every initiative supporting Swiss SMEs in digital transformation is therefore welcome. Because it can affect about 500’000 companies all over the country and 70% of our jobs! I know there are many such initiatives in the country, which is encouraging, but the journey is still long.
Prof. Dr. Michael Hilb is entrepreneur, serves on various boards and teaches strategy, entrepreneurship and corporate governance at universities in Europe and Asia. He is also on the faculty of the Swiss Board School and teaches in the new Executive MBA program focused on digital transformation at the University of Zurich starting this Fall.
http://linkedin.com/in/michaelhilb | hilb.com
Further reading: Michael Hilb’s NZZ article on the role of SMEs in digital transformation.
The best, and really the only place to start a conversation about my work is to explain some of the values I hold most closely, which are fundamental to every project I undertake. Here are just a few:
The translation of these values is visible in many places, but perhaps most fundamentally in my work with blockchain technologies. Blockchain allows the storage of information through systems that embody two essential characteristics: transparency and immutability.
The Humanized Internet looks to capitalize on these qualities to “defend the rights of vulnerable people, and give every human being worldwide secure, sovereign control over their own digital identity.”
Think about how many things in your life require proof of identity. Just consider dealing with the healthcare system, the financial system, employment opportunities, the education system, and much more. Identifying documents are also necessary to prove credentials, whether it’s a license to operate a motor vehicle, to open a business, or to practice law and medicine. The necessity of immutability here is self-explanatory. You do not want this fundamental information to be susceptible to alteration, either by the owner in an attempt to engage in some sort of fraud, or by an outside, predatory party.
The second quality, transparency, is what allows us to ensure the validity and utility of this information. To be clear, transparency does not mean a lack of security. It means that the information can be shared, when and how the owner chooses to. Moreover, it is intrinsically related to immutability. The fact that the information cannot be changed guarantees the transparency of the party offering the data or information. Blockchain allows us to create a system that is, by upholding these two essential qualities, fully secure and able to protect personal data.
The protection of individual identity is not the only application for technology like this. Through my work with Syniverse, we are creating a system that provides a single source of truth in clearing and settling processes, enabling not only trust and security in all transactions but efficient and fair dispute resolutions. The applications for use in other transparent public transactions are limitless.
Also, along with Syniverse, we are working on ways to allow for transparency without disclosure through Zero-Knowledge Proofs. Many of us have likely been in a situation where some third party has shared a secret, and each of the initial two parties are dancing around the topic trying to see whether or not they will be betraying a confidence by discussing what they know. A zero-knowledge proof is a way out of that situation: it’s a way to prove to the other party that you know something without having to disclose that you know it. The impact of such potential, of course, extends far beyond attempts to avoid spreading gossip.
All of this is just the tip of the iceberg when it comes to the potential for blockchain, and I’m excited to see where we will take it next.
Digital transformation is here to stay. We must therefore constantly foster dialogue to increase awareness for all that is and will become digital. Digitalization brings not only opportunities, but also risks that need to be addressed and taken seriously. In my series “Dialogue Interviews” I discuss these topics with leaders in Switzerland, from our member organisations to digital shapers and the brightest minds in the fields of technology and innovation.
For this edition, I talked to Pedro Bados, Co-founder and CEO of Nexthink. Nexthink’s self-described mission is to help IT departments transform the way they service and support employees. Consequently, our conversation touches on the digitalisation of the workplace, on Nexthink’s homebase in Lausanne and Switzerland’s position in a global digitalisation ranking.
Nicolas Bürer: You are the Co-founder and CEO of Nexthink: how was the company founded and how does your technology help transform the way people work?
Pedro Bados: Nexthink was launched as a result of a research project conducted at the prestigious École Polytechnique Fédérale de Lausanne (EPFL). I had been working on a project, which attracted the attention of a large multi-national company who told me that if this idea could be turned into a product, they would buy it. To this day, this company remains one of our customers.
We transform the way people work by allowing them to focus on their jobs and their goals, rather than trying to fix their own IT problems. IT promised so much but is too often a factor of hassle that inhibits employees’ productivity. Devices are slow, applications crash and connectivity can be patchy – and the current way of fixing these issues doesn’t work. On average, every employee loses 22 minutes a day trying to deal with IT issues. And only 50% of problems are even reported to the IT department. Our technology monitors potential IT problems, provides fixes and informs employees the problem is solved. This without any direct involvement from the employee. We are absolutely convinced that this is going to have a significant impact on the way people use IT in the workplace.
Nicolas Bürer: What trends do you expect to surface over the next three to five years related to the digital workplace? What’s your advice to companies trying to keep pace with innovation?
Pedro Bados: Workplaces are definitely going to get more complex over the next years. There will be increased technology complexity – with more dispersed workforces, an increasing number of connected ‘things’, and data collected on anything and everything. But, employees should not be expected to manage their own IT as it will prevent them from doing the work that they were hired to do.
It has also been widely reported that the jobs we do are changing. People will be more focused on what humans do best: creativity, providing perspective and insight, teamwork and collaboration, while other more task-oriented work will become increasingly automated.
All this means that the employees’ experience with technology will become more critical to a business’ success. Traditionally, ‘employee experience’ efforts focused on organisational culture and workspaces, but technology is an increasingly important element that will have an impact on employee engagement and productivity.
Nicolas Bürer: Nexthink raised $85m at the end of 2018, has 1,000+ customers and is doubling revenue every year. You are still headquartered in Lausanne, Switzerland. What keeps you here?
Pedro Bados: Lausanne is where our business started and it has served us incredibly well so far. For engineering talent, we are close to one of the best engineering schools in Europe, which was important when we were starting out and remains important today.
As we have grown, many people in our team have built their lives here and we are committed to give people stability so they feel at home at Nexthink and in the city. Lausanne and the surrounding area is a great place to live so we are able to attract the best talent, which is critical as the battle to hire the best people is fierce.
We also have a US headquarter in Boston and other offices around the world in the US, Europe, Middle East and Asia-Pacific – so there are also lots of opportunities for people elsewhere to grow their careers and contribute to the business.
Nicolas Bürer: Is Switzerland a leading country in regards to innovation and technology or do you think that we are mostly following global trends?
Pedro Bados: Switzerland, and Lausanne in particular, is definitely strong in fundamental research – physics, mathematics, etc. Because of this, the country has an opportunity to be a great location for innovation; but it doesn’t always deliver and this is something we all need to work on.
We are an international business and Switzerland has the opportunity to be central to that – geographically and culturally –, because it helps us to be connected via language, regulations, time zones and people. Sometimes, I wonder if Swiss businesses and authorities shouldn’t be a bit more “aggressive”, though, to achieve the country’s full potential?
There are other major, and perhaps more obvious, innovation hubs in Europe – London, Berlin, Stockholm, Amsterdam – but Switzerland is so open, international and welcoming that it offers something different and we should encourage as much Swiss-born technology innovation as possible.
Pedro Bados: Nicolas, let me ask you a few questions: How have you seen digital innovation evolve over the past few years in Switzerland?
Nicolas Bürer: Switzerland has made very good progress in the past five years. There are over 130 initiatives focusing on digital innovation, which is quite remarkable. Look at all the incubators, accelerators, coaching offers, awards, events, etc… without even counting all the startups and corporate innovation teams, I’m just referring to the independent initiatives. In addition, I feel there is a new wave of digital entrepreneurs in the country that is more ambitious and willing to take a global perspective, like you, for example.
In 2018, 1.25 billion CHF were invested in equity capital in Swiss startups, which is a record that confirms the 30% growth year after year for the past six years. Encouraging!
Pedro Bados: Have you seen enough venture capital supporting the local Swiss ecosystem and what could be done to attract more investment?
Nicolas Bürer: This is definitely one of the pain points in the country, especially compared to China, the US, Germany and Israel. I think we have a good pool of business angels for a first founding round venturing below 1 million CHF.
There are a lot of new VCs which will start investing in the country and which are raising below 100 million CHF, meaning they will support in Seed up to Series B. Many entrepreneurs are part of these VC’s and it will bring new impulse to the market.
This year the Swiss Entrepreneur Fund has raised CHF 190 million CHF to invest in the ecosystem. I think this Fund can be a game changer since it can continue raising up to a few billions but will also attract many international VC’s to look closer at the Swiss ecosystem, as Youzma did 30 years ago in Israel. We have by far not reached the point of raising 100 million or even 500 million CHF from Swiss investors, but maybe in five to seven years? It is definitely not impossible!
Pedro Bados: What do you want to see from Switzerland’s technology leaders like Nexthink and others to boost the country and its reputation in the world?
Nicolas Bürer: I would like to focus on three things: First, you should continue to be ambitious, to leave your mark on the world. Sweden has Spotify, Estonia had Skype and Switzerland also needs some incredibly successful companies with strong international brands. Secondly, when you are abroad, don’t forget to mention your Swiss home base. Swiss entrepreneurs are the best spokespeople for the country abroad and people in your sector will listen to you when you explain your reasons for being based in Switzerland. Finally, give a bit of your time every year and share your know-how and experience with younger Swiss entrepreneurs through coaching, keynotes and workshops. All of this will help the Swiss ecosystem to continue to grow in the coming years.
Traditionally, an exchange is a system or market in which commercial transactions involving items such as currencies and shares can be carried out within or between countries. The worldwide web has offered entrepreneurs an opportunity to build new platforms, notably exchanges, business models and approaches, which range from cryptocurrency to tokenization of art, using blockchain technology. The question is, does this mean that everything will now be tokenized?
Switzerland has long been a leader in finance, and the Swiss FinTech sector is booming. “The digitalisation of the financial sector is the latest in a series of technology-based economic developments. New markets are being created and the rules of the game are being turned upside down for the entire industry”, writes Martin Hess on the SwissBanking website. Not only banking is changing, as it is no longer just about currencies and shares; the entire ecosystem that deals with money, analog and digital, is affected.
The recent MBA Fintech competition organised by SIX, University of St Gallen Business School and digitalswitzerland, asked MBA students from across Europe to make recommendations on how best to launch a SIX digital exchange. The challenge included thinking about the tokenization of non-bankable assets: “to make previously untradeable assets tradeable.” This is particularly relevant to the segment of the ultra and high-net-worth individuals (HNWI), who notoriously tend to be early adopters of new technologies and investment opportunities.
It hast to be stated that there is a long-term increase of the HNWI population and wealth in general. There is also a growth in knowledge about non-bankable assets such as real estate, art, vintage cars, rare watches, gems, yachts, aircraft, and private equity. To give an example of the scope of one non-bankable asset market, in 2016 there was an estimated $3 trillion worth of fine art in safe storage, of which about $65 billion are traded annually through auction houses. The online art market represents €3.27 billion and could reach up to €9.58 billion by 2020, according to art insurer Hiscox. In 2018 alone, 9.8% growth was seen in online art trading.
When there is money to be made, there is crime. The claim that blockchain provides and secures end-to-end traceability may be true; to date no system has proven to be completely hack-proof. While it is more likely that hackers gain access to personal data by hacking big companies, Lisk Academy writes that “despite blockchain technology being decentralized, there are still centralized aspects to it, such as cryptocurrency exchanges. This means that hackers can attack a single point in the hope of gaining access.” A more positive outlook on this matter is expressed by the Global Blockchain Business Council: “No matter setbacks on the path, blockchain continues to inspire innovators to question unexamined systems and norms historically accepted as adequate. The technology is compelling a generation of new solutions specifically built to address perennial inequities and foundational frictions across geographies and industries.
Exchanges are not limited to financial exchanges, particularly in the digital world. Just like in the analog world, in which wherever there are humans there is commerce, the same is true in the digital world, where trade and commerce are upheld by online exchanges. For example, there are multiple human resource exchanges, interpreted as either a platform for opinion and for best practice or as a payroll, compensation and benefits tool, or again as a recruitment tool. There are several diamond exchanges, which are the basis for diamond pricing and trading. There are gold and silver exchanges, which complement financial exchanges. What will be different about them in the future, that’s the hope at least, is that they will provide higher security standards by making use of distributed ledgers.
Considering the tokenization of non-bankable assets like the ones mentioned above, one can wonder how far tokenization will be taken in the future. One could imagine a world where footballers will be tokenized as non-bankable assets. Perhaps the next promising investment will be Messi’s foot or Mbappe’s leg?
Digital transformation is here to stay. That is why we constantly need to foster dialogue to increase awareness for all that is and will be digital. To do so, Digital Day 2019 will have a strong focus on getting into conversations with Switzerland’s population – without fear of debating challenging topics. Digitalisation brings not only opportunities, but also risks that need to be addressed and taken seriously. In addition, I am also starting a new series of “Dialogue Interviews” with leaders of this country, representatives from member organisations, digital shapers and the brightest people in the area of innovation and digitalisation.
This time around, I talked to Alexander Denzler, Head of Blockchain Lab at the University of Applied Science in Lucerne and Director of the Crypto Valley Conference, about everything blockchain-related and Switzerland’s role in it.
Nicolas Bürer: The blockchain and its technology was pushed intensely by new start-ups and disruptors in the last few years; though lately, it seems like other actors joined the race and invested heavily in blockchain technology. Who is, in your opinion, here to stay and win the race?
Alexander Denzler: Correct, a lot of start-ups entered the scene and even big companies like Facebook, Amazon or Tesla are evaluating on how to harness the unique benefits provided by the technology. Academia is no different, as more and more Universities found labs and competence centers to research blockchain technology. Who of these actors are here to stay, you ask? All entities with a clear understanding of the capabilities and limitations provided by this technology, as the days of ICO’s trying to “blockchainify” anything and everything are fortunately over. Blockchain is not the solution to all the world’s problems, but it opens up a vast majority of possibilities that were not available in the past. New business models can and will arise, challenging old, cumbersome and monopolistic solutions in which few reap a majority of the profits. A good example is the latest decision by the Supreme Court, in which Apple faces a lawsuit due to its App store monopoly. Decentralized App stores, anyone?
Nicolas Bürer: Taking a look at Switzerland: after positioning itself as an epicenter for everything blockchain, mainly through the Crypto Valley, many other regions and countries worldwide, like Malta, Singapore, France, Gibraltar or Liechtenstein, followed lead and discovered the advantages of the blockchain. Considering these competitors, how well is Switzerland positioned today?
Alexander Denzler: If you take a look at the Silicon Valley for reference, two characteristics are crucial to its success: investors and talent. One without the other simply doesn’t work. Switzerland has both and therewith provides an ideal setting for start-ups and established companies alike to thrive. The active and positive endorsement by the Swiss government for this new industry completes a perfect set-up, resulting in Switzerland’s leading position in everything blockchain.
Nicolas Bürer: Last question, what should Switzerland undertake as two or three first priorities in order to maintain our leading position in the years ahead?
Alexander Denzler: In order to maintain its leading position, it is crucial for Switzerland to be able to continuously tap into an extensive talent pool. Especially highly skilled developers are always needed, as there is a big shortage of them. To date, a majority of education programs, focus solely on the business and legal aspects, which certainly is important, but most open positions require technical expertise. Furthermore, the Swiss government needs to ensure a stable environment for the blockchain ecosystem. Uncertainty and continuous changes in vision can and will have damaging effects. Last but not least, more widely used applications by Swiss companies have to be placed on the global market. This will ultimately act as a catalyst for further investments and cement the leading position of Switzerland.
Alexander Denzler: Nicolas, let me ask you a few questions: Digitalisation is omnipresent and has a big impact on how we live. Where do you see the biggest opportunities for blockchain in this process?
Alexander Denzler: Nicolas, let me ask you a few questions: Digitalisation is omnipresent and has a big impact on how we live. Where do you see the biggest opportunities for blockchain in this process?
Nicolas Bürer: Indeed, digitalisation will change a lot of products and services we will use in the years ahead. I believe blockchain will need a few more years and will then be widely used in various supply chain processes, international payment transactions and e-government processes. In any case, it will be crucial that it will be widely adopted among many stakeholders (incumbents, governments, etc.) and gain more trust in the population.
Alexander Denzler: digitalswitzerland plays a vital role in facilitating innovation. Could you share some details on what your plans are for the blockchain ecosystem in the future?
Nicolas Bürer: Among our Vertical FinTech & Crypto, we are pursuing two important goals: on the one hand, we drive the legal requirements for DLT (Distributed Ledger Technology) in Switzerland by coordinating and aligning with the broader Swiss FinTech ecosystem and legislative and executive bodies. On the other hand, we focus on selecting, developing and testing (prototypes) assets that can be tokenized. Being first-movers enables us to build a stable foundation for the ecosystem. The Vertical is helmed by SwissRe, MME and Mobiliar/SwissCaution and more than other 20 actors and experts are supporting their work. It is important to mention that our job is not to do business. That role should be occupied by corporates and start-ups. We put in place a fundament in order to enhance the ecosystem. We act as enabler and catalyst.
Alexander Denzler: Where do you see the Swiss blockchain ecosystem in five years?
Nicolas Bürer: I’m very positive about its perspectives. Start-ups and talent are here, but of course we could always profit of more from both. Swiss-based incumbents are increasingly investing in blockchain innovation and experiments. Different regions like Zug, Zurich, Geneva and Ticino are pushing the technology, which is good for internal competition. But we need some breakthroughs, for example in transaction energy consumption or transaction scalability. Why not reaching these breakthroughs in Switzerland? In five years, I am sure the amount of jobs in the blockchain space will have tripled or quadrupled in Switzerland and the country will be known as one of the top three hubs for the technology.
Most financial experts agree the financial sector must reinvent itself to satisfy the changing needs of the next generation of banking and insurance customers. Many of these customer-centric transformations and the implementation of new technologies can be achieved through acquisitions or in collaborations with more agile and disruptive FinTech startups.
The finance industry is under pressure from globalisation, demographic changes and digitalisation. On the one hand, these changes provide opportunities for growth but they also require steady innovation. Young, digitally savvy customers tend to be less loyal to companies or brands than previous generations. This is particularly evident in the financial sector where this new generation sees financial products and services as interchangeable. These younger customers value convenience and prefer executing transactions remotely, ideally with no direct contact with the service provider. “Advances in security and verification will enable all aspects of sales, service and delivery to be conducted online. Technology is making it easier for customers to switch banks, making relationships much less sticky”, a PwC study states. This means that a bank’s target market is no longer “defined by its physical footprint, but by its technology, regulatory boundaries and marketing budget”.
According to PwC experts, customer expectations are being reshaped by interactions outside of the banking industry. These new customers want the same type of quality and service they receive from other sectors that already place significant focus on the customer experience. Those industries offer customers multichannel access, product simplicity, seamless integration and accurate targeting such as online shops, travel search engines and music streaming services. “Customers want convenience, personalisation, accessibility and ease of use. They want to feel like their bank is anticipating their needs, not bombarding them with product offerings. They want transparency and no surprises in terms of fees”, according to the study authors.
Market observers agree that most banks and insurers have recognised the need to deepen their relationship with their customers. “Financial institutions must figure out how they can reinvent their products and services to address consumer needs quickly. It has become easier than ever before to switch providers and only companies that focus on customer experience will survive in the long run”, says Thomas Landis, Head of F10 FinTech Incubator & Accelerator.
Financial technology (FinTech) offers the global finance industry new possibilities to adapt to changing customer needs, reduce costs and make products available to a larger share of the world’s population. An innovative use of FinTech enables financial institutions to design and deliver products and services in customer-centric and efficient ways. Artificial intelligence and big data facilitate more precise targeting as well as personalisation of products and services, while process automatisation allows for real-time transactions and instant value transfers. FinTech is effective in a broad range of business segments such as payments, lending, investment management, money transfer, fund-raising and robot advisory.
FinTech can facilitate invoicing and payment processes for businesses of every size around the world and make them faster and more cost-efficient; it can help established financial institutions deepen customer relationships with targeted communications and offerings. FinTech can facilitate a global reach to banking and insurance customers worldwide by providing remote access to financial services through mobile phones. And most importantly, FinTech can improve the protection of customer data by using biometric data, tokenization and encryption.
“Many have predicted the fall of the traditional bank, as disruptive new entrants win shares by offering a better customer experience through new products and channels. Yet, despite the emergence of new competitors and models, we believe the traditional bank has a bright future – the fundamental concept of a trusted institution acting as a store of value, a source of finance and as a facilitator of transactions is not about to change”, the authors of the aforementioned PwC study conclude.
The transformation towards more innovation may happen through partnerships with startups and through acquisitions. “We are convinced that innovative startups and the big players need to join forces to tear down innovation hurdles”, says Landis from F10. In Switzerland, investors are showing increasing interest in startups working in technology: Swiss ICT and FinTech startups collected 685 million francs of investment in 2018, a 120 percent increase from the previous year. This was the first time that emerging tech companies received bigger investments than their counterparts in the Life Sciences. A good example of a successful collaboration between a FinTech startup and a traditional financial institution that led to an improved customer experience and increased efficiency, is F10 alumni SONECT, a Switzerland-based B2B2C startup.
In this case, the business customers are retail banks and the end users are the banks’ business customers as well as individual private users. “Convenience is the number one reason to use SONECT”, explains Sandipan Chakraborty who came up with the idea of virtual ATMs when he needed cash to pay for a babysitter. On a snowy Friday night, he was hurrying to the next ATM – which was about 600 meters from his home – and watched his neighbourhood pizzeria filling up its cash register to the brink. “Parents are often busy and forget to keep cash in their wallets but depend on it as they have to pay for babysitters, pocket money and stuff at their kids’ schools – all of which is paid in cash in Switzerland”, Sandipan observed. With SONECT, end users can withdraw cash while dining out at a restaurant or when having a pizza delivered. Shop owners, restaurants and delivery services can potentially benefit and gain new clients by providing a better customer experience and reducing their cash surplus. Since operational costs of ATMs can also be reduced, banks could also benefit from SONECT’s decentralized cash distribution model. In January 2018, the F10 alumni SONECT announced a partnership with the Aargau-based bank Hypothekarbank Lenzburg. The partnership makes all customers of Hypothekarbank Lenzburg SONECT users, which crowned this FinTech startup as the single largest cash withdrawal network in Switzerland in just 18 months. Furthermore, it won the global Innovation Jam by Temenos in Dublin in May 2018 for their business idea and ranked among the Top 5 Growing Startups for the Swiss Startup Award this year.
SONECT participated in F10 FinTech Incubator & Accelerator P2 “Prototype to Product” programme. This Startup Acceleration Programme is tailored to international teams with first prototypes in FinTech, RegTech and InsurTech. F10 guides and supports startups on their journey to become successful companies. Applications for the next batch of the P2 “Prototype to Product” programme starting in October 2019 will be accepted until 2 June 2019.
Article by Thomas Landis, Head of F10 FinTech Incubator & Accelerator.
Mondays could always start like this: with a croissant and café at the beautiful Hôtel de Ville in Paris, talking about digital innovation and technology – in this instance, how it transforms the way government works. The first GovTech Summit on 12 November, gathered more than 3’000 corporates, startups, civil servants, investors, politicians and academics.
GovTech is about the future of government: how it well leverage new technologies to collect taxes, deliver services, distribute welfare, maintain security and much more. Increasingly, startups are taking over activities which previously were only done by governments. They help streamline them and make them more user-friendly for citizens. My aim was to gather insights on how other countries manage the challenges posed by digital transformation, how they harness the opportunities, and learn from international best practices from other governments that could be applied in Switzerland too.
Interesting, in my opinion, is the prioritization of this topic at the highest level: The GovTech Summit was supported by French President Emmanuel Macron, Paris Mayor Anne Hidalgo and the European Commission. Hosting the 8th Internet Governance Forum and the GovTech Summit during the same week under #Parisdigitalweek sends a strong message.
Last May, French President Emmanuel Macron highlighted digital transformation by welcoming 140 of the most important tech leaders in the world at the Vivatech in Paris, and reminded them to use tech for good.
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Seldom have I read an interview where a political leader was so invested in mastering a technical topic (or used expert advisers to brief him), as in Macron’s WIRED-interview on France’s Artificial Intelligence strategy.
Anne Hidalgo, the Mayor of Paris, and Justin Trudeau, the Prime Minister of Canada opened the first GovTech Summit. Macron himself was busy opening that same day the Internet Governance Forum in Paris on the topic of ‘Internet of Trust’.
Anne Hidalgo made a strong pledge to use technological progress for the benefit of all, that it should serve humans and the social good, and help tackle global challenges like climate change and the protection of democracy. In her view, the underlying values are the basis for digital transformation.
Justin Trudeau reiterated this belief and shared his vision, which is a positive and liberating one. Technologies should be used to enhance democracies and empower its people instead of undermining them and fostering polarization. He also made clear that technology can be used to the detriment of the people. He sees it as the government’s responsibility to do a better job and offer an alternative. How to empower and involve citizens on the topic of tech is key to him.
Even though Trudeau admitted that he sees developments such as AI with a critical eye and calls for a common framework in the future, Canada is making an optimistic and confident choice to become a leader in this field: ‘When faced with tech disruptions like AI, societies can either embrace status quo or ‘dive into the future, accept that there are going to be transformations but if you are faster, dig deeper, then you can come out ahead.’
China and its use of data was a popular topic throughout the summit. Trudeau believes China has an advantage through its ability to access large volumes of data, but this could be detrimental to the country’s citizens. He also proposed to establish a common framework for the ethical development of artificial intelligence.
European Commissioner for Digital Economy and Society, Mariya Gabriel recognised that people are worried about AI and privacy issues and underlined the need for common values: ‘Our citizens are concerned about AI. AI doesn’t know any borders. Our approach is on values. We need to talk about privacy protection.’
Marietje Schaake, a Dutch Member of the European Parliament also expressed concerns about the use of data in China: “In Europe, we haven’t really comprehended the fundamental challenge that China and its top down governing of technology is coming our way. We need to understand what’s at stake and start designing for the outcomes we want.”
Many speakers emphasised the need for Europe’s increased involvement in technology and to not leave this area solely to China and the US. In parallel to the GovTech Summit, French President Emmanuel Macron spoke at the Internet Governance Forum and called for a European internet, which carries European values and ideas.
With challenges such as changing demographics, ageing populations and the rise of medical costs for instance, it is in the interest of all to seek more efficient ways to afford the same level or better healthcare. The same goes for most public services. Building digital competencies right at the center of government makes processes and operations more effective and thus, creates value that serves the citizens directly. New technologies open up possibilities to the government to first understand better their citizen’s opinion and second, which services are actually used and needed. A more citizen-centric approach is the result.
Jennifer Pahlka, Founder of Code for America, in an interview with PBS calls it a ‘delivery-driven government’: “If the interactions between citizens and the government drive creation of policies and operations, it is a fundamentally different game.” She recommends to take what we have learned in the tech world and apply it to more bureaucratic systems – to hack bureaucracy. However, it is not just about creating new fancy apps for the government, it is about a new way of thinking, a system change.
GovTech and Civic Tech will certainly grow in importance in the future – especially in Switzerland, where according to certain rankings, we still fall short. The IMD Digital Competitiveness Report positions Switzerland behind when it comes to E-Voting for example.
For my part, I believe that GovTech can make government services better and serve the common good and the people. Understanding new technologies isn’t easy for everyone. It requires education and the involvement of the people to prevent a social and generational divide. And importantly, GovTech will never be a substitute for elections or citizens’ involvement. It can be a bridge and a new means to communicate with governmental officials and the administration to make processes more efficient, transparent, accessible and user-friendly.
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