The jubilation was great when a fintech received the blessing of the Swiss Financial Market Authority. But one provider has already given up.
“The potential for technological innovation in the financial markets is considerable,” wrote the Swiss Financial Market Supervisory Authority (Finma) in its 2020 annual report, raising curiosity about the topic.
The constraints triggered by the pandemic highlighted the opportunities and need for technical innovation, such as in payments, the Swiss financial market regulator continued.
Report makes one wonder
Therefore, the fintech license, i.e. the “banking license light,” is just the right thing as a new license category to promote applications of blockchain technology in the financial market or innovations in trading with financial products or in payment transactions, according to the tenor.
Last Friday the Federal Council also drew a fundamentally positive conclusion in its report on financial market regulation “Bank Licensing Light” on the regulatory relief for fintechs.
The exemptions in the banking ordinance actually lowered the hurdles for market entry and promoted innovation, it said.
Silence in the forest
But there was also something strange in the Federal Council report: “Since 2019 and until mid-2022, four institutions obtained the 1b license, whereby Finma opened bankruptcy proceedings against one of the institutions in June 2022,” it says in plain black and white.
But wait a minute – there was no outcry in the media that one of the fintechs had already sunk into the ground again.
muula.ch therefore went in search of information about the fintech, because the website of the Swiss Financial Market Supervisory Authority did not contain a media release about the disappeared fintech at the time.
Search and find
Finally, research revealed that the missing fintech was the company Mogli. A Finma media spokesperson confirmed this to Switzerland’s new business news portal muula.ch on Friday evening.
Why there was no information for the public, could not be discovered quickly. However, according to the research, it could be that Mogli had none or hardly any customers and therefore very few consumers were only marginally affected by the bankruptcy.
In April 2021, the Zug-based fintech Mogli became the third startup for financial innovations to receive a “banking license light” from Finma, after the neo-bank Yapeal and Klarpay.
eWallets as purpose
Apparently, the company around the persons Donat Carlo Jösler, Thomas Fromherz and Leonie Winter did not really get flying. However, according to the commercial register, the managers actually had a renowned trustee at their side in the form of PricewaterhouseCoopers PwC of Zurich as auditors.
The company’s purpose had originally been: “Develops and programs programs and applications for itself or on behalf of customers”.
The company could also operate eWallets for itself and its customers as well as grant software licenses to customers, had been added to the commercial register in April 2021.
Failure as opportunity
And on June 7, 2022, bankruptcy proceedings were opened against Mogli AG. Now the startup is called “Mogli AG in Liquidation” and the three persons are no longer authorized signatories. Since July 2022, PwC is also no longer responsible.
It was not possible to find out what exactly happened and why the fintech gave up the ghost after just a few months. However, there is actually no shame in failure in this innovative area.
The only thing is that those responsible, like the federal government, could have been more transparent in their dealings with the public. After all, there are comings and goings in this field, which is characterized by experimentation.
Coming and going
Finma’s current list of licenses even has four names again: Yapeal, Klarpay (Zug), SR Saphirstein (Zurich) and Swiss4.0 (Geneva), as muula.ch‘s research further showed.
In the Federal Council’s report, the officials also provide a relativizing comparison in a footnote anyway: in the years 2019 to 2021, the Swiss financial market regulator Finma has approved 18 new banks and securities firms.
Over that same period, however, 13 banks and securities firms have exited the market. Accordingly, only five additional companies would have survived on the Swiss market.
Who noticed all of this? Probably nobody, except us.