Switzerland remains a global innovation powerhouse. However, the new evidence shows fatigue, fragmentation, and insufficient transformative momentum.

A newly published report commissioned by State Secretariat for Education, Research and Innovation (SERI) examines how innovation models are evolving across six innovation-intensive sectors, including finance. Its conclusion is clear: Swiss firms still innovate, but often in small steps, while the conditions for radical, digital, and sustainable innovation are not improving fast enough.

In financial services, the path to transformative innovation increasingly runs through interoperability, shared foundations, trusted data frameworks, and regulatory learning-by-doing, not isolated pilots.

The report as of December 2025 by KOF Swiss Economic Institute, FHNW School of Business, EPFL and University of St. Gallen analyses how companies develop new products, services, and processes, and what slows down or blocks innovation. While Switzerland still has strong innovation centres and globally competitive sectors, the report warns that momentum is weakening in areas that matter most for the next decade: digitalisation, sustainability, and transformative innovation.

“Switzerland still has strong innovation centres and globally competitive sectors. However, signs of fatigue and fragmentation are visible.”

Key findings of the report

  1. Innovation happens, but often incrementally: Companies innovate, yet frequently through small-step improvements rather than bold breakthroughs.
  2. Switzerland risks losing momentum in digital, sustainable, and transformative innovation: The report flags a risk of slowing progress precisely where global competition is accelerating.
  3. Regulation is a double-edged sword and can deter radical innovation: Firms report rising regulatory complexity, frequent changes, and legal uncertainty. This can delay projects and discourage radical innovation, including in finance.
  4. Digitalisation shows a widening gap, particularly for SMEs: Large firms are more proactive; many very small firms remain disconnected from digital innovation. Constraints include data access and skilled personnel.

What the report examined

The research looks at innovation patterns and obstacles across six innovation-intensive sectors: Finance, chemicals, pharma & biotech, ICT, Medtech, MEM (metals/electronics/machines), and food & beverages.

It also finds that parts of the services economy (including banking and insurance) often innovate via models that are less R&D-centric and less connected to classic innovation policy instruments.

Why this matters for financial services

Financial services innovation rarely depends on a single “lab success”. It scales when the market can implement reliably:

  • Interoperable APIs and shared implementation patterns
  • Trusted data governance and identity foundations
  • Security-by-design for data sharing
  • Regulatory learning loops that allow controlled experimentation without compromising stability

The report’s warning on incrementalism, SME gaps, and regulatory drag lands directly in the financial sector’s reality. The next productivity wave will come from shared rails, not one-off solutions.

Swiss economic impact and possible actions

Companies rate Swiss innovation policy positively overall but warn that framework conditions must evolve to match structural economic change. Transformative innovation remains too rare, despite being essential for long-term productivity and the shift toward a digital and sustainable economy. Based on industry feedback, the report identifies gaps in current policy and outlines nine possible actions to strengthen Switzerland’s research and innovation system and better enable radical, digital, and sustainable innovation, including:

  1. sector‑specific regulatory “sandboxes” (controlled tests with reduced regulations),
  2. further harmonisation of regulations (between cantons and between Switzerland and other countries),
  3. improving the framework conditions for start‑up funding in all stages,
  4. targeted support for transformative and sustainable innovation,
  5. operational improvements in promoting innovation,
  6. better matching of collaboration partners through research information systems and collaboration brokers,
  7. an extension of funding for certain institutions of national importance (technology competence centres) in the field of research and innovation,
  8. a national data strategy and
  9. a fast‑track procedure for work permits for highly qualified professionals.

SFTI’s role and contribution

SFTI was represented in the finance stream amongst Swiss Bankers Association and Swiss Insurance Association.

Our commitment: Turn insights into execution capacity for the ecosystem. We convene members to build reusable foundations that reduce fragmentation and enable compliant, scalable innovation.

How members can engage:

  • Participate in SFTI working groups on interoperability and shared foundations
  • Share obstacles you face (regulatory friction, data access, talent constraints)
  • Propose “sandboxable” use cases where Switzerland can learn faster and safely

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