Comparing Swiss LightBank-Fintech and EU EMI Licenses The key distinction between an EU EMI and a Swiss LightBank-Fintech license lies in their potential for upgrading. An EU EMI is a payment institution that cannot be upgraded. An EMI must complete a full bank license application if they wish to change status. Do not hesitate to contact us at connect@swissfintechpro.com for more information on this matter
In contrast, the Swiss LightBank-Fintech license is designed from the outset as a pathway to a full bank license, allowing for a more streamlined progression.
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| Feature | Swiss FinTech License | EU E-Money Institution License |
| Status | Light/Restricted Bank License | Payment and EMI institution |
| Regulatory Path to Bank License | Natural progression towards a full banking license as deposits reach CHF 100 million The crypto assets are not calculated into the 100 millions limit to the contrary crypto-based assets of unlimited value can be held. | No streamlined path; requires a separate, comprehensive application process |
| Strategic Growth Implications | The Swiss FinTech license is a crucial step towards obtaining full banking capabilities. It acts as the foundational structure for a bank license application, simplifying the process by building on existing groundwork. Additionally, the license enables firms to operate continuously while applying for a bank license, allowing them to maintain uninterrupted client services and business continuity as they enhance their capabilities.
| Transitioning to full banking services requires initiating a new application process from the ground up, as there is no direct upgrade path from an EMI license to a banking license. Although operational history such as an existing client base and a track record of regulatory compliance can be highlighted in the application, the foundational regulatory framework must be built anew, unlike the Swiss FinTech license where the existing license serves as a base to build upon |
| Main Activities | Acceptance of Public Deposits up to 100 mln CHF without interest or investments. | Issuing electronic money, executing payment transactions |
| Additional Services | Payment accounts, cards, e-wallets, crypto-related services | Payment initiation services, account information services |
| Currency Types | Fiat and cryptocurrencies | Fiat only (crypto requires additional registration) |
| AML Regulations | Subject to the Anti-Money Laundering Act (AMLA); stringent enforcement | Governed by AMLD4 and AMLD5; requires customer due diligence, transaction monitoring |
| Safeguarding Requirements | Must segregate customer deposits from company funds Customer Public Deposit must be kept in Switzerland and segregated from own funds of the company. A separation per client, however, will not be required by law. The funds must be liquid at any time, and no investment or payment of interest will be permitted. | Must safeguard funds in separate accounts or low-risk assets, with optional insurance or guarantees |
| Capital Requirements | Initial capital of at least 3% of public deposits, minimum 300,000 CHF | Initial capital of 350,000 EUR; must maintain funds not less than 350,000 EUR or 2% of average outstanding e-money. Then the capital will be scaled in relation to the float and Electronic Money |
| Interest on Deposits | No interest allowed on customer funds | No interest allowed on customer funds |
| Investment of Funds | No investment of customer funds allowed | No investment of customer funds allowed |
In other words, the LightBank-Fintech license is seen as a foundational milestone towards achieving full banking capabilities. It serves as the base structure for a bank license application, eliminating the need to start from scratch. Instead, the process is akin to adding additional floors to an existing building, where the groundwork and initial construction are already in place and recognized in the transition.
Furthermore, the LightBank-Fintech license offers the significant advantage of allowing firms to continue their operations while applying for a bank license. This seamless transition ensures that businesses can maintain continuity and client service without disruption as they expand their capabilities
Below a table that lists the specific document requirements for individuals and corporations when applying for the authorization to open a new LightBank-Fintech, focusing on people responsible for administering and managing the company and holders of qualified participations (10%):
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| Document Type | Individual Requirements | Corporate Requirements |
| Nationality and Domicile | Information on nationality and domicile. | Not applicable. |
| Qualified Holdings | Details on qualified holdings in other entities. | Not applicable. |
| Judicial and Administrative Proceedings | Information on pending or past judicial and administrative proceedings. | Information on any judicial and administrative proceedings, whether pending or completed. |
| Curriculum Vitae | A CV signed by the individual. | Not applicable. |
| References | Professional references. | Not applicable. |
| Criminal Record | An extract from the criminal record. | Not applicable. |
| Statutes | Not applicable. | The corporate statutes. |
| Commercial Register | Not applicable. | An extract from the commercial register or similar certification. |
| Activity Description | Not applicable. | A description of the company’s activities, financial situation, and group structure. |
| Shareholder Declarations | Not applicable. | Declarations from shareholders holding qualifying shareholdings: details on participation and rights granted. |
The table below illustrates the core requirements for directors under both regulatory frameworks. While both licenses demand similar foundational skills and experiences, the specifics can vary according to the regulatory environment and the nature of services provided. Directors of EMIs, for example, need a slightly separate set of skills and knowledge tailored towards electronic money and digital payment services, reflecting the EU’s regulatory focus.
In contrast, Swiss Light Bank directors require a broader understanding of traditional banking in addition to new financial technologies
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| Criteria | Swiss Light Bank License | EU EMI License |
| Professional Experience | Extensive experience in banking or financial services, particularly in relevant areas of operation. | Significant experience in financial services, preferably with exposure to electronic money and payment services. |
| Regulatory Knowledge | Deep understanding of Swiss banking and financial regulations. | Comprehensive knowledge of EU financial regulations, especially those relating to e-money and payment services. |
| Management Skills | Proven management and leadership capabilities. | Demonstrated leadership and management skills in running a financial institution. |
| Reputation and Past Conduct | Must have a clean criminal record and a history free of financial mismanagement. | Clean criminal record and no history of regulatory non-compliance or financial mismanagement. |
| Educational Background | Typically requires a higher education degree in finance, business administration, or law. | Often requires a relevant higher education degree; sometimes specific qualifications related to financial management or technology may be emphasized. |
| Risk Management | Experience in managing financial and operational risks specific to banking activities. | Experience in managing risks associated with electronic money issuance and payment processing. |
| Financial Acumen | Strong financial management skills, including understanding capital adequacy and liquidity management. | Strong financial management skills necessary, with a focus on safeguarding customer funds and managing liquidity. |
Shareholder requirements are the same for both type of institution. Experience requirements above do not apply to shareholders.
The table below summarizes the regulatory expectations and requirements for shareholders in financial institutions, highlighting the need for transparency and integrity in their involvement.
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| Requirement | Description |
| Fit and Proper Test | Regulators assess the integrity and suitability of significant shareholders (10% or more) to ensure they do not pose a risk to the sound management of the institution. |
| Source of Funds | Significant shareholders must disclose the source of their funds to prevent money laundering and confirm the legitimacy of the capital. |
| Disclosure Requirements | Shareholders with significant stakes must disclose their holdings and any changes therein to regulatory authorities for transparency and monitoring purposes. |
| No Criminal Background | Significant shareholders should not have a history of criminal activity, especially financial crimes, to maintain the institution’s integrity and trustworthiness. |
At Ovalor, we specialize in transforming your business concepts into operational realities.
Our services are designed to streamline the activation process, ensuring a smooth transition from foundational planning to full-scale operation.
We possess deep knowledge of the Swiss financial legal framework and maintain strong working relationships with FINMA, the local banking regulator.
Our team in Switzerland boasts a diverse array of professionals, including lawyers with 30 years of experience, bankers with 11 years as CFO and CRO of a Swiss bank, and bank auditors with 9 years of experience as senior bank auditors. Choose Ovalor—we are the experts you want to work with. Do not hesitate to contact us for more information with regard to this matter at connect@swissfintechpro.com
