The staged end of banking secrecy has transformed the Swiss private banking landscape, a change accelerated by the legal disputes with the United States and the European Union.
This transformation has had implications on profitability for the Swiss banking sector due to:
- Tougher regulatory requirements for tax compliance
- Quality control over the client base and fund sourcing
- Suitability of the products proposed based on the investor’s personal situation
The end of banking secrecy means Swiss banks will now be in competition with players in their clients’ home countries. This further erodes the Swiss advantage and further reduces fees and related profitability. This development is part of a long-term trend that is not likely to reverse, as opposed to market effects which are usually temporary.
Evolving Swiss banking
There are a number of areas that Swiss banking has to develop:
- Improving the accessibility and quality of their services
- Development of advisory management and execution-only transactions, which are starting to replace discretionary portfolio management
- Enhancing the discretionary portfolio management
- Improving access to non-local markets and non-EU markets
- Strengthening asset management
These have been covered in the main-stream and specialist press but there is a quiet revolution – digital marketing.
Digital marketing – the saviour?
The end of banking secrecy has had one benefit for digital marketing in Switzerland: it removes some of the taboo and resistance of digitising information and therefore enables digital marketing analytics to gain a better understanding of investor and client expectations to ultimately raise and preserve assets-under-management (AuM). In this regard, FINMA’s constructive attitude towards digital marketing has played a big role in the adoption of digital marketing in Switzerland which is essential to growth in online investment management.
A word of caution though – digital marketing analytics, insights and applications should only be viewed as tools to supplement existing relationships and not as an opportunity to reduce the quality of the personalised service for which our financial centre is famous. As is the case with luxury goods, the adoption of new technologies should not come at the expense of product excellence.
Digital Marketing – the saviour of Swiss private banking?