An external storage of data was unheard of in Swiss private banking, the mainstay of secrecy in the country of secrets. Now that things have started to change in the industry, telecommunications giant Swisscom senses a new business opportunity.

Swiss private banking is bleeding – badly. Every tenth institute has folded over the past year. The survivors are faced by market conditions that couldn't be any harsher. Compliance costs have exploded and customers are sitting on mountains of cash which the central bank is charging money for keeping.

And it will get worse too, experts claim.

The noble banks have seen sense though and are looking for ways of cutting costs. Even if it means that they will have to slaughter some of their holy cows.

New Business Opportunities

Handing data to third parties for storage is one of the taboos. As is the management of the IT platforms. Of course, with banking secrecy tight as it was, no company would have dared to have somebody else handle these core issues. These certainties are now but a memory.

And as the conditions have changed, companies from outside banking are sensing opportunities. Swisscom, the former Swiss state telecommunications monopoly, is working on an offering to get a foot into the industry, research by finews.ch has shown.

Risk Reduction

«We are planning to extend our services especially to private banks,» Oliver Kutsch, the head of banking at Swisscom, said in an interview. Swisscom, still by far the largest company in the telecommunications industry, has noticed an increase in demand for outsourcing of IT infrastructure, protection against cyber risks and digital banking consultancy. «Hitherto, the industry was very reluctant to outsource,» Kutsch added.

Swisscom aims to help private banks with two of their most pressing problems. «Our offering for private banks is designed to contribute to a reduction of risks and a better cost-income-ratio,» the head of banking said. The services contain IT infrastructure, cyber-security solutions, data management as well as consultancy for digitization plans – for instance using products developed by Swisscom's E-foresight fintech think-tank.

Retail Banking Solutions

Swisscom is already a strong player in the finance industry. It provides IT services to about 100 retail banks and 50 companies are using outsourcing solutions, for instance for transaction services and securities business.

Swisscom also is an important contributor to the Swiss payment application Twint as well as several fintech projects.

In Talks With Private Banks

Companies such as Valiant or the Bern-based Zaehringer Privatbank even have entrusted their entire IT or large parts of their back offices to Swisscom.

As a private bank, Zaehringer still is an unusual customer of Swisscom, which so far has concentrated on the retail banking business. That may change now: «In the development of our offerings, we are currently in talks with several private banks,» Kutsch said.