The prophesized end of Swiss banking does not add up, Claude-Alain Margelisch, CEO of the Swiss Bankers Association, writes in a response to an earlier finews.first essay.
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finews.com founder Claude Baumann heralded the end of Swiss banking in a recently-published article. But is the author correct in giving this requiem? Many factors indicate that the banks are currently undergoing an epochal transformation. They will emerge from this transformation strengthened. An end is therefore not in sight. Instead, what is currently underway is much more a development that reflects the continuation of a centuries-old tradition.
Our banking centre is internationally competitive and in Switzerland, a key industry for the entire economy. This historically important role of our financial services providers can be attributed to two important strengths: firstly, Swiss banking builds on highly stable and competitive location factors. The foundation upon which the financial centre rests is characterized by features such as political and economic stability, legal certainty and an open, liberal approach.
«Swiss banking is increasingly the combination of offshore and onshore banking»
Switzerland must continuously foster and defend these location advantages. The second strength is the banks themselves: the banking center consists of a broad range of institutions that distinguish themselves through uncompromising standards of quality, highly qualified, experienced employees, reliability and responsibility. The Swiss banks are still the global leaders in the cross-border wealth management business.
This is not least attributable to the fact that, with the introduction of the automatic exchange of information, the banks have adjusted their business models and still remain attractive for foreign assets today. The Swiss National Bank’s statistics reflect this: over the last several years, the assets managed in Switzerland have remained stable.
International competition in the private banking industry has significantly intensified. Swiss banking must adapt and assert itself, and the Swiss financial center can act from a position of strength as it does so. The quality of services and customer proximity are a fundamental part of this. Accordingly, Swiss banks are well represented in growth regions. Swiss banking is increasingly characterized by the combination of offshore and onshore banking. Services for customers are now also provided locally, while «production» often continues to take place in Switzerland.
«A strong corporate banking business supports companies large and small in all facets»
However, Swiss banking is much more than just wealth management. The Swiss home market, which is also characterised by a diverse banking landscape, accounts for a very important part of the business. In addition to this, the Swiss financial centre offers asset management services that are in demand both at home and abroad. As a leading European location for asset management, a total of 2 trillion Swiss francs ($2.035 trillion) in assets are managed in Switzerland for domestic and foreign investors. A strong corporate banking business supports companies large and small in all facets. This variety is an important characteristic of the Swiss financial center.
The outlook for Swiss banking is positive. The two fundamental strengths described previously – stable and competitive local conditions in Switzerland, and the outstanding quality of Swiss banking – form a unique combination that is decisive for international competitiveness. During times of major geopolitical uncertainties in particular, stability and reliability are likely to become more, rather than less, important.
«There are countless examples of innovations and collaborations that Swiss banks are involved in»
Further to this, if the Boston Consulting Group is correct in its projection that assets under management in Switzerland will rise by three to four percent annually until 2021, the future prospects, in particular also for private banking, are good. A recent study published by Credit Suisse also provides a positive outlook for the Swiss financial center, in that it will be able to participate significantly in the global growth of the wealth management business.
A further sign of the future viability of our financial center is the diverse fintech ecosystem that has emerged in recent years. Innovation is a critical factor for success – the Swiss banking reality has for many years now no longer taken place only in the wood-paneled rooms of private bankers. There are countless examples of innovations, incubators and collaborations that Swiss banks are involved in, as finews.com itself often reports.
Together with the government and the authorities, the Swiss Bankers Association, or SBA, is working to create an innovation-friendly regulatory framework and has set a high priority on promoting matters such as Swiss cloud solutions, regtech and blockchain. Future success is also in the hands of the banking center itself. The SBA's objective is to further strengthen its international competitiveness. The course must now be properly set on two levels.
«Swiss banking will change»
Firstly, the location conditions must be secured. In discussions with the federal government and the authorities, the SBA is therefore advocating for an innovation-friendly regulatory framework. Good regulation will enable the banks to grow instead of being suffocated. Also, the government, policymakers and authorities must not relent in their efforts to ensure greater economic openness and improved access to the most important foreign markets.
Secondly, the banks must continuously develop both themselves and their services further in order to ensure the needs of their customers are met by providing outstanding quality. This will ensure that jobs and value creation remain in Switzerland, even if the banks will potentially conduct their business differently in the future than they do today. Swiss banking will change – but it will remain at the forefront.
After completing his legal studies at the University of Berne, Claude-Alain Margelisch qualified as an attorney-at-law and notary and worked in a law firm until 1993, when he joined the Swiss Bankers Association, or SBA. Before taking up his post as CEO in 2010, he was the SBA’s deputy CEO and responsible for international financial markets.
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