Page 2 of 2

Not the Only Concern

Retail banking isn’t only under attack from cut-fee payment services. The direct banking of Credit Suisse and a UBS project in planning are both tacit confirmation by the two big Swiss banks that mortgage selling has become a platform business. The loans, which even in times of ultra-low or negative interest rates are a valuable source of revenue, have become a mass-market product.

The way to go was paved by online mortgage broker Moneypark, which is a unit of Helvetia insurance company. The Moneypark platform helps mortgage takers choose among a wide selection of providers, and insurance companies and pensions funds increasingly pip banks for the business.

Of course, as of today, banks are providers of more than 90 percent of all mortgages in Switzerland. But the sales statistics for new loans show a different picture altogether. At Moneypark, more than every third mortgage is sold by a non-banking competitor.

Standardized Solutions as an Answer?

Fintech players such as Revolut and N26 may soon emerge to provide services other than their typical payment solutions and offer an investment product to a quickly growing clientele, helping them to gain further market share. This may help them reach out to the affluent clientele and start approaching the customers with the most money to spare – millionaires.

In doing so, they would reach the heart of this Swiss industry – private banking. It isn’t surprising to see UBS coming up with more standardized product lines for rich clients in foreign markets. Credit Suisse’s direct banking solution will equally extend to wealth management and the fund arm of the bank currently is working on an investment app for retail clients.

A Tough Challenge for the New CEO

Will it suffice to fend off the challenges the banks are facing? The success of Revolut and Moneypark shows that customers can indeed be convinced to switch. The traditional banks have two mighty problems to contend with: first, their digital solutions are essentially built upon an established structure. And second, each modernization step is one that squeezes their profit margin.

Gaining market share in Switzerland under these conditions hence may prove a tough nut to crack for Credit Suisse under new CEO Gottstein.