7. AuM: No Longer the Measure of All Measures
All of these changes will have a massive influence on the financial market and increase the pressure on banks to consider the way to boost profitability. Growth in assets under management and net new money used to be measure of success. But growth as such isn't the key parameter anymore, bank chiefs have noted – one being Eric Syz of namesake bank or Philipp Rickenbacher of Julius Baer, who spoke in an interview with «Finanz und Wirtschaft» (behind paywall).
Assets under management simply are no sign of profitability if margins are declining and costs rising. Revenue is what counts, money made on assets under management, independent of how big these are.
8. Middle Management: One Level Will Go – at Least
Fewer jobs, change in work conditions, pressure to increase profitability and lower costs. The middle management will be the one layer to fall victim of the new reality. During the golden years of Swiss banking, financial institutions were able to maintain huge organizations. Of course they contributed to the success, but they also cost a lot of money – with bankers earning huge sums, without really contributing to the growth in profitability.
With a change in conditions, a sobering look on profitability and as procedures are becoming automated, bigger banks will need to cut an entire layer of management – as Credit Suisse did a number of years ago at its Swiss division – under the guidance of Thomas Gottstein – finews.com reported on it.
9. Regular Working Hours: Those Were the Days
The nice new world of work – at home – isn't free of problems. They will become all the more apparent once the whole dynamic of the industry is back. It is no longer so obvious who has called it a day, or is on holiday or who even simply has regular working hours. In any case, most bankers are constantly online. Which shows that the new freedoms come at a price – a high price tag on the psychological level.
10. Wine & Dine: Just Don't
These were great times when UBS caught the limelight as main sponsors of Formula 1 motor-racing. The bank presented its clients with a unique experience. The coronacrisis put an end to all that. The events won't take place in the same fashion for quite some time – and in any case, banks can't sponsor activities that harm the environment in such a fashion when they preach the ESG criteria.
Other big events are also under pressure – Baselworld being one of them. This type of cultural event is going virtual. Put simply: all things spendthrift aggregated under the expression of Wine & Dine are totally out.
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