UBS Branch Closures and the Lack of Protests

Also on Tuesday, UBS announced that it is lowering the limit for interest due on balances of 250,000 francs or euros starting in July. For tens of thousands of clients, this, along with the closures, amounts to less familiar service and potentially higher costs – a dangerous mix for any banking relationship.

Simply betting on the inertia of the clientele could prove to be a tricky bet: as retail banks with a lot of proximity to customers have found in particular, customer loyalty has dropped noticeably in recent months. The increasingly widespread online onboarding processes also make it very easy for clientele to switch banks.

5. Hollowed-Out Townscape

The image is as ubiquitous to Switzerland as the Matterhorn: a series of bank branches dotted between retail shops, fanning out from a train station. Typically UBS, Credit Suisse, Raiffeisen, a cantonal bank, and perhaps a regional specialist like Linth or Valartis. Even before the pandemic, you could almost hear a pin drop in these branches: banks have struggled to lure clients back in, or even abandoned efforts altogether (see point 6). A large-scale branch closing will hollow out a townscape irrevocably – in Geneva and Zurich as much as in ritzy ski resorts like Verbier, where four banks crowd around Place Centrale alone.

6. Property Recycling

Clients are eschewing branch visits are one side of the coin – the other is that banks are sitting on a lot of valuable, underutilized prime real estate. Credit Suisse has sold prime Zurich real estate in recent years including the Metropol (to Switzerland’s central bank) and Leuenhof (to a real estate investor). Other banks have repurposed: Zurich’s cantonal bank gave itself a 200 million Swiss franc ($225 million) facelift five years ago, dispatching of most teller stations and installing a café and a public co-working space instead, UBS included a champagne bar in the refurbishment of its Bahnhofstrasse head office, and Credit Suisse last year opened a branch in Zurich’s Europaallee development to test how well its new digital CSX breeds with traditional retail space

7. Proximity Remains a Pull

By abandoning branches, banks are sacrificing local presence and thus customer proximity. This is something that no one wants to miss, especially in rural areas where branch offices are part of the village landscape (see point 5). Geographical and thus cultural proximity has a high value, as even digitization experts now admit: when new digital channels to customers had to be opened in a hurry in the corona year 2020, they realized that this required being close to the customer. Developments from outsourcing destinations like India often disappointed.

8. Digital Banks Are Popping Up Everywhere

Where something goes, something new must come. This is a truism, but it also applies to banking. The reduction in the number of Swiss bank branches – since the turn of the millennium, the number of bank locations nationwide has fallen from 3,809 to 2,799 – has been accompanied in recent months by the launch of digital banks. Credit Suisse, for example, launched its banking app CSX last October. Basellandschaftliche Kantonalbank is planning a digital bank with a focus on sustainable investing, and Geneva-based Bank Reyl is building its digital subsidiary Alpin.

Previously on the market were Swiss pioneers Zak and Neon, fintech Yapeal, and foreign competitors such as Revolut, N26, and Transferwise.