Being a customer's main bank is the highest compliment in retail banking. A new survey shows that cantonal banks succeed better than most competitors.
The Zuercher Kantonalbank (ZKB) claims to be the bank closest to its customers. The dominant market position and customer proximity in their home markets pay off for the entire group of cantonal banks. According to a study published on Monday, the 24 institutions are the bank of choice for 29 percent of Swiss.
This finding is based on a survey conducted by the Institute for Financial Services Zug (IFZ) (in German) at the Lucerne University of Applied Sciences and Arts and Postfinance of 3,162 Swiss residents between the ages of 18 and 74 in April 2022. According to the authors, the survey is representative of Switzerland in terms of age, gender, education as well as the language region of the respondents.
Credit Suisse Money Outflows
The state banks have been able to make gains compared to 2021. Although the sample is not directly comparable, the proportion of cantonal banks in the group was 27 percent at that time.
If the two surveys are placed side by side, UBS and Credit Suisse defend their share of 19 percent. It should be noted the survey came before last fall's money outflows at Credit Suisse and the massive increase in assets under management in Switzerland at UBS in the fourth quarter of 2022, where UBS hauled in $9 billion in new assets.
Postfinance made slight gains in the main bank relationship with its share rising to 17 percent from 15 percent. This came despite the banking arm of the Swiss postal service losing thousands of customers in recent years.
Coveted Main Relationship
«Main bank» status is particularly coveted in retail banking because the institutions have the highest density of fee-generating transactions. Conversely, multiple banking relationships mean that there is less danger of competitors or even new banks forcing their way into the customer experience.
Raiffeisen and Generation Z
Nevertheless, relying on snapshots is likely to prove deceptive for today's main banks as new generations of customers are gaining in importance who often have different preferences. For example, the Raiffeisen banks, likely thanks to numerous special offers and discounts for young customers, are almost as strongly represented as the main banks among 18- to 25-year-olds, with a share of 25 percent, and the cantonal banks with 28 percent. Among Generation Z, the banks and Postfinance also fare comparatively well, with 23 and 15 percent respectively.
The cantonal banks, meanwhile, are significant among all generations, according to the IFZ survey. They are disproportionately often the main bank for the more affluent over 57-year-olds on average, while regional banks are disproportionately relevant among the older generation. By contrast, they are of little importance among younger generations.
Interest Rates
It remains to be seen how rising interest rates and the resulting competition for savings deposits will change the field. Smaller banks in particular, which refinance themselves to a large extent through customer deposits, are now tempting customers with comparatively high savings interest rates.
The big, Raiffeisen and state-owned banks are keeping a very close eye on these developments. To date, these institutions have so far largely held back from offering more generous interest rates, precisely because they are already the principal banks for millions of Swiss people.
