He'll never go back to banking, the former CEO of Zuercher Kantonalbank tells finews.com. After leaving the bank just over a year ago, Martin Scholl has flipped the switch and is now an enthusiastic startup investor. But the ex-banker says he would never give money to fintechs.
Mr. Scholl, we last met at your farewell event with media representatives. Next, you wanted to fly to New York with your wife, making up for a trip you never found time for during your 16 years as CEO of Zuercher Kantonalbank ZKB. How did that work out for you?
We lived in Manhattan for six weeks. It was a kind of homecoming: My wife and I once lived and worked there - she for a financial boutique, I for the former Bankverein. Last September, we returned to where we started 34 years ago. In that respect, it was a good fit as a starting point for this new phase of our lives.
But as a retiree, you could take it much more leisurely.
We covered 400 kilometers on foot! You have to experience Manhattan as a pedestrian. We visited all the places we knew before and discovered new ones. New York has changed a lot for the better.
«I don't feel like arguing about compensation reports anymore»
When I was there in the late 1980s, it was a dangerous city to be in with your eyes open.
As soon as you returned, observers had the feeling that you had settled into life after banking with various mandates on boards of directors. Was that a long time coming?
I didn't panic about my impending departure from ZKB. Instead, I thought carefully about what I wanted to do professionally. Nothing that would put me in the public eye, no return to a listed company.
Did you have any offers?
There were. But I don't feel like poring over audit reports anymore, arguing about compensation reports, and taking part in interminably long meetings that only deal with business topics in sections.
You describe CEO life in somber tones.
No, it was fine. It was excellent! That's the corporate world. I always enjoyed working in this environment and never asked myself on any given day what am I doing here. But flipping the switch after I left ZKB was just as easy.
What does that mean?
I want to be active with inspiring people and in an entrepreneurial environment. I've known the Verve Ventures team for a long time, but my mandate there only began to take shape last fall.
«They have a vision, a mission, limited resources, and no time for 'bullshit'»
The same is true for Belvédère Asset Management and, in fact, for Zurich Innovation Park operator IPZ Property, although discussions existed before.
And what about a return to banking?
Never in a million years.
Is the profession so uninspiring?
Banking is at the center of the business cycle and is inspiring. But that chapter is closed. Now, a different era has begun. When you're in the startup world, such as Verve, it's enriching in other dimensions. I have never met people in the startup world that I found uninteresting. They have a vision, a mission, limited resources, and no time for 'bullshit.'
Instead?
They focus on contributing with their technologies to solve today's challenges, be it in energy and resources, biotech and medtech, industrial automation, or the future of computing. Of course, they want to make money with it, which is what I want.
Do you believe that technology will solve all our problems?
Of course, people have to accept technological developments and adapt to them. The last two decades have shown how well people can do this. The core of practically every large company is technology. Especially in the field of energy, we cannot rely on behavioral changes by mankind; that will neither suffice nor work.
As a startup investor, you also have a financial interest in us saying yes to technology, right?
As explained, there is no alternative to technology if we want to develop further. I don't know many people who would wish for the old Swisscom phone booths back and would be willing to return their favorite gadget. For me, the goal is to keep up with the issues of the future and to deal with pressing topics in the hope of staying mentally fit. But of course, it's also about continuing to make money.
«This isn't the death of the startup idea»
I make many startup investments through Verve's platform, where I am a shareholder. At Verve, this happens within a well-defined process. This is usually better than relying on secret tips from colleagues.
Speaking of colleagues: ZKB has a stake in Verve Ventures, and at Fintech Finfinder.ch, where they act as advisors, alumni of ZKB are founding members. That's where accusations of rope-a-dope quickly surface.
No one on the entire Verve team has a ZKB background. That also applies to IPZ Property and Belvédère Asset Management. I know so many people that a connection would probably always be found. ZKB holds a minority stake in Verve. However, I don't sit on the board as a bank representative; the managers of Verve are strong enough personalities, free to decide for or against Scholl.
You know many people: there are bound to be requests and offers galore. Will you accept any other assignments?
No, for once, it's good.
Given the turnaround in interest rates and the economic uncertainties, some of the air has escaped from the startup hype. For example, fintechs are finding it increasingly difficult to access fresh capital in the financial sector, and insurer Helvetia is integrating a successful name like mortgage broker Moneypark. How do you assess this as a professional investor?
For startups, in general, funders have become more selective. The timing of startups that need to raise fresh capital this year or next is not ideal. The bargaining power has shifted more to investors. It can now also happen that companies are valued lower in a new financing round than before. But those who receive money can at least develop their company further, while less fit startups will fall out of the running. But this is just a market phase and not the death of the startup idea.
And what happens specifically with fintechs?
I never invest in fintechs. I don't believe in their promises. In between, there might be an exceptional success like the Swiss-German insurtech Wefox. But the chance of me, as a private investor, being involved here early on is very small. Even in my days at ZKB, I was skeptical of financial startups.
«Never. They can read every meeting minutes there»
With an innovation budget of more than 300 million francs, we could replicate any innovation that came out as needed. So, I never feared that the banks, with their history, financial strength, and trust base, would be seriously threatened by fintechs.
Now, we have the advantage of looking back at history. But in 2015, when the fintech boom took off, did you never worry that ZKB would fare like Kodak?
Never. You can read every meeting transcript with all the people who were in sheer despair and thought Scholl was diehard. In 2023, it's apparent that disruption ambitions vanished into thin air. Fintechs are still around, to be sure, and have their uses. But they have never taken over entire aspects of banking. This is particularly true because the banks have found the correct answers regarding digitalization.
If not fintechs - what are your hot tips as a startup investor?
The energy and resources sector is very promising, with the Geneva-based startup Transmutex, which is developing a new form of nuclear reactor that reuses uranium waste. The first plants abroad are under discussion. And if it comes, it would probably be a moonshot. Turn2X, a startup company from Germany, is turning electricity from renewable sources into liquefied gas, making it more transportable. There are also many attractive new business models in the medical sector. In general, though, be careful with hot tips. I think it's about systematically building a broadly diversified portfolio in the startup sector. Otherwise, it is pure speculation.
Not precisely a moonshot, but at least an unprecedented undertaking is UBS's takeover of Credit Suisse. What thoughts did you think about this from afar?
When I started my banking career in the late 1970s, there were five major banks, and now there's only one. However, of the 26 cantonal banks, 24 have remained since then, and most regional banks are still there.
«The best insurance against banking crises remains well-managed banks»
In this respect, we seem to have a problem with major banks' business models in this country, even if the institutions have disappeared for various reasons. In my opinion, the banking sector is vital because it is highly diverse and broadly based. This diversity continues to suffer, which will also become a problem for the business location.
But with the disappearance of Credit Suisse, ZKB became number three in the country. Companies could increasingly turn to the state bank.
Of course, I can no longer speak for the ZKB. This may work right up to listed, medium-sized companies. But above this limit, the ZKB and the other cantonal banks cannot fill the gap left by Credit Suisse. The midcaps now depend on foreign banks to offer certain new services and do so in the long term. The situation is a bit uncomfortable for her right now.
As a former state banker, you'll have noticed that the major Swiss banks are now guaranteed state-guaranteed emergency liquidity, the so-called public liquidity backstop. What do you think of it?
It is striking that those institutions that have received help from the state since the financial crisis never paid for it. This contrasts the cantonal banks, which pay their state guarantee to the cantons. In this respect, it seems imperative that the state pay for this service. However, the best insurance against banking crises remains well-managed banks with the right people and suitable DNA.
Does this apply to UBS?
I do think that UBS management learned from the past. You once stood on the edge - and never want to experience it again. However, passing on the lessons from this experience to future managers will be a challenge.
Martin Scholl worked for Zuercher Kantonalbank (ZKB) for over 40 years and was CEO from 2007 until August 2022. Since then, the 61-year-old from Dübendorf has been active as a startup investor and has accepted various mandates: Scholl sits on the boards of venture capitalist Verve Ventures, asset manager Belvédère Asset Management, and IPZ Property, the operator of the Zurich Innovation Park. He also acts as an advisor to the fintech company Finfinder.ch.
