Views

the swiss financial centre –
new realitY in private Banking
Financial crisis. Despite initial signs of an
economic recovery, the repercussions of the financial
crisis had a strong impact in 2010. The
crisis also left its mark on Switzerland as a financial
centre. In private banking in particular,
values such as trust, transparency and security
have thus taken on increased im portance. Also,
driven by excessive national debt and keen to
leverage additional fiscal potential, several other
industrialised nations have put massive political
pressure on Switzerland.
The criticism related primarily to Swiss banking
secrecy, which is of central importance to
private banking. On a political level, Switzerland
has offered solutions that will enable the anonymous
payment of taxes and a reg ularisation of
undeclared assets. This should, in keeping with
Swiss legal tradition, ensure that client privacy
remains intact going forward.
The consequences of the financial crisis
have contributed to a further intensification of
market regulation. The tougher stance taken
by the Swiss regulatory authority is above all
re flected in additional requirements in terms of
cross­border asset management.
Introduction of structural changes. The
most recent developments should not be interpreted
as being first and foremost a form of
crisis management. They are much more the
beginning of a long­overdue structural change
arising the fact that many banks are not yet in a
position to make clients’ needs their first priority.
Although it is reasonable for banks to oppose
the trend toward over­regulation, the fact is
that the general framework has been altered
fun damentally.
dr. stePHan a. zwaHlen
dePuty CHief exeCutive offiCer,
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Private bank
More sophisticated client needs, greater
transparency, expanding product ranges, tax
considerations, increased regulatory complexity
and the erosion of margins are leaving their
mark on the new reality of private banking.
Furthermore, the rising cost of leveraging specialised
expertise and developing advanced IT
solutions itself presents significant new challenges.
Switzerland’s position as a leading international
financial centre for asset management
thus appears to be at risk. Despite the difficult
prevailing conditions, however, the strengths
of our financial centre remain intact. Examples
include our proven international advisory expertise,
the country’s stable economy and currency,
legal security and an excellent financial market
infrastructure.
Innovative business models. Banks are
thus obliged to take a critical look at their business
models and adapt these where necessary.
Smaller, more flexible institutions in particular
have an opportunity to assert themselves as innovative
financial services providers. In order to
avoid the looming pressure to consolidate, they
must leave behind the classic banking model by
focusing only on specific areas within the value
chain. For a private bank, this translates into
focusing solely on providing independent investment
advice and asset management.
The problem of achieving critical mass
– i.e. the ability of smaller banks in particular
to survive – can be alleviated and the independence
of core business maintained by
outsourcing those segments that add little
value from the client’s perspective. Typically,
these segments include heavily standardized
securities trading processes, order processing,
money transfers and the operation of IT infrastructures.
At the same time, expertise in specialist
areas such as investments, pension planning
or tax, as well as cross­border business, should
be expanded in a focused manner.
Specifically, the individual conditions prevalent
in the countries in which clients are domiciled
must be considered. Applicable taxation
laws, for example, must be taken into account
when making investment decisions. This is also
because it is very likely that the ratio of declared
assets and the demand for corresponding solutions
will increase significantly. For advisory services
it is essential not only to increase in­house
expertise, but also to tap external specialist networks
and make further use of IT systems.
Change as an opportunity. For private
banks that recognised these trends early on and
judged them astutely, the new reality in private
banking presents an attractive opportunity.
Collaboration with specialised partners allows
them to focus firmly on their core competencies
in investment advice and asset management.
Commitment to the traditional values of Swiss
private banking, an investment philosophy that
focuses on safety first and the absence of inhouse
products are all further powerful tools to
help these banks consistently satisfy the needs of
their clients.