Zurich, July 7, 2008 - In a year marked by a global financial crisis, Swiss banks have defined above average growth targets for 2008. As our survey of 40 top managers in the finance branch shows, Swiss banks want to achieve this predominantly through organic growth, and not through takeovers. There will be a strong focus on the personal relationships of the account managers, who can use their advisory skills to offer the customer a full pallet of services, and less of a focus on individual products.
On the one hand Switzerland has a unique starting position against the international competition in the finance sector. As worldwide market leaders in cross-border asset management business, Swiss banks are in pole position to benefit from growth in the future, and to defend their leading role. On the other hand, in the Swiss retail banking sector, which is limited by geographical borders, aggressive competition is the order of the day.
Between January and April 2008 IBM Global Business Services interviewed 40 top managers from leading Swiss retail universal and private banks. The discussions centred around this key question: How do Swiss banks rate their opportunity for growth?
The survey is the first major study published since the start of the current financial market crisis. A quick summary shows the most important conclusions below.
High growth targets defined for 2008
Despite the global financial crisis, Swiss banks have defined growth targets for 2008 above the expected market growth. 70% of the private banks interviewed plan to increase their client assets by more than 5%. Of the universal banks, 76% are targeting a growth in their market share of over 5%. In particular the small and medium sized banks believe that they can profit from the current uncertainty in the global finance markets. Client appreciation of the closeness and security found in this banking segment is once again on the rise.
“Our survey highlights a clear paradox in the Swiss Banking Market: While there is a strong focus on gaining market share at the expense of the competition – most banks are ill prepared to identify or prevent the outflow of customer assets.”
explains Jan Seffinga, Partner at Global Business Services and co-author of the survey.
Organic growth instead of takeovers
The majority of banks interviewed wish to achieve these ambitious targets by organic growth. The takeover of other banks is only specified as a growth strategy by a minority. Universal banks see geographic expansion as an option for extending into new markets. Cantonal banks are increasingly considering opening branches in other cantons, or even in neighbouring countries.
Personal relationships as the critical distinguishing factor
Both the private and the universal banks name the personal relationship with the client and the quality of the advisory services as their central distinguishing characteristics today. At the same time, these factors are named as the greatest challenges for future growth. The banks talk about a real ‚war of talents’. Most notably, customer advisors who manage an existing portfolio of high-value customers are currently being courted intensively in the international finance sectors.
“The banks have recognized the importance of the employee in the fight for market share. They are confronted with the challenge of continuously educating and training their employees in a hard fought over job market, so that they can provide clients with a high quality and holistic service”, says Roger Altorfer, Partner at Global Business Services and co-author of the study.
The business model is a success factor
The majority of banks today concentrate on their traditional strengths, which emanate from their business model. Regional banks cite their proximity to the client; the cantonal banks the security of the state guarantee; private banks their discretion and conservative approach; and the large banks their international spread, as differentiation factors that set them apart from the competition. Various universal banks have already initiated the successful transformation to a consequent customer focused organisation. Some private banks have already made the move towards geographical diversification, and are today less dependent on the Swiss home market.
Private banks and universal banks are progressively narrowing the gap
The majority of the traditional retail banks in Switzerland today describe themselves as universal banks. Almost all of them offer, in addition to the classical retail items, products which even a couple of years ago were the reserve of private banks. Equally today, classical private banks also offer mortgages and credit cards. With these services, both increasingly address the medium wealthy client segment.
Complex products alone are not enough
Only a few banks indicated that they can set themselves apart from the competition through their products. Today, holistic solutions for customers are increasingly being sought. For Example: Universal banks are trying to combine insurance products with classical bank products. Here, those banks with the relevant skills available within the wider company can benefit. Other banks have entered co-operation agreements with partners in order to obtain access to these products.
The study is available from the IBM Switzerland media office on request.