How Swiss private banks can reignite growth

in Financial Services, 02.02.2017

Swiss private banks have been on the defensive for a decade. We think the time has come to go on offense through commercially-driven transformation. By focusing on their strengths, and partnering for their non-core activities, Swiss private banks have a real opportunity to maximize value and grow again.

Can we begin to see a silver lining for Swiss private banks?

We’ve certainly been talking a lot about the difficulties they face. In our last major report, Clarity on Performance of Swiss Private Banks, the prognosis for Swiss private banks was not good. From the financial crisis to the weakening of banking secrecy and the tsunami of new regulations, they have had a difficult decade.

The challenges are still there. But as we point out in a new report, Clarity on Transformation in Private Banking, good news may be on the horizon. Having been on the defensive for so long, we think it is now imperative for Swiss private banks to go on the offensive through commercially-driven transformation to reignite growth.

How to proceed?

Think hard and think growth

Change starts at home. We think the first step on the path of transformation is to take a hard look in the mirror. Banks have to ask themselves some difficult, even existential questions:

  • Can we really keep going the way we are now?
  • Should we perhaps exit the market?
  • Or is there a way we can transform and so grow?

Not everyone will find it makes sense to keep going. For those who do, we have a clear message: Reignite growth by rethinking business and operating models.

Managers looking to kickstart growth through such commercially-driven transformation will need to invest time and energy, as well as make good use of their skills and expertise. As experience in other industries has shown, such transformation can also be emotionally taxing. Managers will need to find ways around their own psychological barriers. Relying on systematization and rational thinking, as well as employing aids like KPMG’s decision-tree tool presented in our new report, can help.

Develop your strengths for the benefit of your clients

There was a time when a Swiss private bank developed, offered and executed all of its services itself. We think those days are over.

In today’s world, banks need to concentrate on those activities that truly bring value to their clients. Only by conducting a thorough analysis and identifying their core USPs will they be able to see clearly where they can really make a difference for clients and differentiate from the competition.

Once they’ve identified their strengths, we think banks should focus squarely on them – building up their capabilities so as to maximize their client value and increase client satisfaction.

What about the banks’ non-core services?

We believe that in the current environment, Swiss private banks have a great opportunity to work with partners for their non-core activities – whether through tactical partnerships (what we call a “THEM” approach), or preferably strategic collaborations (what we call an “US” approach). This combination of reliance on internal USPs and delivering non-core activities through more effective strategic partners will maximize overall value for the client.

The good news is that – thanks to digitalization and the rise of new Fintech players – Swiss private banks have more partnership options than ever before.

Success through an ecosystem of partnerships

The lion’s share of our latest white paper addresses how to go about building such banking ecosystems. There is certainly a lot to think about, and a lot to do. There is also no doubt that partnerships have their risks. These need to be understood and mitigated.

In our opinion, the rewards will be worth it. We are convinced that true ecosystems can generate more value to partners and their clients than they could generate on their own. Because such ecosystems are not easy to copy, those who are able to build successful ones will also, in our opinion, gain an important competitive advantage. For Swiss private banks, this could be the silver lining.

Full publication: Clarity on Transformation in Private Banking

 

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