The Swiss banking sector is expected to shrink by 2010, forcing job losses and salary cuts, according to recent research.
A study by Accenture and the Swiss Institute of Banking and Finance at the University of St Gallen, asked 180 senior managers of Swiss banks what direction banking will take over the next five years.
Rising pressure on costs created by the downturn in the past three years, together with EU regulatory changes, have had an impact on Swiss banking. Switzerland is not an EU member but there is a trend for Swiss laws to harmonize with Europe. Further harmonization is expected in accounting rules, use of insider knowledge and prevention of money laundering, suggesting Switzerland will lose its special position in Europe.
A concern is that tighter regulations and increased supervision will have a negative influence, particularly in private banking, where 77% believe this will prejudice business development. Regulatory changes will enhance competitiveness but the banks will face rising costs, putting a serious financial burden on smaller private banks.
Consolidation will continue, with 83% of respondents expecting the number of banks to fall between now and 2010 (see figure). The Swiss National Bank says there were 840 banks in Switzerland in 2002, a figure expected to drop to 730 in 2010. The sector employs 160,000 people but 20,000 jobs may go in the next five years. Linked to this, further outsourcing of products is expected, which will mean growing specialization of the banks in such areas as transaction processing and information technology.
Although Switzerland has good anti-money-laundering procedures and is committed to fighting the financing of terrorism, it is still under pressure to lift banking secrecy.
The tightening of rules on economic crime, money laundering and insider trading is expected to enhance the attractiveness of the Swiss financial centre.
?Switzerland will never give up its banking secrecy law but it will have less of a role,? says Beat Monnerat, financial services partner at Accenture. ?The focus will no longer be on secrecy but the role of the customer.?
Investment will shift from cost-cutting to customer loyalty and customer acquisition: measures to cut operating costs and optimize operating processes will take second place behind customer loyalty programmes.
The survey says Switzerland should hold its position in private banking. Singapore and Hong Kong are competitors but European customers usually place their assets there through Swiss banks.
?Knowledge of client needs and ensuring that product innovation is in line with other global banking sectors is vital for Swiss banks to maintain their competitive position in the world,? adds Accenture?s Monnerat. ?Switzerland has a stable economy and a strong currency and is geographically well positioned to uphold its leading presence in private banking.?
Expected bank numbers
Average trend in next
10 years (%)
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Source: Accenture/
University of St Gallen
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