Banks are starting to see the revenue opportunities that an open ecosystem could create. Slowly they are being persuaded that if they can get access to more customer data then they get to see a bigger picture. This scenario promises a more holistic service that can be better tailored to the whole customer - rather than just the proposition of the customer that the bank already ‘owns’.

But facilitating this is somewhat difficult. Switzerland has not adopted PSD2 and so here the standardization landscape is a trickier one. Although there has been work on adopting common standards around APIs, work has been largely limited to the corporate sector.

This has to change. Tavor explains: “Pressure on revenue will force change. Banks will realize that there is only so much that they can do with cost cutting exercises. Impetus to adopt the technologies that enable a value add will build.”

He gives the example of a wealth customer at a big bank. “The customer might also be a client at two other smaller banks. If the big bank could, however, get the mandate to oversee assets and activities within the other two smaller banks and provide a consolidated view to the client then there is a value add and a revenue creation opportunity.”

Achieving this level of collaboration does, however, require the right technology. Digitization is key as are APIs that can work seamlessly to allow data to flow to where it needs to go.

Tavor thinks that the opportunity is greatest for the incumbents because they already have large customer bases. “What we also know is that it’s very hard to acquire customers and so those that have very large customer bases already are in a strong position to add value to an existing offering and thus create revenue that way – if they are prepared to adopt the right technology,” he says.

He cites the US as a good example of this in action. There, he says, two independent robo advisors have recently closed while Vanguard, a big provider with a large customer base, has launched its own robo. In Switzerland, meanwhile, Scalable Capital has shut down its roboadvisor offering, while Credit Suisse aims to build an entirely new digital bank and migrate its customer base over to it.

Technological enablement is one side to the issue. Customer engagement is the other.

“Customers as well as banks need to see this change in the ecosystem as an opportunity rather than as a threat. In exchange for their information, banks can offer something that gives extra - a consolidated view, risk analytics, other products, investments and related services such as an introduction or matching service to other professionals such as lawyers and accountants,” Tavor says.

Will customers be persuaded though? “Credit Suisse certainly thinks so, hence its investment. However, customers are ultimately in charge of their data and their experience,” says Tavor. “The more forcefully and the faster they complain about outdated analogue services and not being able to access the added value products and services needed, the quicker this will happen.”

For banks meanwhile, he says, the change will happen when the pain point of not being able to cut costs anymore is reached. “The two should hopefully dovetail and result in the emergence of a new ecosystem that will bring with it seismic change” he says.

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This article originally appeared in The Wealth Mosaic's 2020 Swiss Wealth Technology Landscape Report. Click here to access and download this report:
https://docsend.com/view/2b56ksz