Last month, we published our first WealthTech Landscape Report (WTLR) of the year, Swiss WealthTech Landscape Report 2024. It included a curated collection of articles and insights focused on the technology themes, trends, and challenges impacting wealth management in Switzerland in 2024. 

In this article, we showcase some of the key data points and insights discussed in the report alongside an infographic to keep you up-to-date on the digital transformation of Swiss wealth management.

Report insights at a glance
Much like other wealth management centres, Switzerland has not escaped the implications of geopolitical instability, poorly performing markets, and high interest rate environment, and investor caution.

Indeed, at the end of 2022, assets under management had retrenched to 2020 levels, driven by poorly-performing markets and a reduction in the amount of new money being invested, according to KPMG. The same report says that a higher interest-rate environment has since provided some upswing in performance and profitability.

But this upswing is not universal; smaller banks are currently benefiting more than larger ones, says PwC. Although small and medium private banks with less than CHF5 billion and between CHF5 billion and CHF50 billion saw assets under management (AUM) decline by 7.6%, they also benefited from net new inflows of 4.4% and 3.6%, respectively.

Investors were potentially put off by the forced merger of Credit Suisse with UBS and instead favoured smaller and less ‘corporate’ entities. Smaller entities are also nimbler and have thus been able to pivot to get closer to an optimal cost-to-income ratio. Large banks, meanwhile, still hold sway with some 83% of the industry's gross profit and 77% of its AUM, according to KPMG.

External asset managers
External asset managers (EAMs) currently account for some 20% of total Swiss AUM. But their situation, too, looks to be unsteady. according to Leader's League.

Indeed, The Financial Institutions Act (FinIA) and the Financial Services Act (FinSA) took full effect in 2022. EAMs and trustees now need a license from the Swiss Financial Market Supervisory Authority (FINMA), and they are subject to prudential supervision.

The new regulations have impacted the sector, and many, especially smaller and mid-sized ones, have had to make significant adjustments to their resourcing model to remain compliant. Many small EAM owners are nearing retirement, and this, combined with resourcing issues, has driven consolidation in the market.

Service delivery
But it is not just size and growth that matter; service delivery is increasingly important too, with most banks now firmly making efforts to offer a digitised service likely to appeal to the younger investors now entering the wealth management arena. Indeed, the mass affluent, with bankable assets between CHF200,000 and CHF2 million, constitute around a quarter of Switzerland’s population. They own nearly 40% of Switzerland’s total of approximately CHF2 trillion of onshore financial assets, according to Deloitte.

Such investors are far more likely to be digital-first, and thus, it is no surprise that some 66% expect a state-of-the-art online banking experience, according to Deloitte.

It is no surprise that digital banking offerings are springing up with a predicted market for digital banks in Switzerland set to grow by 13.92% between 2023 and 2028, resulting in a market volume of US$15 billion in 2028, according to Statista.

Two notable examples in the recent past are radicant and Alpian – both of which pride themselves on reaching their target audience through digital means. The largest digital player, True Wealth, reached CHF1 billion in AUM in 2023, ten years after its launch.

More generally, KPMG asserts that banks seeking success will need to contend with more than just performance-related decline in AUM. Other issues requiring attention are a shortage of talent, a lack of sizeable M&A opportunities as a means to grow, and the ability to grow organically.

The ability to deal with the cost and complexity of cross-border business also remains crucial. BCG says that Switzerland not only has a high proportion of non-Swiss residents (25%), but it also has a high percentage of assets/investments from overseas investors, standing at 47.4% of total AUM in 2021. Not being able to cater to this client base is restrictive, to say the least.

Thus, the conundrum for Swiss wealth managers is to meet the needs of local as well as cross-border investors, and to take into consideration the changing service and delivery requirements of a younger investor base - all while striving for growth - be that via M&A or organic.

The future is very much going to be built on technology solutions that enable all of this and provide the support to a value-added and efficient proposition capable of appealing to all the composites of its client base. This could be direct to the client, or it could be via the EAM structure. What is certain is that failing to prepare is preparing to fail.

You can read the full Swiss WealthTech Landscape Report 2024 here.

Data infographic
For a quick on-the-go view of these data points/insights, please see below for an infographic from the Swiss WealthTech Landscape Report 2024 ‘Data & Insights’ section.

About the WealthTech Landscape Report series (WTLRs)
Our goal with our WealthTech Landscape Reports is to collate relevant, insightful content and comments from both wealth managers and vendors operating in a specific region.

Our benchmark reports cover all key wealth management geographies. Each WTLR is founded on a curated directory of hundreds of relevant technology and related solution providers to the business needs of the wealth management community in focus.

This Directory is reviewed and refreshed for every report. The directory is supported by a rich variety of thought leadership articles and interviews with industry participants from both the buy and sell sides, plus a section of Solution Showcases. Within each report, we look at how global trends affect that country, region, or sector.

We also look at country, regional, and sectoral trends. This compelling mix of thought leadership, Solution Showcases, and Directory, come together to form the basis of each WTLR and a report that aims to provide each community within the series with a modern and insightful knowledge resource for its technology and related business needs.