For decades, banking institutions have been the bedrock of financial security. Their legacy, regulatory oversight, and systemic role made them the default choice for wealth management. Banks offer stability, vast financial expertise, and extensive networks that facilitate complex financial transactions. Regulatory frameworks ensure customer protection, deposit insurance, and structured risk mitigation. 

Despite these advantages, however, trust in traditional banking is eroding. The 2008 financial crash wiped out US$19 trillion in household wealth (IMF, 2009), and the rapid downfall of Credit Suisse in 2023 raised pressing concerns. A report from MIT Sloan (2024) pinpoints excessive risk-taking, lack of transparency, and cybersecurity weaknesses as recurring issues in banking failures.

At the same time, wealth owners are changing their priorities. A 2023 Deloitte survey found that 78% of ultra-high-net-worth individuals (UHNWIs) now value transparency and digital security more than brand legacy when choosing a financial institution. This shift is opening doors for fintech firms that prioritise security, control, and real-time financial visibility.

Designed for security from the ground up

The general operating model of fintechs is quite new in comparison to that of traditional banks, many of which rely on hard-to-change IT infrastructure introduced decades ago. 

Thanks to their relative agility, Fintechs can “leapfrog” traditional banks and start and make cutting-edge cybersecurity practices – such as encryption and multi-factor authentication – a foundational component of their operations.

A report from DataGuard (2023) found that fintech firms meeting ISO 27001 security standards had a 35% lower data breach rate than traditional banks. ISO 27001 is a globally recognised standard for managing information security, ensuring companies follow strict protocols to protect data from cyber threats.

Altoo, a Swiss wealth management fintech, is a prime example of this security-first approach. Catering to UHNWIs and their trusted advisers, the company uses end-to-end encryption, a zero-trust security model, and user-controlled data storage to ensure clients have full control over their financial information. 

The end of opaque banking

Beyond security, fintech is reshaping wealth management through transparency. Traditional banking institutions have long profited from complex fee structures and restrictive financial products that limit client control. A 2023 European Banking Authority (EBA) report found that 62% of retail clients and 48% of wealth management clients did not fully understand their banking fees.

The trend of open finance is accelerating to meet wealth owners’ demands for greater financial transparency. A 2023 MIT Technology Review article highlighted how open finance is dismantling barriers by allowing users to consolidate financial data from multiple institutions and service providers, a shift that traditional banks have historically resisted. 

Fintechs are at the forefront of this shift. By integrating data from multiple financial service providers into unified platforms, these innovative companies foster a more competitive and client-centric financial ecosystem. 

For instance, Altoo – a member of the OpenWealth Association in Switzerland – uses application programming interfaces (APIs) to aggregate data from clients’ institutions and provide real-time visibility into all financial holdings such as private equity, real estate, or digital assets on a single platform. This comprehensive oversight minimises reliance on intermediaries for critical information and empowers investors to make accurate decisions.

How to identify a trustworthy Fintech

With fintech’s rapid growth, choosing the right platform is crucial. Wealthy individuals are rethinking security strategies and should evaluate fintech firms based on four critical factors:

• Regulatory compliance: ensure the platform adheres to strict financial regulations, such as Switzerland’s FINMA guidelines or the EU’s Revised Payment Services Directive (PSD2) framework.
• Security infrastructure: look for firms that implement end-to-end encryption, multi-factor authentication, and zero-trust security models.
• Transparency and control: a reliable fintech will offer clear, real-time visibility into fees, investments, and portfolio performance without hidden charges.
• Proven track record: established fintechs with a history of compliance and strong cybersecurity audits are safer bets than new, untested startups without any reputable track record with clients.

Why Fintech security matters for UHNWIs

Standard risk mitigation strategies universally call for diversified portfolios. Yet, even the most carefully planned asset allocation plans can be vulnerable to external threats:

• Physical risk: if a UHNWI holds real estate, art collections, or financial data in a single location with sub-optimal safeguards in place, a natural disaster such as the Los Angeles wildfires could wipe out these assets in an instant. Geographic diversification – which should include storing data in a place specially selected for physical safety – is essential.

• Cyber risk: many wealthy individuals underestimate digital threats. In today’s financial landscape, cybercriminals do not just target institutions; they also target individuals. A single phishing attack or data leak could compromise an entire portfolio.

• Decision-making disruptions: wealth management relies on the owner’s ability to make strategic decisions. If an unforeseen event prevents this, a lack of digital contingency planning could destabilise the portfolio.

A secure digital platform like Altoo’s addresses these concerns by providing encrypted, real-time access to wealth data, ensuring financial continuity even in unexpected scenarios. For example, a family office working with Altoo will be positioned to securely access and adjust investment positions remotely to prevent significant losses if a health emergency impacts a key-decision maker.

A new era of compliance

Critics argue that fintechs have less regulatory oversight than do traditional banks. That perception is quickly changing. In Europe and North America, regulatory bodies are tightening fintech compliance standards to match or exceed those of banks.

Switzerland’s FINMA regulations and the EU’s PSD2 framework have set clear security and compliance mandates. According to a 2024 report in Handelszeitung, Swiss fintechs now operate under some of the world’s most stringent financial regulations. A 2024 Kreditwesen study found that 75% of Swiss fintech firms undergoing regulatory audits demonstrated stronger risk management than many legacy banks.

Swiss-based Altoo aligns with Switzerland’s wealth management regulations, ensuring banking-level security and compliance while prioritising user-controlled data privacy.

Fintechs as the new safe haven?

The competition for financial trust is shifting, and fintechs are emerging as serious contenders to traditional banks. Their commitment to security, transparency, and regulatory adherence positions them as viable alternatives for wealth management.

According to a 2023 Boston Consulting Group report, fintechs could manage up to 25% of global wealth assets by 2030, compared to just 5% in 2020. If they continue prioritising security and compliance, fintech firms like Altoo may redefine wealth management, challenging banks as the new custodians of financial trust.

For wealthy individuals, the question is no longer whether fintech is a viable alternative but whether their current financial institutions are keeping pace. In a time where financial security is digital, the safest hands may no longer belong to banks but to fintechs that are built for the future.

Explore how the Altoo Wealth Platform redefines financial security here.

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