Switzerland prides itself on its exceptionalism – not just in its politics but also its wealth management industry. Some of the most renowned private banks and institutional wealth managers have risen to global prominence in our small and mountainous country with a population similar to New York or London. The question for the rest of the world is – can Switzerland’s success be replicated? The short answer is – yes.

Historically, Switzerland’s reputation for safety and stability, combined with generational expertise and a favorable regulatory and tax environment, has established the country as a leading wealth management nation. Yet despite Switzerland’s rich heritage, its differentiators have been eroded and competition has opened on multiple fronts. Until 2014, for example, the Swiss market also offered the exclusive allure of banking secrecy. Discretion still sits at the heart of Swiss banking, but secrecy is no longer a USP. Globally, low-cost investment products and new asset classes are also challenging traditional wealth management models, reshaping client expectations, and intensifying competition.

In the face of radical change, Swiss firms are turning to cutting-edge technology to offer white glove service to discerning clients and enhance operations. Mahogony-paneled rooms and long consultations with wealth managers are disappearing – clients want on-demand and immediate service, and the assurance that their investments are safe in an increasingly uncertain world. The lesson from the Swiss market for the rest of the world is that natural advantage is not enough — technology is now central to success.

Enhancing natural advantage
Legacy technology remains a serious pain point for wealth managers. Over time, many firms have accumulated technological bloat: a patchwork of disparate systems creating operational inefficiencies that are getting harder to ignore. Manual processes, slow service delivery, and rudimentary risk management practices must be urgently addressed – particularly in the wake of recent risk events.

So, how are Switzerland’s storied institutions deploying technology to keep up with the times?

• Leveraging SaaS: Large Swiss banks are tapping Software-as-a-Service (SaaS) solutions to enhance their tech stack and incrementally address legacy technology issues. Through smart strategies, Swiss firms can deliver fast speed to value with the option to scale and extend capabilities to other areas of the business without the risk of diluting or confusing their offering.
• Organizational change: For those looking at return on their tech investment and fearing possible disruption or high cost of ownership, technology is automating key processes, allowing firms to focus on quality of service and delivery. Understanding the pain points of clients and internal teams is allowing private banks and wealth managers to streamline key processes and focus on delivering their expertise to customers.
• Execution and risk: The collapse of Archegos is still fresh in the memories of managers, Swiss and otherwise. Before this, rapid expansion was to the detriment of risk management practices at some Swiss banks – a misstep that still serves as a case study on the importance of effective risk management. Cutting-edge risk management capabilities that give clients the assurance of safety are therefore essential.

Where Swiss firms are enhancing natural advantage, global peers can use technology to do the same: streamlining operations, enhancing service and improving access in an increasingly globalized market.

Opportunity cost
Amid increasing global competition and the availability of more affordable investment options, successful private banks are replacing legacy technology that drags on operational efficiencies, holds back capabilities and heightens the risk of disintermediation by more agile competitors.

Switzerland’s private banks and wealth managers are modernizing despite their historic strategic advantages — a testament to the value of tech. Crucially, they also demonstrate that modernization does not come at expense of the rich heritage they have built up, in some cases over centuries. Instead, it allows managers to rapidly scale and diversify their offering without diluting quality of service.

While several major players have embarked on tackling legacy technology, others remain at the starting line. The longer firms wait to address legacy technology, the greater the opportunity cost.

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