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«That was when the biannual wine-and-dine ritual with foreign customers was still fun»

This development didn’t come by accident, because the typical client has changed radically over the past thirty years. Swiss banking in the past lived well with its tax-dodging and therefore undemanding clientele from Europe and customers from big overseas markets in Latin America and the U.S. – the classic offshore banking as it is known in the business jargon. Today it is more the Asian, Middle East, or Russian billionaires, who – in their own language – want to be advised according to the latest banking standards. Which is something that a Swiss bank can come up with, not because they are Swiss, but if they measure up to their American, French or British brethren – and only then.

The increasing importance of know-how is emblematic of the end of the high-margin tax arbitration business performed almost excessively by the Swiss banking industry in years past. Regulation introduced after the financial crisis – the keyword here being automatic exchange of information – has put paid to the whole sorry business for good.

Add to that an increasingly demanding situation at the stock exchanges of this world and monetary policy interventions that rendered obsolete market mechanisms on a permanent basis. The times are gone when interest rates yielded a return, the Swiss franc was rock solid and stock prices knew but one direction – upwards. That was when the biannual wine-and-dine ritual with foreign customers was still fun.

«Forget about that!»

No more – and that’s also to do with the fact that the customers of tomorrow don’t actually want this anymore. Today’s economy harbors so many opportunities – entrepreneurship, technology and globalization – for the young to earn a lot of money, and they are unimpressed by an offer to dine with chatty private bankers or even going to the opera with them. Tech-savvy millennials are those who will deal the deathblow to Swiss banking as we know it.

And this is not due to them wanting to do business digitally only. Forget about that! They will still demand advice to manage their money affairs properly. But they will get the advice wherever they like and wherever they will find the best private bankers. Both can have something to do with Switzerland, but doesn’t have to – in investment banking this has already been the case for a long time.

«Sex appeal of Google bank is much more inspiring than the wood-paneled offices of Swiss private banks»

And yes of course, millennials will do all their financial transactions for which they don’t need expert advice outside of the traditional banking system – first, because it is much cheaper to do so and second because the sex appeal of Google banking is much more inspiring than the wood-paneled offices of Swiss private banks. In other words: the client of tomorrow has nothing to do with Swiss banking as such – but expects powerful companies that are able to provide the best and obviously most secure financial services anywhere in the world for any specific purpose.

Swiss banking likes to compare itself with the great Swiss watch-making tradition and basks in its glorious tradition. But the comparison doesn’t add up: Swiss watches cannot be copied – Swiss banking can. The watchmakers’ heritage in La Chaux-de-Fonds, Schaffhausen or Biel will remain the crucial element of their success a hundred years from now. For Swiss banking, this won’t be true in just a few years' time.

Claude Baumann is the founder and CEO of finews.ch and finews.asia, which is based in Singapore. Previously, he wrote for «Weltwoche» and «Finanz und Wirtschaft» in Switzerland. He also co-founded the publisher Nagel & Kimche and launched business travel magazine «Arrivals». He is the author of several German-language books on the banking industry.

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