How Swiss banks are affected by technological advances
Swiss banks, alongside chocolate and cheese, have become one of the country’s brands. Customers around the world appreciate their reliability and high level of service. However, it is becoming increasingly clear that the industry has not kept pace with rapid progress.
It has taken several centuries to shape Switzerland’s financial sector. During this time, bankers have created a robust system of operations and interconnections. For example, several local laws have governed the industry for over 175 years. Many of these rules are losing their relevance to the modern world, and Switzerland is in no hurry to revise them. As a result, the country is gradually losing its status as a financial centre as other countries develop.
The main competitors in this respect are the countries of Asia and the Middle East. Changes in the structure of the global economy itself are the main drivers of these processes. In addition, these regions are showing excellent growth in wealth. Wealthy people from these countries prefer to keep their capital at home rather than in old Europe.
The geopolitical conflict in Europe has shown the need to revise many rules. This also applies to the regulation of the Swiss banking system, which does not take a tough stance against countries that sanctions have hit.
Progress and its impact on the sector
Technological progress has brought the global economy to a new stage of development. And, as current events show, not all industries were ready. Swiss banks, with their established processes, failed to grasp the scale of the impact of innovation. As a result, many lag far behind their competitors in terms of technological sophistication. To maintain its status as a financial centre, the central bank has had to adopt new approaches at an accelerated pace. Blockchain has become a key one. Thanks to this, Switzerland is still one of the world leaders. However, it is impossible to rest on one’s laurels.
According to some experts, local banks will have to pay attention to the following areas to maintain their position:
– digitalisation;
– expanding digital asset opportunities;
– environmentally responsible investment.
In addition, the Swiss authorities want to oblige representatives of the financial sector to consider climate risks. All of these changes will require banks to make significant investments. At the same time, even large holding companies have felt the negative impact of the global economic slowdown. They have limited resources due to high inflation and rising interest rates.
The banking system has long since ceased to be the leading sector of the Swiss economy. Its role in the country’s economy is relatively modest at around 9%. Therefore, talking about the country as a leading financial centre is probably no longer relevant.
