Swiss banks are turning their attention to providing more digital services for customers, but their progress has been slow. This may have something to do with new technology upstarts struggling to gain significant traction thus far in Switzerland, according to a new study.
Once financial technology (fintech) innovation properly takes off in the over-crowded banking sector, the competition may well cause some traditional players to disappear, says the Swiss National Bankexternal link (SNB) in its “Survey on Digitalisation and Fintech at Swiss Banksexternal link”.
Fintech is a growing theme in Switzerland, but its current importance pales in comparison to countries like Britain, Germany, China and the United States. Digital banks, such as Revolut and N26, have only chipped away at Swiss borders, making modest inroads, while payment apps and devices are scarcely used, according to the survey.
“Although there have been significant developments in certain segments, the entry of such players into the market has thus far been relatively modest,” states the SNB survey.
Most Swiss banks (47%) forecast increased competition from fintechs and large technology companies, like Google, particularly in the area of payments. But they have been slow to react. “Overall, the banks have not yet achieved their desired level of digitalisation. In many process steps, digital maturity is well below target,” the SNB says.
The forthcoming competitive challenge is viewed as evolutionary rather than revolutionary, with few banks predicting a complete disruption of the Swiss financial sector. As such, they are concentrating their efforts on digitalising existing business operations, such as payments and mortgage lending, rather than adding new services.
They see more mileage in adopting biometrics, robotics and big data technology than such trendy buzzwords as blockchain or artificial intelligence. Larger banks are building their own in-house models while smaller players are opting for collaborations with fintech service providers.
Perhaps another reason for the slow progress is the conservative habits of consumers. “On average, customers use individual digital offerings in around 25% of mortgage applications at a bank, and digitalised support is used in 8% of advisory sessions. Banks say that the volumes processed via their own crowdlending platforms are low,” says the survey.
Banks complain that the lack of legal clarity for digital identities and the need for physical signatures on many contracts is also holding back progress.
The SNB surveyed 34 banks that hold 80% of all assets in Switzerland that were relevant to the survey.