Banks in Switzerland are at a turning point and must concentrate on more quality and introduce fresh faces if they are to regain their past glory, a new book argues.
The banks will also have to focus on their own business models and target their marketing more efficiently, one of the authors, economics journalist Claude Baumann, tells swissinfo.
Together with banker Werner E. Rutsch, Baumann has outlined the successes of the Swiss banking industry over the past 50 years, putting the finger on where the sector has recently made mistakes and suggesting ways to improve the current situation.
The book entitled Swiss Banking – what next? explains there were a number of elements behind the present global crisis, including the big banks' determination to push growth.
"The banks were very much focused on revenue growth and neglected the customer... The banks also invested a lot of their own money for proprietary trading to improve their profits and revenues," Baumann said.
"I think we have seen that this cannot be the strategy of a bank. There must be other reasons for a business model than just revenue growth."
He believes that Swiss banks could, for example, strive to be cheaper and more efficient than others or they could be a first mover in a specific market like online banking or in banking for wealthy people.
"It's important for any bank to have a clear focus on a specific business model."
The book says that some of the qualities of Swiss banking have suffered over the past decade as a result of globalisation.
Baumann believes Americanisation of the Swiss banking sector has much to answer for.
"Doing business in the United States or Anglo-Saxon countries is quite different from the Swiss way of doing business or banking."
"Business in the US is much more focused on the short-term, it's much more deal-oriented than in Switzerland.
Preserving customers' money
Swiss banking, he says, used to be much more focused on preserving customers' money and not risking it for the sake of making as many deals as possible.
"We should also be aware that Credit Suisse and UBS invested a huge amount of money just to have a stake in investment banking but somehow they never got the benefit out of it."
The book says that leadership qualities have disappeared with the advent of globalisation.
"If we look back in the past we had some very great bankers in Switzerland and they really not only represented the banking industry but also the whole country.
These people also had an important position in society... this has disappeared in the last ten years"
Baumann says fresh blood is needed if the Swiss banking system wants more credibility again.
"Lately this industry has brought to light only negative aspects like high salaries and the arrogance of the bankers; this has to change. These new people have to rediscover the role of the true Swiss banker."
Another issue that should be improved for Swiss banks is the environment in which they operate. The book points out that some businesses, including gold trading and the Eurobond market, have left Switzerland for London or Luxembourg because of taxes and stamp duty.
Baumann says that it's important that this situation should not deteriorate further although there is now "huge pressure" for more controls and regulation.
"We should not have stricter or tougher regulations than other countries because this would give us a disadvantage compared with other countries.
"We should have regulations because it gives more credibility to the whole system but these should always be similar to those abroad."
Not surprisingly, Swiss politicians are seen as having a role to improve framework conditions and support the banking industry both at home and abroad.
"We are not very unified when it comes to defending the financial centre of Switzerland. If I compare it with London, the whole city, the politicians, the bankers, the regulators and all the people involved are really unified. They can exert a lot of pressure."
As Baumann puts it, it is an "open secret" that London quite often tries to compete with Switzerland or attract some assets out of the country.
"In Switzerland, many people still look at the banking industry as something that just exists and that is needed for our wealth and nothing more. In fact it's a very lively industry that has to be fostered and expanded," he said.
As for the old chestnut of banking secrecy, or the term "bank client confidentiality" that the Swiss Bankers Association finds more appropriate, Baumann argues this is the protection of financial privacy and is very relevant for the future of the Swiss banking industry.
He says many people are simply not aware of the very strict legislation in the Swiss financial centre aimed at combating money laundering.
"People don't know. Maybe this has to do with the modesty of the way of thinking of many Swiss. It's somehow strange.
"Much tougher marketing for many of the issues in banking would be of great advantage... to emphasise the Swiss financial centre's strengths," he says.
swissinfo, Robert Brookes in Zurich
Baumann is an economics journalist with the weekly Weltwoche magazine, which has just celebrated its 75th anniversary.
He worked previously for the Finanz und Wirtschaft newspaper and the Swiss news agency SDA.
He has received a number of awards for his writing.
In 2006, his book Ausgewaschen – Die Schweizer Banken am Wendepunkt (Washed out – Swiss banks at a turning point) appeared on the market.
He has just launched a website about the Swiss banking industry called Finews (see link below).
Werner E. Rutsch
Rutsch, managing director of Clariden Leu bank in Zurich, has been in the banking sector for 15 years.
From 2001 to the end of 2006, he was head of the Investment Office of Bank Hofmann.
He previously held positions at Credit Suisse and UBS.
Rutsch has published numerous articles and speeches on economic issues, in particular about bank marketing and communications.