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Proposition 1: Margins in retail banking will continue to fall
Against the backdrop of geopolitical tensions, survey participants continue to view Switzerland as stable and believe it will remain attractive in the future. Participants agreed with the thesis of a gradual erosion of margins driven by the interest rate environment (with a temporary improvement in the asset and liability margin), rising customer expectations and fiercer competition, in part due to new technologies and platforms. Despite the growing influence of new providers and other banking industry challenges, the industry remains confident and continues to believe in the value of central features of retail banking, such as closeness to the customer and the quality of advice. However, keeping revenues stable in the core maturity transformation business by expanding volumes may not be a viable model going forward. Moreover, margins could fall further in the strategically important investment business and may not be compensated by additional volumes.
Proposition 2: Innovative technology will increase competition
There were differing views on the impact of innovative technologies on competition, but overall the impact was thought to be overstated. Genuine innovations with material implications for value creation are rare, said participants. Artificial intelligence (AI) and quantum computing could possibly change this – but even they will not do so overnight. Fintech and big tech companies are seen as catalysts for banking innovation and the epitome of convenience, but not as competitors – at least as long as they do not gain control of the customer interface. In the view of survey participants, the tech multinationals do not see entering the Swiss market as worthwhile due to its small size, at least at the moment. The high regulatory hurdles also protect the Swiss market from them.
Proposition 3: Societal and regulatory pressure remains high
Trust is key for banks, and their regional presence is often used as an argument by banks to differentiate themselves, not least when it comes to sustainability. Banks also accept that they have a responsibility to society, but its implementation remains somewhat diffuse. Certain issues such as managers' salaries and fair interest rates are of concern to the public.