Wealth management in Switzerland – Edition 2
Creators: name: Künzle, Christoph
name: Hefti, Jonas
Publisher: name: ZHAW Zürcher Hochschule für Angewandte Wissenschaften
Year: 2024
Subjects: Wealth management
Benchmarking
KPI
Industry study
Swiss banking
Financial service
332.1: Banken

description: In the heart of Europe, Switzerland remains the global center of excellence for wealth management, renowned for its expertise, service quality, stability, and confidentiality. The Swiss wealth management industry, with its rich heritage, continues to play a crucial role in global finance and may be characterized as a kaleidoscope of institutions offering a broad range of services tailored to the sophisticated needs of wealthy clients. These institutions range from Large Banks to Private Banks and Cantonal Banks, each uniquely contributing to the overall nature of the industry.
With this study, we aim to contribute to the industry's continuous success and increasing transparency. Based on publicly available data, this study may serve as a fact base for clients and prospects, senior management, professionals, service providers, policymakers, the wider public, research, and academia. The study's focus on licensed Swiss banks that generate a significant portion of their revenues from wealth management activities provides a clear lens through which to examine the industry's current performance and – hopefully – its outlook. The ZHAW WM Performance Score, a cornerstone of the study, offers a transparent and intuitive assessment of banks' performance across four key categories: Profitability, Efficiency, Capital Adequacy, and Growth. This innovative benchmarking tool provides a factual perspective on the competitive landscape and enables stakeholders to discern the frontrunners and detect areas needing improvement.
Among the various bank types, Private Banks, especially smaller ones with AUM below CHF 20 billion, have emerged as the top performers in the study. These banks excel in leveraging their niche focus and operational agility to deliver superior results, achieving particularly high marks in the Profitability and Efficiency categories. Banks like CBH, Von Graffenried, and Goldman Sachs have distinguished themselves, showcasing the effectiveness of their strategies and operational excellence. The study also highlights the concentration of Swiss wealth management banks around the country's financial hubs, with Zurich and Geneva being prominent centers. This geographical distribution not only reflects the historical development of the industry but underscores the strategic importance of these cities in global finance. An analysis of the industry's KPIs reveals interesting insights. For instance, the decline in AUM among Large Banks (influenced by the downfall of Credit Suisse), contrasted with the more stable or growing AUM among smaller Private Banks, points to both challenges and opportunities within the industry. With regard to Boards of Directors, this study identifies a negative correlation between the increase in female Board members and the ZHAW WM Performance Score, contrasting with our previous findings. However, the absence of a multi-period dataset restricts the establishment of causality, though the specific case of Credit Suisse, with a high proportion of female Board members and a low ZHAW WM Performance Score, may highlight an avenue for further research.
Looking ahead, the Swiss wealth management industry faces a rapidly evolving landscape. Technological advancements, shifting client expectations, and regulatory changes are reshaping the sector. The study's findings underscore the need for Swiss wealth management banks to adapt to these changes proactively, embracing innovation and enhancing transparency to further strengthen their competitive advantage. Digital transformation, in particular, represents a double-edged sword for many Swiss wealth management banks. While it offers attractive opportunities to enhance client engagement, develop new service offerings, and streamline operations, it also poses challenges in terms of (costly) implementation and alignment with traditional and tested – sometimes centuries old – corporate values. The ability of Swiss wealth management banks to navigate this transition will be a key determinant of their future success.
In conclusion, the Swiss wealth management industry stands at a pivotal juncture, marked by tradition and trans-formation. As it grapples with external competition and internal dynamics, the insights from this study may serve as a valuable guide for navigating the path ahead. The industry's resilience, coupled with its commitment to Swiss quality and innovation, will continue to uphold its leading position in global finance.
If this study proves beneficial to a diverse array of readers, particularly clients and prospects, in their endeavor to identify or evaluate an appropriate Swiss bank, it will have fulfilled an ancillary goal. We would be delighted to receive feedback on any "real life" success stories resulting from the insights provided herein.