Swissquote, Switzerland's first pure online bank, received a capital markets license in Singapore in August. The bank's Singapore CEO and executive director Damian Hitchen sat down with finews.asia to tell us about its plans going forward.
Online bank Swissquote began life in 1996 as a financial platform and in 2000 was floated on the SIX Swiss Exchange and received a banking license in Switzerland that year. A number of acquisitions since 2010 has allowed the bank to consolidate its position as a leader in online trading.
On the back of its most successful year as an online bank in 2018, Swissquote announced plans to expand its business to Asia. In August 2019, it received a license from the Monetary Authority of Singapore (MAS) to trade with capital market products and offer custodial services in the city-state.
Damian Hitchen, Swissquote is a fully regulated bank in Switzerland and has been listed on the Swiss stock market since 2000, yet its viewed slightly differently from the typical Swiss bank. Why is this so?
We set ourselves apart because we’re very much a digital bank. We’ve been so for the last 20 years. All of our clients globally, which number over 300,000, communicate online via our various platforms. We don’t have any branches or tellers but provide a range of platforms that serve both B2C and B2B clients.
«We operate in an automated way and are driven by a very technology-oriented DNA»
We are a fully-licensed bank, with all the regulations and reporting that go alongside that, but we operate in an automated way and are driven by a very technology-oriented DNA. The company itself has just short of 700 employees, and almost half are employed in the technology side of the bank. Swissquote itself owns and develops all of its own technology, and over the past decade, we’ve invested heavily in improving our B2B/institutional services.
What are the key differentiators of your platform?
We give direct market access to our partners via our platforms, which collapses and speeds up the whole process. We are an execution-only provider, so we do not give financial advice. Second, we don’t manufacture our own product, which means that there’s no conflict of interest in what we do and what our partners do, as they’re the guys that give their clients advice.
What prompted the bank's decision to set up in Singapore?
Clearly, Asia Pacific is the largest private net worth market in the world. There’s a lot of emerging and existing wealth here. Swissquote has historically been a Europe-focused company, but the next step of our growth story is in Asia and to deliver our services to the Asian marketplace. We have good global coverage in terms of markets and asset classes so we’re looking to widen the investment universe and offering of our clients.
«Swissquote has historically been a Europe-focused company, but the next step of our growth story is in Asia»
In 2018, we put a paper to the board about the opportunity to move to the Asia Pacific region, and Singapore was our chosen jurisdiction. Everything happened within 10 months, but we’re not reinventing the wheel or changing anything. We’re coming to Singapore to be our Asia Pacific base and regional booking center, and to offer and deploy the services we already offer in other jurisdictions.
What are you focusing on to cater to the region’s high net worth clients?
I think what the emerging wealth in Asia is demanding is better user experience and access, particularly in the millennial space. They’re plugged through their smartphones and want instantaneous access, good information and useability. We are well-placed to cater to this demand as we’ve built our services and platforms in a digital way, which means you can access more than 2.5 million products from your smartphone, as well as access your portfolio 24/7 online.
In particular, for Singapore, the focus here is very much on the institutional/B2B segment. We’re here as a global custody and brokerage execution platform. This means other financial services companies that are providing advice for their end clients can use our platform to hold their assets and transact in various asset classes across the world via our digital platforms.
What challenges or opportunities do you see in digital banking?
Demand from the marketplace is forcing change from the incumbents. We’re getting non-bank participants coming in, and the advantage they have is they’re already built and incredible front-end user experience on their platforms and have a large user base with brand loyalty. But what they need to do is plug into a banking infrastructure, and that’s not that easy.
The challenge of digital banking is not only building a nice and elegant front-end user experience but also plugging into financial architecture. What you’re seeing in Hong Kong, and in the MAS’ guidelines, is that you can be a non-bank player, but you need banking architecture, intelligence and knowledge to get that license.
«The challenge of digital banking is not only building a nice and elegant front-end user experience»
Form a consumer perspective, you’ll see better services, delivered better and faster, all at a lower cost. At the same time, I think artificial intelligence will continue to shape how financial services players market to their clients. It will also help in cutting out some of the work that historically has been manual, and this will certainly have an impact on jobs in the industry, but will also make things more efficient from a processing point of view. Again, that’s already built into our DNA and how we look at things. So for the consumers, there will be more choice, better and faster delivery, all at a lower cost.
Will there still be a place for face-to-face interaction?
The industry needs to be able to adapt itself to this new environment. But there’ll always be demand for face-to-face advice. Once you reach a certain level of wealth, you’ll want to speak to someone, but I think this will be supported by a more automated and digital communication channel.
How do you see Swissquote’s business growing in Asia Pacific?
We already had some Asian clients in Hong Kong and Singapore, but since moving here, we’ve been focused on raising awareness of our platform and services. That’s been really positive so far.
«We’ve been focused on raising awareness of our platform and services. That’s been really positive so far»
Globally, Swissquote is at $31 billion in assets under custody, and in the first half of this year, we’ve increased it by $3 billion, $1 billion of which was from the region, so we see Asia Pacific as being a large additional growth story for us.
Naturally, the clients for us in the immediate future is the large community of wealth managers here in Singapore and Hong Kong, but we have plans for and spend time speaking to people in all the other markets in the Asia-Pacific region.
Damian Hitchen joined Swissquote in January 2014 to drive the firm's expansion strategy from being Switzerland’s largest online banking and trading platform into the Middle East and Asia regions. From 2014 to 2019 he built a successful B2C-B2B office from DIFC, Dubai with a major focus on the development and upgrade of the bank's existing institutional platform services.
In July 2019, he relocated from Dubai to lead Swissquote’s new office in Singapore, which will act as the regional booking centre for its business development in the Asia-Pacific region, with a focus on professional, industry and institutional clients such as external asset-managers, insurance firms, securities brokerages, family offices and local-regional banks/private banks. Prior to joining Swissquote, he worked in a number of senior roles for HSBC in the Middle East for almost a decade.
