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Several digital wealth managers have launched new offerings recently, despite the coronacrisis. They may be about to write private-banking history – if they learn from the failures of their predecessors.

François Reyl, the co-owner and CEO of the namesake banking boutique in Geneva, is an investment banker by training. And as an investment banker he senses good opportunities – a skill he has put to perfect use recently: right in the midst of the digital surge that was prompted by the pandemic, Reyl launched a new bank – Alpian.

The announcement spoke of a digital bank that would make available private banking services to the affluent clientele.

Alpian isn't alone in this renewed push toward digital wealth management. Postfinance, the finance division of state-owned Swiss Post, announced the start to a new investment solution that it will offer online only; robo advisers such as Selma also have said that they have seen a massive influx of assets, and similarly the smartphone banks such as N26 and Revolut. More is likely to come in the summer when Raiffeisen will go live with its adaptation of the Vontobel application Volt.

«Competition Will Increase»

Meanwhile, giant Credit Suisse is busy developing a digital direct bank. Insiders are sure that it will contain a killer app for the wealth management business. Ingo Rauser and Nils Reimelt of Capco consultants, who are involved in several digital projects in Swiss banking, expect more to come from this industry: «Competition in the field of digital wealth management solutions will probably increase substantially.»

To be sure, optimism isn't a sentiment that will be shared by all in the digital private banking business: Falcon Private Bank only just announced that it will go into liquidation. The Zurich-based company was a pioneer in this segment of the banking industry, having decided in 2017 to make digital private banking the focus of its business strategy. The company since grabbed headlines with the introduction of crypto-banking tools. But in the end, the money it had invested in technological infrastructure went to waste and the falcon won't rise again.

Past Failures

The first Swiss digital private bank went bust in 2016. PHZ Privatbank had launched its new service under the name of Bank Leodan – and was forced to throw in the towel before the business had the chance to prove its worth. Flynt, Jan Schoch's digital wealth management project, is another to have folded early. It handed back its banking license in 2017.

There is no dearth of failed initiatives of Swiss financial market players. UBS, the biggest of them all, canceled the online wealth management pilot named Smartwealth in the U.K. in 2018. In 2019, three Swiss-based robo advisers also went out of business – E-Invest by Elvia insurance, Scalable Capital and Investomat, the robot launched by Glarner Kantonalbank.

So what can be learned from the failings of projects past?

There Is No Digital Escape