Page 2 of 2

Digitization experts Rauser and Reimelt agree that lessons can be drawn: «There are numerous pitfalls to evade when you launch a digital private bank offering,» they said. Most importantly: a digital offering can't solve underlying problems of a bank. This is probably what was the problem in the cases of Falcon and Leodan; both banks had a challenging situation to master and struggled to overcome legacies.

Also, it helps to have a solid foundation and a strong brand to rely upon for a push to acquire new clients. «This is a point in favor of established, large firms.» On the other hand, these firms also face potential troubles emanating from grown structures and internal opposition to digital projects – which may have contributed to the downfall of Smartwealth at UBS.

The business nevertheless has huge potential. Private banks are boosting their search for new areas of revenue generation, the Capco experts say. «There are two areas of interest: you give new services to existing clients or you open up to new client segments – the digital channel is more than ever readily available for both channels.»

Mercedes Has Shown How It Works

Reaching out to a new clientele seems particularly attractive in the affluent segment and the generation of heirs. Reyl sees a potential of 2.6 million people in Switzerland, with a combined wealth of 660 billion Swiss francs. This is almost two-thirds of all assets aggregated in the occupational pension funds.

The affluent market in Europe is growing by as much as 5 percent a year independent of how well the stock market is doing. Taking a foothold in this market is all the more attractive for private banks, which can launch with simple and relatively cost-efficient solutions to build a new customer base. «Premium carmakers such as Mercedes has shown how, aiming at a younger clientele with its A-Class hatchbacks,» said Rauser and Reimelt.

Plan B

The companies shouldn't, however, underestimate the need of affluent clients for more than just digital services. They will also want the help of real client advisers for major transactions. The coronacrisis hasn't just led to a surge in digital solutions but also made people reflect on traditional, trusted services and values. Swiss private banking could profit from such a trend.

The success of the neobanks may also act as an inspiration for the development of a digital solution. «Unicorns» such as N26 and Revolut are valued at a premium – hence a digital solution can be built with a view on a later divestment, said Rauser and Riemelt.

The financiers of Alpian – the company collected some 12.2 million francs from investors – would presumably be okay with such an outcome too.