Swissquote Captures Financial Zeitgeist
No other Swiss financial institute embodies the world of finance's zeitgeist more than online bank Swissquote. Why is this?
Online bank Swissquote has already flagged that it will post record high profits on Friday when it presents its first-half results.
The bank, based in Gland in western Switzerland, and with operations in Hong Kong and Singapore, has also significantly raised its targets for the next few years.
Founded in 2000 (the first trading platform dates back to 1996), the company has already been through some ups and downs such as the bursting of the dot-com bubble at the turn of the millennium or the financial crisis of 2007-08.
Nevertheless, under the leadership of Marc Bürki and Paolo Buzzi, Swissquote has emerged as Switzerland’s undisputed market leader in online trading, constantly offering new products and expanding abroad, particularly in Asia.
Swissquote is one of the rare, owner-managed and at the same time listed success stories in Swiss banking; but what lies behind its success?
Hardly any other Swiss financial institution embodies the financial zeitgeist, which the coronavirus pandemic has brought even more sharply into focus. The company has been digital from the get-go, bases its branding on Swiss quality and reliability, disrupted an entire business sector and has been able to slash online trading fees.
Markets Soar
Its website is user-friendly, offers a variety of tradable financial products and currencies, as well as a robo-advisory service, and included digital assets early on.
Its two co-founders mean the outside world can still associate «a face» with Swissquote. At the same time the bank has been able to use partnerships, in particular with U.S. institution Goldman Sachs, to achieve strategic growth.
The coronavirus crisis has only fuelled this development.
Financial markets reacted with enormous volatility at the start of the pandemic in spring 2020, which in turn led to central banks releasing massive amounts of liquidity. The result was an entirely digitally driven stock market boom. This trend was bolstered by massive speculation in and the media frenzy surrounding bitcoin and its cryptocurrency peers.
Perfect Conditions
These are optimal conditions for a bank like Swissquote. Since the beginning of the year, its share price has risen from 90 Swiss francs ($99.30) to 155 Swiss francs. Back in 2019, it was worth just 40 francs.
CEO Bürki is in the fortunate position of having exceeded forecasts ahead of time, but the whole thing has a speculative air about it.
Ambitious goals are all well and good and mean investors piling into the stock based on herd instinct, but if these goals are not met, any sell-off will be all the more brutal. That makes a stock like Swissquote volatile, which was illustrated this summer when it lost almost a fifth of its value after peaking in June.
Facing the Music?
Since then all the signs for the stock have been pointing in an upward direction. Many investors have already taken positions based on the announcement about Friday’s record figures.
This brings to mind a now legendary quote from former Citigroup CEO Charles «Chuck» Prince: «When the music stops, in terms of liquidity, things will be complicated,» he said, adding: «but as long as the music plays, you have to get up and dance. And we're still dancing.» Shortly afterwards, the 2007 financial crisis hit and Prince was fired.
