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As Singapore claims to be the «better Switzerland» for banking, finews.asia editor-in-chief Claude Baumann looks at how Swiss banks mistakenly assumed they are irreplaceable, in an essay for finews.first.

finews.first is a forum for renowned authors specialized on economic and financial topics. The texts are published in both German and English. The publishers of finews.com are responsible for the selection. 

Swiss banks love being compared to Swiss watchmakers. The problem is that this doesn't do justice to the watchmakers, which aren't as interchangeable as the banks. Doomsday scenarios seem to be en vogue, with a recent report in the «Financial Times» as well as the book «The End of Banking» by Jonathan McMillan receiving an enormous amount of attention.

Now it's my turn to join the chorus and to quite simply predict the end of Swiss banking. Not because I particularly want to spread doom and gloom, but merely because there now are so many facts clearly indicating that Swiss banking as we’ve witnessed in full bloom over the past thirty years soon won’t exist anymore. The question is: will something else take its place?

«Switzerland increasingly depends on the goodwill of the Europeans»

But first, let's look at the facts: Switzerland may still be a wonderful country that excels in many ways, as numerous international surveys (competitiveness, innovation, quality of life) regularly prove. But this privileged position isn’t a given. Many countries are improving their performance, elevating themselves to equal status with Switzerland in certain aspects such as technology, openness and connectedness – a trend that will continue.

Europe's political development contributed Switzerland increasingly finding itself in a delicate position. Opinions vary widely about whether it is an advantage or disadvantage for the financial industry that Switzerland is more or less paralyzed in its relations with the European Union and the U.K. because of Brexit, and increasingly depends on the goodwill of the Europeans. What a difference to earlier times.

«Many jobs once performed by the Swiss have been taken over by talented Asians»

Swiss banking secrecy is an example in case. It used to be not the only, but probably the most important ingredient in the concept of Swiss banking – today it is gone for foreign customers. The protection of the client, intelligent a principal as it is, has come under fire even in Switzerland itself. Not the most promising of perspective for private bankers for sure. Whether they want it or not, they are forced to reconsider their business model – or give it up entirely.

There’s a lot to take into account, because Swiss banking doesn’t work as it used to with well-trained private bankers available all over the world, be it in London, Singapore or Dubai – financial markets that have built on their strength in the slipstream of Switzerland. They all took Switzerland as their example and perfected the business, unburdened. Asia is the best example in case: Singapore is presenting itself as a «better Switzerland», and many jobs once performed by the Swiss have been taken over by talented Asians.