Swiss banks ready to take the cryptocurrency shift

More than half of the institutes surveyed by EY plan to launch a crypto-asset offering, according to the 2022 banking barometer presented by Patrick Schwaller.

After the slump in 2020, Swiss banks are again showing unfailing optimism. Nearly nine out of ten Swiss banking institutions (87%) surveyed by the consulting firm Ernst & Young (EY) anticipate an increase in their operating profit for the 2021 financial year, a significant increase compared to the year previous where this share was only 53%. In addition, nearly four out of ten banks (39%) even anticipate an increase of more than 10% in their operating profit over the past six to twelve months, indicates the latest EY Banking Barometer 2022 published on Tuesday. A year ago, this share was limited to 12%.

Optimism but no euphoria

Most of the 90 banks surveyed by EY are just as optimistic about the future: in fact, 86% of the establishments questioned anticipate a “rather positive” (increase in their operating profit between 0 and 10%) or “positive” ( increase of more than 10%) in their long-term operational activities, i.e. over a horizon of more than three years. We have to go back to 2018 to find such a high proportion, then at 87%. “The banks have weathered the crisis well. They show optimism without speaking of euphoria – because the challenges are still too great,” summarized Patrick Schwaller, head of audit for the financial sector and partner at EY Switzerland, quoted in the report. of the consulting firm.

There are, however, significant differences according to the categories of establishments. Thus, private banks are very optimistic in the long term, with 32% of them having either “positive” or 68% “rather positive” expectations of their operational activities. In comparison, regional and cantonal banks are more cautious about their long-term prospects, although these institutions are again more optimistic about the development of their operating results over the next three years.

Strong competition from insurers expected in mortgages.

Although the Swiss banks are not overly worried about inflation – two thirds of the establishments surveyed do not expect inflation to exceed 2% in Switzerland in the medium and long term – they do not, however, completely overlook the potential danger that would represent a sharp and rapid rise in interest rates. Thus, 26% of the institutes surveyed, ie double the previous year, believe that such a scenario represents the greatest challenge in the management of interest rate risks for banks.

In addition, Swiss banks expect to see their market share in mortgages erode in favor of insurance and pension funds. Thus, more than four out of ten banks surveyed (41%) expect insurance to continue to gain market share with private customers over the next five years, while 37% of them believe that pension funds are who will get a bigger slice of the pie. By comparison, only 28% of banks surveyed believe that banks will be the ones to gain market share in mortgage business over the next five years.

Cryptocurrencies: soon investments like the others

If Swiss banks have so far been rather cautious about offering investments in cryptocurrencies, more than half of them (55%) are now ready to launch offers in this area – and this already over the next three years. This is the case for more than two-thirds of private banks (68%), while only one out of two cantonal banks plans to offer placement opportunities in this area and while this share drops to 48% among regional establishments.

In addition, more than half (55%) of all banks surveyed believe that cryptocurrencies will establish themselves over the long term as a classic investment category, alongside stocks and bonds. Here, it is foreign banks (68%) and wealth management institutions (64%) who support this statement the most.

Opportunities to be seized thanks to digitization – fears of cyberattacks.

Another hot topic: digitization. The digital offers offered by banks, or which will be offered in the future, will in particular contribute to improving the “customer experience” in the eyes of 83% of the institutions surveyed, while digitization will also bring benefits to customers. in terms of access to new products (36%) and cost reduction (34%), say the banks surveyed.

However, 83% of the banking establishments surveyed believe that personalized advice to customers, for example in terms of investments, pensions or financing, will remain the main source of added value for which customers will continue to be ready to pay a premium. .

While digitization is not perceived as a threat to their business model, banks are concerned about the risks that may arise from cyber-attacks. More than half (55%) of the establishments surveyed believe that the level of threat has increased significantly over the past twelve months. This share even climbs to 70% among regional banks, which are the most worried about this. To prevent such cyber-attacks, establishments surveyed that staff awareness (78%) of these issues is the most effective means of action, as well as investments in technology and infrastructure.

ESG investing continues to grow in importance

Another key topic of the moment, sustainable investments are considered by nearly half of the banks surveyed (45%) as the greatest chance for them to contribute to effective climate protection, followed by the granting of loans taking into account sustainability criteria (27%).

Similar to the previous year, more than half (51%) of the institutions surveyed believed in 2021 that sustainability issues should be integrated into investment advice or that they are an integral part of the advice process. Here, it is now the cantonal banks (69%), even before the wealth management establishments (54%), who rely the most on sustainable investments as part of their advisory activity.

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