Online and increasingly mobile banking has long been a mainstay of the Swiss banks‘ private client business, alongside branch banking. A survey conducted jointly by the Lucerne University of Applied Sciences and Arts and ti&m among 1000 Swiss people shows that e-banking, in particular, is a central channel for customers. 89% of all participants surveyed stated that they use e-banking. The frequency of use is interesting: 66% of e-banking users check their account balance at least weekly. On the other hand, 11% of e-banking users are still “refusers“. The main reason for not using e-banking is security concerns (37%). Overall, 54% of those surveyed are already (also) using their smartphone or tablet to access the bank. We can see that the average age of mobile banking users is around five years lower (41 years) than that of e-banking users (46 years). Around 36% of the Swiss population are “e-banking only“ users – in other words, these customers use online banking but not mobile banking. On the other hand, only 1.2% of those surveyed use mobile banking but not e-banking. The study “Customer Touchpoints in Banking,“ published in July 2020, confirms this trend. According to the study, around 92% of those surveyed now use online banking, whether in the city or in the country, and this explicitly includes older people – no other touchpoint is used by more customers and more frequently. According to the study, however, the following applies to mobile banking: the younger the group of customers surveyed, the higher the affinity to banking on the smartphone. Mobile banking is mainly used to check account balances and incoming payments, but for business-critical services and transactions, customers tend to switch to other touchpoints.
Personal contact counts for mortgages
Digitization and the resulting changes in customer behavior also lead to new opportunities and risks in “financing“ from the banks‘ point of view. Thanks to technological advances, institutions – even outside their traditional market area – can grant a mortgage or corporate loans via the Internet. The market for online mortgages, i.e. the conclusion of mortgages via the online channel, is of particular interest here. Although these online opportunities have existed in Switzerland for more than nine years, the corresponding market share is still very low at around 3 percent. However, as more and more financial service providers are offering a digital channel, an increased volume above this is to be expected in the near future, especially with regard to the extension of mortgages that have fallen due. At the same time, personal contact with the bank seems to remain important for many people when making such a decision. A typical mortgage customer will probably continue to research relevant product information online in the future in order to be prepared for a purchasing decision. However, he will still make the actual conclusion of the transaction “offline“ – i.e. at the branch or on the phone.
Investment advice is automated
The development of new technologies, intelligent algorithms and changing customer behavior will also change the revenue field of investment advice, which is important from a banking perspective. Today, customers have the opportunity to find out about investments in a variety of ways, discuss investments in communities and manage their money digitally. The so-called Robo Advisors are always in particular focus. “Robo Advisor“, composed of the words “Robot“ and “Advisor“, are based on an algorithm system that makes automatically generated recommendations for investments and automatically implements them. Supportive advice and interaction between the customer and provider is largely avoided. Despite a rapidly growing number of providers and increasing diversity in the range of products and services on offer, volumes have developed rather slowly in Switzerland in recent years. In addition, some providers have also left the market in the meantime. It is noteworthy that Robo Advisor offers are used in an initial phase primarily by better educated, male and digital savvy people.
Growth market private provision
The topic of „digital provisioning” is becoming an increasing priority for banks. The three-pillar system commonly used in Switzerland, with old-age, disability and survivors‘ insurance, which are financed in different ways, contains a tied pension plan in pillar 3a that is subsidized by federal funds and is therefore tax-deductible. Above all, the development of a digital pension app that allows savers to manage or control their 3a portfolio simply and cost-effectively appears to be an offer that customers are looking for. The results of the trend study carried out by the Lucerne University of Applied Sciences and Arts show that 46 percent of all respondents can now imagine opening retirement savings account online. The market for private provision for the future is generally a growth market, the development of which is likely to gain further momentum with the help of digital solutions.
Cashless payment more strongly in trend
Until the beginning of the Corona pandemic, cash was still very popular in Switzerland. It is estimated that almost 70 percent of all transactions up to that point were still made with cash. After the virus outbreak many retailers appealed to their customers to pay with debit or credit cards or smartphones to avoid infection. Even before that, developments in the field of contactless card payments showed that the Swiss were also adapting their payment habits, if there was an obvious additional benefit (e.g. in the form of time savings). Mobile payment therefore has the potential to change the payment traffic in the long term. Currently, about 8 million transactions per month are made via smartphone. This sounds like a lot at first glance. But in terms of the total number of transactions, it corresponds to “only“ an estimated market share of 1 percent. However, this also shows that the upward potential – not least due to the behavioral changes caused by Covid-19 – is still great.
Scepticism towards new technologies
In contrast, customers are still reluctant to embrace new technological developments, such as electronic identity, biometric authentication procedures, voice and speech recognition software or location-based services – at least with regard to associated banking services. Only a minority of the customers surveyed are currently positive about these technological innovations. The corresponding offerings have not yet become widely accepted and, according to the survey, have not aroused much enthusiasm. For example, only 16% of those surveyed currently use a digital assistant in everyday life.
The various developments show that clients in Switzerland are not particularly technology-savvy when it comes to the digitization of banking services. In all service sectors there is a more or less large group of clients who are interested in appropriate solutions (average: male, 38 years old, well educated). However, these central services in the area of digital payment, financing or investment are not yet used nationwide by the Swiss population. It is to be expected that complex transactions such as taking out a mortgage or making a retirement plan will continue to be concluded through personal discussions in the future. On the other hand, more simple transactions, such as opening an account, making payments or making a deposit into the 3rd pillar will become more digital.