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.

 

the younger the more mobile trends

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.

 

Conclusion

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.

News from ERNI

In our newsroom, you find all our articles, blogs and series entries in one place.

  • 27.09.2023.
    Newsroom

    Unveiling the power of data: Part III – Navigating challenges and harnessing insights in data-driven projects

    Transforming an idea into a successful machine learning (ML)-based product involves navigating various challenges. In this final part of our series, we delve into two crucial aspects: ensuring 24/7 operation of the product and prioritising user experience (UX).

  • 13.09.2023.
    Newsroom

    Exploring Language Models: An overview of LLMs and their practical implementation

    Generative AI models have recently amazed with unprecedented outputs, such as hyper-realistic images, diverse music, coherent texts, and synthetic videos, sparking excitement. Despite this progress, addressing ethical and societal concerns is crucial for responsible and beneficial utilization, guarding against issues like misinformation and manipulation in this AI-powered creative era.

  • 01.09.2023.
    Newsroom

    Peter Zuber becomes the new Managing Director of ERNI Switzerland

    ERNI is setting an agenda for growth and innovation with the appointment of Peter Zuber as Managing Director of the Swiss business unit. With his previous experience and expertise, he will further expand the positioning of ERNI Switzerland, as a leading consulting firm for software development and digital innovation.

  • data230.08.2023.
    Newsroom

    Unveiling the power of data: Part II – Navigating challenges and harnessing insights in data-driven projects

    The second article from the series on data-driven projects, explores common challenges that arise during their execution. To illustrate these concepts, we will focus on one of ERNI’s latest project called GeoML. This second article focuses on the second part of the GeoML project: Idea2Proof.

  • 16.08.2023.
    Newsroom

    Unveiling the power of data: Part I – Navigating challenges and harnessing insights in data-driven projects

    In this series of articles (three in total), we look at data-driven projects and explore seven common challenges that arise during their execution. To illustrate these concepts, we will focus on one of ERNI’s latest project – GeoML, dealing with the development of a machine learning algorithm capable of assessing road accident risks more accurately than an individual relying solely on their years of personal experience as a road user, despite limited resources and data availability.

     

  • 09.08.2023.
    Newsroom

    Collaborative robots revolutionising the future of work

    The future of work involves collaboration between robots and humans. After many years of integrating technology into work dynamics, the arrival of collaborative robots, or cobots, is a reality, boosting not only safety in the workplace but also productivity and efficiency in companies.

  • 19.07.2023.
    Newsroom

    When the lid doesn’t fit the container: User Experience Design as risk minimisation

    Struggling with a difficult software application is like forcing a lid onto a poorly fitting container. This article explores the significance of user experience (UX) in software development. Discover how prioritising UX improves efficiency and customer satisfaction and reduces risks and costs. Join us as we uncover the key to successful software applications through user-centric design.

  • 21.06.2023.
    Newsroom

    How does application security impact your business?

    With the rise of cyber threats and the growing dependence on technology, businesses must recognize the significance of application security as a fundamental pillar for protecting sensitive information and preserving operational resilience.