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COVID-19: Wealth management leaders accelerate strategic imperatives

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In our last blog, we focused on how wealth managers may enjoy a competitive advantage in the post-COVID 'next normal' through a more digitally-enabled front office. This article focuses on broader strategies for wealth management leaders and addresses the key question: ‘What has changed since COVID-19?’ Are the industry’s strategic imperatives still the same, or are there important changes that need to be considered?

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Posted on 6/07/2020 | 0 Comments

Cost transformation - Part 2: Rethinking cost structures in Swiss banking

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Our Deloitte banking blog last week on Cost Transformation1 outlined the economic and regulatory market conditions for banks in Switzerland. It identified a save-to-transform approach as the appropriate cost management strategy for overhauling banking business and operating models in order to stay competitive in a changing and increasingly technology-dominated banking industry, while also adapting to new requirements in a post-COVID-19 environment.

In this second article, we discuss the cost levers for contributing to a sustainable overhaul of bank operating models, and explain where Swiss banks stand today in revising their approach to value creation in the longer term.

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Posted on 22/06/2020 | 0 Comments

Designing for the post-COVID-19 era: FS firms that have been re-inventing over the past few months are responding to changing customer needs

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Everyone is talking about the ‘new normal’, but no one really knows how changes in customer behaviour will be transformed into new products, services and experiences, to achieve growth in business. Some companies have been proactive in recent months, learning about the changing needs of customers and responding with new product and service offerings.

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Posted on 17/06/2020 | 0 Comments

Cost transformation - Part 1: More than ever an imperative for Swiss banking

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COVID-19 is still dominating the news and focusing the minds of executives: dealing with the impact of the pandemic requires strong leadership and rigorous action.

And the impact is significant. Growth projections from the OECD Interim Economic Outlook were reduced substantially between November and March –and prospects for the rest of 2020 are weak1. The full extent of corrections to the financial markets remains to be seen.

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Posted on 15/06/2020 | 0 Comments

COVID-19: Digitally-enabled Wealth Managers will lead the way in the 'new normal'

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This article forms part in a series on the impact of COVID-19 on the Swiss banking industry. Deloitte will be publishing on an ongoing basis its perspectives on key implications and potential solutions that banks should consider.

Introduction

COVID-19 is having a dramatic impact on individuals, communities, and organizations. No financial institution is immune from its effects. Firms have taken action to protect themselves, their employees and their clients in the short term, and they are also considering how to future-proof their business for a ‘post crisis’ world.

In previous blogs in our series, we suggested immediate steps that banks should take as they transition from the RESPOND to the RECOVER phase. This blog post turns the spotlight on the post-crisis ‘new normal’ environment and the competitive advantage that wealth managers could gain with a digitally-enabled front office. Our insights are based on extensive project experience with leading financial services firms, market observations, and a Deloitte study that discusses the impact of the pandemic on digitalization in the Asia Pacific region: ‘Navigating towards a 'next normal’ after COVID-19 - Lessons from APAC wealth managers’.

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Posted on 4/06/2020 | 0 Comments

COVID-19 boosts digitalisation of retail banking

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This article forms part in a series on the impact of COVID-19 on the Swiss banking industry. Deloitte will be publishing on an ongoing basis its perspectives on key implications and potential solutions that banks should consider. 

Even before the current crisis, online services had become an integral part of retail banking. The impact of COVID-19 has now reinforced this trend which is likely to continue once the crisis has passed. Cost is a major factor for banks, but customers also increasingly want online banking. This is one of the findings of a recent Deloitte survey of 1,500 working-age individuals living in Switzerland. The survey shows that almost 20% of all retail banking customers have used at least one online service for the first time during the crisis, and just 6% have made no use of them at all. Moreover most first-time users say that they want to continue to use at least some online services once the crisis has passed, although the ’conversion rate’ will differ between services. Retail banks now have an opportunity to win over customers to the benefits of online banking, but they will need a convincing multi-faceted approach that includes hybrid solutions – particularly for complex bank services, such as mortgages and investments – if they are to persuade customers across the board.

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Posted on 27/05/2020 | 0 Comments

Swiss banking in a post-COVID-19 World: How to turn the crisis into an opportunity

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This article forms part in a series on the impact of COVID-19 on the Swiss banking industry. Deloitte will be publishing on an ongoing basis its perspectives on key implications and potential solutions that banks should consider.

We will feel the effects of this crisis for years – both economically and socially – and it will have a lasting impact on how banks interact with their clients.

We believe that although it presents a challenge for banks, it will also open up opportunities. Instead of going back to the ‘old ways’ over time, banks and their clients can benefit by ‘locking in’ at least some of the new ways established during the crisis:

  • Finally a breakthrough for online and mobile channels, not just for transactions but also for advisory and sales.
  • With fewer physical interactions and less handling of cash, banks may be able to reduce their branch and ATM networks to save costs, while transforming the role of the branch towards higher value activities.
  • Remote interactions (such as video) and home working can substantially improve employee productivity.
  • Traditional barriers of rapid change – compliance and feasibility – have already turned out to be manageable given the rapid response to the COVID-19 restrictions.
  • The case for change is strong: better client experience, better employee experience, lower costs, higher profit. And in addition, a major contribution to the sustainability agenda.

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Posted on 25/05/2020 | 0 Comments

COVID-19 related strategic scenario design and financial impact assessment for banks

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This article forms part in a series on the impact of COVID-19 on the Swiss banking industry. Deloitte will be publishing on an ongoing basis its perspectives on key implications and potential solutions that banks should consider.

Introduction

The negative effects on the Swiss economy triggered by the COVID-19 crisis are becoming increasingly visible as well as consistently worse. Based on latest SECO forecasts, Swiss GDP for now is expected to decline by 6.7% this year and the recession most likely will last into 2021.

The government has taken strong pro-active measures to support selectively the suffering economy. These include amongst others the supply of temporary liquidity loans to SMEs totalling CHF 40bn (equal to over 5% of Swiss GDP) and temporary FINMA exemptions for banks.

From our analysis of relevant COVID-19 scenarios, however, we still see significant risks for Swiss banks in the current situation with potentially severe short- and mid-term impacts on their P&L, balance sheet and capital position. Assuming an economic downturn that follows an “L-Scenario”, we have simulated that corporate default rates on average may increase to over 3% (i.e. five times above the historical average). In addition, from our work as auditor and advisor to Swiss banks, we already see the financial impact coming through with an increase in the rate of credit write-downs. Hence, the current situation requires an immediate response from bank executives:

  1. Drive your COVID-19 scenario design and detailing: Develop a common understanding within the bank on how the corridor of relevant COVID-19 scenarios may materialise;
  2. Understand the impact on your profitability, capital and liquidity position: Translate the COVID-19 scenarios into a simulation of relevant impacts on key KPI’s of your bank;
  3. Define and take pro-active measures: Understand which actions already shall be implemented today to buffer and counter the effects of short- and mid-term adverse developments.

In this regard, Deloitte (i) has developed a detailed view on relevant scenarios for the current crisis, (ii) has a proven tool set at hand to give support to managing the situation and (iii) is able to define action plans to mitigate the risks and help Swiss banks to navigate successfully through this crisis.

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Posted on 18/05/2020 | 0 Comments

COVID-19: Emergency solutions worth keeping for the long term

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Introduction

The COVID-19 outbreak has affected millions of people across the globe with an alarming impact but  with different experiences across countries. The first of many lessons is that for many companies both their business and operating models were unprepared for such a disruption – Switzerland was no exception.

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Posted on 11/05/2020 | 0 Comments

COVID-19 ‘back to the office’ plan for the banking industry

COVID-19 ‘back to the office’ plan for the banking industry

This is the first in a series on the impact of COVID-19 on the Swiss banking industry. We will be publishing our perspectives on its key implications and potential solutions that banks should consider.

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Posted on 16/04/2020 | 0 Comments