SNB published a report on the results of a survey it conducted, in the fourth quarter of 2018, on digitalization and fintech at Swiss banks. The survey focused on financial stability considerations and was intended to gain a perspective on how digitalization is influencing banks operating in the deposits and lending business. Overall, the results of the survey indicate that the banks expect a strong level of digitalization in financial intermediation.
The results of the survey show that banks view digitalization mainly as a source of opportunities, particularly with regard to cutting costs and improving service quality. However, banks also highlighted challenges from increasing competition, both with other banks and with new market participants such as bigtech firms and digital banks. Thus, banks are seeking to achieve ambitious digital maturity targets and are investing in their own innovations or acquiring innovative solutions from specialized firms such as fintechs. Other key findings of the survey are as follows:
- In the longer term, the banks envisage continuing to play a central role in financial intermediation, albeit amid heightened competition and significant digitalization of financial services.
- At the strategic level, the banks are seeking to bring their existing business models to a high level of digital maturity, with the aim of cutting costs and retaining their attractiveness to customers.
- Digitalization strategies vary greatly depending on the size of the bank. The larger banks have set themselves more demanding digitalization targets than their smaller counterparts and have already achieved a higher level of digital maturity.
- Responses on banks differ considerable regarding the usage of digital channels by customers. Customer use of e-banking services is high. However, when it comes to opening a deposit account or establishing a lending relationship, the digital channels are used less frequently.
- The majority of banks regard the regulatory regime in Switzerland to be sufficient and do not see it as a hindrance to further digitalization developments. Banks, however, see a need for action when it comes to the lack of a legal basis for digital identity and the statutory requirement for contracts to be physically signed for certain transactions. This is seen as an obstacle to end-to-end digitalization in various business segments.
The survey is based on a representative sample comprising 34 Swiss banks that are predominantly active in the deposits and lending business. The banks included in the sample make up about 80% of the banking sector assets. As part of its statutory mandate, SNB tracks developments in the digitalization of the financial system, focusing on its implications for the implementation of monetary policy, the operation of cashless payment systems, and the stability of the financial system.
Keywords: Europe, Switzerland, Banking, Fintech, Digitalization, Survey Results, Bigtech, Financial Stability, SNB
Previous ArticleSBV on Legal Framework and Roadmap for Implementing Basel II
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
PRA published a statement to insurers that clarifies the approach to application of the matching adjustment during COVID-19 crisis.
EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.
EC launched a consultation to revise the network and information systems (NIS) Directive (2016/1148), which was adopted in July 2016 and is the first horizontal internal market instrument aimed at improving the resilience of the EU against cybersecurity risks.
PRA published a statement that outlines its view on the implications of LIBOR transition for contracts in scope of the “Contractual Recognition of Bail-In” and “Stay in Resolution” parts of the PRA Rulebook.
PRA published the policy statement PS15/20 to reflect additional resilience associated with higher macro-prudential buffers in a standard risk environment with a reduction in Pillar 2A capital requirements.
BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.
FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic.
ACPR published a draft version of taxonomy RAN 1.4.0_PWD1, along with the related documentation, for Solvency II reporting.
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).