New Rivals, Customer Demands Transform Swiss Banking

Banks in Switzerland look beyond traditional platforms and partners to achieve continuing business model innovation, ISG Provider Lens™ report says

Most banks in Switzerland are carrying out digital transformations as they face new competitors and the modern demands of young, digital-oriented customers, according to a new research report published by Information Services Group, a leading global technology research and advisory firm.

“Zürich has become a digital banking hub”

The 2022 ISG Provider Lens Digital Banking Services report for Switzerland finds that the country’s established banks increasingly need to compete with fintech startups and technology giants such as Google, Apple, Facebook and Amazon. As these players gain market share by offering innovative lending, savings, investment and payment services, traditional banks are building digital frameworks to develop new, differentiating business models of their own.

“To stay competitive, Swiss banks are extending their reach and transforming their offerings,” said Owen Wheatley, ISG’s lead partner for banking and financial services. “Proximity to customers no longer affords them an advantage. They need to constantly innovate to meet the evolving needs of those customers.”

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For many years, most of the country’s established banks worked with the same set of large IT service providers, but that pattern is changing, ISG says. Now they are engaging with fintechs, global technology companies and a wider array of service providers. Switzerland is home to some of the leading core banking platform providers, and the country’s banking industry already uses a wide range of technology platforms, including global systems and local implementations.

“Zürich has become a digital banking hub,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “The vibrant startup scene supports digital transformation projects by the country’s banks.”

Swiss banks usually carry out modernization initiatives in a gradual and modular manner, developing capabilities either with new architectures such as microservices or by using modules of more comprehensive banking products, ISG says. Smaller banks typically use ready-made platforms.

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As regulations evolve and European banking grows more integrated, governance, risk and compliance (GRC) is becoming another area of innovation for banks in Switzerland, the report says. Technologies such as integrated risk platforms and fraud analytics tools powered by AI are gaining traction. Banks are also making major investments in payment and card processing platforms, where real-time payment capabilities and the growing potential for data monetization are changing the competitive game. Most banks’ payment initiatives are now at the proof-of-concept stage, ISG says.

The report also explores other technology trends in the Swiss banking industry, including the integration of old and new systems and the growing importance of environmental, social and governance (ESG) strategies.

The 2022 ISG Provider Lens Digital Banking Services report for Switzerland evaluates the capabilities of 27 providers across four quadrants: Core Modernization and Integration Services, Technology Transformational Services for Digital Banking, Banking Governance, Risk and Compliance Services, and Payment and Card Processing Services.

The report names Accenture, Capgemini, Cognizant, GFT, IBM, Infosys and TCS as Leaders in all four quadrants. It names Deloitte and Sopra Steria as Leaders in three quadrants each and Atos and EPAM Systems as Leaders in two quadrants each. MSG is named as a Leader in one quadrant.

In addition, EPAM Systems, HCLTech, Swisscom and Zühlke are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.