Banks in Liechtenstein and Switzerland are the most advanced in Europe in terms of digital strategies, finds a recent study. That’s good news, but banks struggle to put their digital strategies into action.
The new year has started, and there has already been some good news for Liechtenstein’s banking scene: According to a study by the Swiss Finance Institute (SFI) and consulting company zeb, Swiss & Liechtenstein-based banks are the European leaders in terms of their digitalization strategies.
The study is called “Digital Pulse Check Schweiz” and looks at how well banks across Europe have adopted digital strategies. The SFI has conducted the study for a second time, and Swiss and Liechtenstein-based banks have improved compared to the first rating. Part of the study was a survey among 159 industry leaders from European banks, of which 31 percent were from Switzerland and Liechtenstein.
Leaders in strategy
The results show that banks in Switzerland and Liechtenstein have made progress in three areas: Digitization strategy, business model, and management & organization. In all three areas, the banks rank higher in 2020 than they did in 2019.
Swiss and Liechtenstein-based banks shine in particular at the strategic level. Banks have deepened their levels of digital adoption. “Bank employees have lost their fear of digitalization – or are at least less fearful than in the past,” says the study. What has helped banks improve their digital strategies is to bring on expertise from outside of the bank, specialists, who can bring new ideas and impulses, suggests SFI. Preferably, these specialists should fill positions where they can act cross-functionally because digitalization efforts are rarely ever limited to just one isolated part of a business.
Implementation is the key challenge
While Swiss and Liechtenstein banks are more advanced than their European peers on the strategic level, the actual implementation of those ideas is not as advanced. And that’s a common challenge not only of Swiss banks but all over the banking landscape. It’s easy and fancy to talk about digitalization, and nearly every digital idea sounds good at first: Cut costs, increase revenues, offer better customer service.
However, the challenges start when a new system has to be implemented alongside existing legacy systems, when employees have to be trained to use new tools, and when customers have to be switched over to a digital service rather than what they are already used to.
And that also continues to be the bottleneck for Swiss banks. “Banks still hesitate and worry about taking apart running systems,” says the study. That’s where banks have to be braver. Yes, they might have a running system today, but for how long will it keep running? Neobanks, payment providers, and blockchain projects start attacking banks from all sides. What works today is not necessarily going to work tomorrow. Nobody will fill in bank checks anymore in the future, and bank branches will continue to disappear. That future might still be years away, but it already starts today.