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Since the 1990s, which could be considered the «Wild West» of investment banking, a great deal has changed in terms of regulation. However, satisfaction is rare.
Today, client advisors lose a significant amount of time due to extensive compliance requirements, which leaves them with less time to offer proper financial advice. Customers are often left signing incomprehensible documents designed to protect the bank yet create uncertainty for the client.

Every financial crisis follows the same pattern: investors lose money, and regulations increase. These new rules are always based on past events, which means that during the next market crash, clients suffer fresh, unexpected losses. It becomes clear that the growing volume of regulations does not prevent the repetition of such events, but rather exacerbates them.

Rising costs lead banks to refuse services to less wealthy clients. The growing density of regulations and the illusion of complete security encourage clients to relinquish their responsibility, ceasing to think critically about their investments. Simultaneously, customers are more likely to sue banks during market disruptions, which forces banks to add more layers of protection.

«The exponential development of artificial intelligence has only intensified this trend»

This situation effectively places client advisors in the role of the «first line of defense,» creating a tension-filled dynamic between them and their clients. However, technological advancements could break this vicious cycle.

What seemed impossible for banks twenty years ago – the daily provision of detailed portfolio analyses for each customer – has become a reality thanks to advancements in computing power. The exponential development of artificial intelligence has only intensified this trend.

Parallel to this, the fintech revolution has produced numerous start-ups dedicated to regulation and transparency, enabling customers to more accurately assess whether their bank is acting in their best interest.

For this to happen, banks must be willing to share their data with these start-ups. Open banking plays a key role here, even though it is still in its early stages. This would allow data to be compared and a simple online dashboard created, which presents and evaluates the client’s situation in an unbiased, fast, and clear manner—much like a blood test in medicine. If necessary, the client can consult with their advisor and request deeper analysis.

«Increased transparency and client responsibility could reduce regulatory pressure»

Several IT solutions are already in use, falling under the umbrella of «Regtech.» These start-ups offer banks solutions to support their internal compliance processes. Apiax, for instance, has developed software that directly integrates new regulations into banks' systems, taking into account client data such as transactions and positions. This information could potentially be shared directly with customers and presented online in a simplified graphical format.

Another example is Norsia, a start-up specializing in transparency around sustainable investments. Clients can define their sustainability criteria and monitor whether they are being met.

Performance Watcher, active for more than ten years, offers an intuitive «weather map» that assesses the quality of a client’s portfolio by comparing it with those of other banks. Green and sunny signals indicate no action is required. Red and stormy signals, however, call for clarification with the advisor and possibly even a switch of banks. This keeps the customer in the driver’s seat when making financial decisions.

Increased transparency and client responsibility could reduce regulatory pressure. Feedback from banks that already offer their clients Performance Watcher's portfolio weather radar indicates that this can improve the client relationship and sustainably strengthen trust in the financial sector.

Marc Lussy began his career in the financial industry as a Sales Manager for Traded Options and Futures at UBS. Later, he worked as a Project & Product Manager in Private Banking at Credit Suisse and as Senior Product Manager for Investment Products at Graubündner Kantonalbank. Since 2015, he has been Head of Business Development for the German-speaking region at the company Performance Watcher, which offers performance comparisons for individual client portfolios. Since April 2024, he has also been an Adjunct Expert at Zhejiang University International Business School in Haining (Zhejiang Province).

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