Mr. Raab, instant payments, click-to-pay... the digitalization of banking is progressing, but few innovations have truly reached end customers. Why is that?

I agree with you: in practice, these innovations haven’t fully reached the market, especially in Switzerland. However, in places like Poland or the Nordics, the situation is quite different.

Christian Raab (Image: zVg)

Why is that?

On one hand, there’s a clear urban-rural divide in Switzerland, which isn’t as pronounced in other countries. On the other hand, conservative customer behavior plays a role.

Is it also a generational issue?

Certainly, younger people are much more open to technological innovations. But that’s not the only factor. It’s also related to security concerns, with data privacy being a key consideration here.

«Shrinking margins are forcing banks to embrace technological changes»

Why not delay these innovations if customers aren’t demanding them?

The demographic shift is putting significant pressure on financial institutions. Many banks are still relying on systems that are over 30 years old, and the pool of experts who understand these outdated systems is rapidly shrinking.

On top of that, there’s a cost issue: shrinking margins are forcing banks to undergo technological changes.

Against the will of many customers

That’s an oversimplification. It's clear that more and more customers are demanding faster and more efficient services.

When it comes to digitalization, other financial centers are ahead of Switzerland. How does Switzerland’s financial sector fare overall?

The Swiss financial center still enjoys an excellent reputation and is ahead of many others. The emphasis here is on «still.» Switzerland was one of the pioneers in cryptocurrency, being among the first to establish regulations. Its central location, political stability, and high education levels remain strong selling points. But there’s no room for complacency.

Because other countries are catching up?

Exactly, and I’m not even referring to Dubai, Abu Dhabi, Singapore, or Hong Kong, which operate in a different league. Germany, for instance, has made significant progress in recent years. Austria has also been strong in the contactless payment sector. However, Switzerland remains the most attractive location in the DACH region for fintech companies.

«Closer collaboration between banks and fintechs in Switzerland is needed»

What sets it apart from other locations?

The clear regulation of crypto-assets and blockchain technology creates legal certainty for fintechs. Switzerland also has a well-developed financial market with numerous investors willing to back innovative companies. Additionally, Switzerland offers access to a large pool of highly skilled professionals. Finally, established financial institutions and the government actively support the growth of the fintech sector.

What can be improved?

Closer collaboration between banks and fintechs in Switzerland is essential. This would allow for more process automation, ultimately driving down costs.

In recent years, numerous neobanks have entered the market. Yet, all of them struggle to gain a foothold. Why is that?

There’s certainly a lot of potential in that space. Unfortunately, much ground has been lost, resulting in a lack of trust. A partnership between a traditional bank and a neobank would make sense.

Christian Raab is the Director of BFSI (Banking, Financial Services, and Insurance) at Thoughtworks. The international technology consulting firm was founded in Chicago in 1993 and is now present in 19 countries.