We are living in times of volatile change. New technologies and new players are disrupting the financial market. Andy Kollegger, Head Corporate & Institutional Clients International and Member of the Executive Committee, UBS Switzerland, talks about changes, risks and opportunities for financial institutions in this rapidly changing environment.
Mr. Kollegger, 2018 was an eventful year in the banking industry not least thanks to technical innovation. Looking back, what are the developments that you are most excited about?
AK: One of the most fascinating developments last year was the increase in collaborative efforts in the marketplace. A concrete example of this is SWIFT global payments innovation (gpi), which for the first time actually allows you to track the status of a payment from when it is released to when the money arrives at its destination. The benefit to the end client is clear, but gpi also offers improved efficiency, transparency, and operational benefits. It sounds like a small piece of innovation, but it was a pretty big step for the industry.
Another example saw a couple of banks collaborate for the first concrete applications of the blockchain technology. Together we looked into bringing the advantages of distributed ledger technology to trade & export finance, a business which traditionally has been very paper based. The project merged into the consortium we.trade and will mean that trade & export finance products will be available even for smaller transactions.
So, banks have made collaborative efforts, but we have also seen new players pushing into the market. How would you describe the new banking landscape?
AK: It has become quite a populated space. There’s been a lot of talk about FinTechs, obviously, and I think they are here to stay. Also about crypto currency, particularly here in Switzerland, which is still in its early days. There have been the RegTechs, and the large IT providers, who are looking at banking – not in its entirety, but at specific parts of the value chain that might be commercially interesting.
We’ve also seen a regulatory onslaught. The result is a more transparent, more robustly regulated industry, which benefits clients. But it came with a massive increase in complexity and in cost.
But cost pressure comes from a combination of these factors, and also, of course, our clients have become more cost sensitive. As a consequence, banks have had to review their shelf very carefully. Now we will have to ask ourselves, what we are really, really good at – and discontinue some of the areas where we cannot compete.