Can Switzerland remain at the top in wealth management? - A Q&A with Julius Baer CEO Philipp Rickenbacher
Switzerland is the biggest offshore wealth manager in the world, making private banking one of the most important segments of the Swiss financial industry. But can it maintain or even advance its leading position? Tanya König of finance.swiss speaks with Philipp Rickenbacher, CEO of Julius Baer, to find out.
Besides heading a private bank, you’re also the chairman of the Association of Wealth Management Banks. To give us a little bit of context, what’s the proportion of these assets managed in Switzerland relative to other financial centers?
Switzerland is the preeminent global cross-border wealth management center. Out of 10 trillion of assets managed globally cross-border, Switzerland roughly has 2.5 trillion under management. Clearly ahead of Singapore, Hong Kong, the U.S., and of other financial centers. And Switzerland also plays an important role in the 240 trillion domestic wealth management markets across the world, with Swiss banks present in many of the key markets and managing money domestically. That’s testament to the strong value proposition of Swiss banking, far beyond the banking-secrecy-led value proposition from a long time ago.
We know we’re facing the greatest wealth transfer in the history of humankind. Are Swiss banks prepared to cater to a younger clientele with different needs and different preferences compared with previous generations?
With 200 or 300 years of history, Swiss banking always had to cater to new generations to remain in business. Yes, this generation is quite challenging: a new view of the world; digital natives; have completely different needs; sometimes a different language; and different values. But there are also commonalities of this new generation with older generations. The complexity of wealth, the need for education in financial matters, and the need for personal relationships and for trust. This gives us a fantastic base to work from. Yes, we cannot rest on our laurels. We need to redefine what we do, how we do it, and with this generation also why we’re doing things.
So you’re not worried about the future?
I’m never worried about the future. I’m embracing the challenges.
Geopolitics are affecting every corner of the world economy. There are more and more voices who think that the global economy is in a process of fragmentation. What’s your take on that?
This time around I think there is a lot happening on the geopolitical side and a lot of uncertainty. You’re saying fragmentation, and I agree with that. I think the world is deglobalizing to some extent, or at least slowing down its globalization. Blocks are forming, East and West. But also within regions, like in Europe after Brexit. But the fragmentation is not the only thing going on. We’re coming out of a time when the world has seen a digital divide, already before the pandemic, and a divide between those who are digital and those who stay behind. We’ve seen a pandemic divide and a post-pandemic recovery divide. And we’re seeing yet another divide, which is now linked to inflation and what is happening. I think this is creating completely new boundary conditions. It’s also creating opportunities on a geopolitical scale. Opportunities for those countries that are well-networked and that are builders of bridges, as Switzerland has always been. So I think Switzerland’s starting position—as a beacon of stability and with its active neutrality in a world that changes so fast—is actually very strong.
But how can Swiss banks navigate this business risk that you also mentioned before?
Navigate is the right word. When you’re out there in the sea, and it’s getting rough, you don’t switch off the engine and hope for the best. You switch it on, put it in gear, and you push in the direction where you think you need to go. And that’s what Swiss banks need to do. First and foremost, with our clients because that’s what makes us relevant and help them navigate this world. Then reinventing our business model, our strategies, advancing our work in this field, creating new value propositions, doing more on the digital side, conquering new asset classes. There are a lot of things that Swiss banking and Swiss wealth management are
doing right now. But not just in isolation. It’s about creating connections between the industry, the authorities, politics, academia, and using the ecosystem that we have. It’s about continuing to develop new talent in this market. And it’s also about Swiss banks being relevant in the societies where we live and where we operate, because we do play a role also on that level. And all of these things together, I think create a good package. It’s a time for us to move forward, and we’re taking it on with a lot of energy.
It’s obviously well-known that Switzerland has a long-standing tradition in private banking. But for a variety of reasons competition is getting fierce internationally. So what are Swiss banks doing to stay ahead of the curve, and why should high-net worth individuals continue to trust their wealth to Swiss institutions?
Switzerland has always punched above its weight. It’s a little country, it’s landlocked, it has no resources, and so it was not set to succeed in areas like biotech, pharma, and high tech, as we do today. And the same holds true for banking. What helps us are very stable, fundamental conditions. Having a strong economy, having a liberal mindset in the country, having a rule of law, and excellent infrastructure. On top of that, we have an outstanding dialogue between the industry, authorities, and politics. We have a fantastic link to academia, and we have an ability to develop great talent. All those are ingredients that create the great competitive framework for Switzerland. On top of that, I do embrace competition. Competition is something that keeps us on our toes, that’s creating energy, that lets us develop, that lets us measure our capabilities and confirm the direction that we’re taking. So yes, indeed, we are ready to compete, and the fact that our clients entrust their fortune to Swiss banks is reflective of our success in this competitive environment.