Wealth: Credit Suisse to shift focus from branches to digital banking

John Miller

3-4 minutes - Source: REUTERS

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ZURICH (Reuters) - Credit Suisse (CSGN.S) said on Monday it would invest hundreds of millions of francs in digital services and other parts of its Swiss division by the end of 2021 and said it no longer needed a bigger branch network in its home market than its rivals.

Switzerland's national flag flies beside a logo of Swiss bank Credit Suisse at its headquarters at the Paradeplatz square in Zurich, July 31, 2019. REUTERS/Arnd Wiegmann

Banks across Europe have been closing branches and cutting tens of thousands of jobs as customers go online and banks seek to save on their bricks-and-mortar costs.
“The achievement of long-term success will not depend on having the biggest branch network in the future,” Thomas Gottstein, head of Credit Suisse’s Swiss Universal Bank (SUB) unit, said without elaborating on any branch closures.
“Instead, having the best digital offering – combined with access to advice from any location and the best service quality – will be the deciding factor,” he said in a statement.
The Zurich-based bank is creating a new business area, called Direct Banking, for retail and commercial clients, starting on Sept. 1 while carving out its Swiss investment banking operations into a separately managed unit.
In total, investments “in the high three-digit million range” through 2021 will include boosting the Swiss unit’s digital offering, hiring client advisers, marketing and sponsorships, Credit Suisse said.
Beyond digital services, Credit Suisse said it planned increased telephone advisory services and “the provision of personal advice in the regional network of branches”.
More details about the new branch concept would be provided in the first half of 2020, the bank said.
Credit Suisse’s new Direct Banking would have about 1 million retail clients, 60,000 commercial clients, and more than 500 employees and would be run by Mario Crameri, Credit Suisse said.

YOUTH, RETAIL LAG

“Credit Suisse’s market share tends to be lower in Swiss retail banking and among young bank clients than in most other client segments,” it said.
“Against this backdrop, Credit Suisse has decided to adjust the business model of its Swiss division and to make substantial investments.”
The bank said it also planned investment in digital solutions for areas with a strong advisory focus, particularly for wealthy clients, entrepreneurs, companies and institutional clients.
The Swiss division is sticking with financial targets communicated at Credit Suisse’s 2018 investor day: above-market growth in revenue and client business volume, a cost-to-income ratio of less than 60%, further profitable growth over the medium term and a return on regulatory capital of more than 18%.
The Swiss Universal Bank, which in 2015 was targeted for a now-shelved partial IPO as Credit Suisse sought to raise cash, has increased its pre-tax income from to 2.2 billion Swiss francs ($2.26 billion) in 2018, from 1.6 billion francs, over the last three years.
The cost/income ratio improved from 68% to 58% over the period, Credit Suisse said.

Reporting by John Miller; Editing by Sonali Paul and Edmund Blair