Geneva is known worldwide for its Motor Show and the Luxury Watchmaking Show. However, Geneva is also known for its financial center and the number of banking institutions located at the end of Lake Geneva. So, what would happen and what would you learn if the first World Banking Fair was organized in Switzerland?
The beginnings of Geneva as a financial center go back more than 500 years. Banks were present even before the city experienced its international development or the arrival of the first watchmakers.
Today, the canton has approximately 140 banking establishments, 50 of which are foreign: A large and diverse number of establishments, some well-known to the general public and others a little less.
Often, neo-banks offer investment services, but these are not to be confused with wealth management.
Here is what you can learn at the Banking Fair:
Types of banks
You could be confronted with several types of banks, such as the universal banks, which as the name suggests, offer all possible banking services. Then there are the commercial banks which are aimed at companies, the private banks which focus more specifically on wealth management services, and the “neo-banks” which focus on a digital offer. In fact, the list is long, the banking ecosystem includes a multitude of players without which the economy would have difficulty functioning: import-export banks, development banks, central banks, business banks, transaction banks, finance banks, specialized credit institutions, etc.
Each bank is generally aimed at a specific clientele – that is why it is necessary to know the services offered by these banks in order to find the one most suited to your needs.
The offers of banks and their customers
With the exception of universal and cantonal banks, banks do not always offer the same services and are not specialized in the same fields. Consequently, their clientele can also vary.
Commercial banks offer specific services to companies that are useful for payment execution, currency transactions, and cash management. They also offer credit services, but will not specialize in stock market investments.
Private banks rarely offer mortgage services and often rely on third-party partners to assist their clients in this area. In private banks, wealthy clients often seek sophisticated and personalized solutions. The entry levels for becoming a client are often high in these institutions.
Finally, most neo-banks today offer basic services. Their offer focuses on different types of accounts and cards, payments, and currency transactions.
Often, neo-banks offer investment services, but these are not to be confused with wealth management. A platform that allows clients to buy and sell financial products on a speculative basis or with a short-term view cannot be compared to a wealth management offer where the objective is to manage a portfolio on a long-term basis, taking into account the complete situation of a client.
Moreover, these online platforms often lack recommendations or access to an advisor specialized in the field. Therefore, the client must be able to make decisions and manage his assets independently.
Do we really need banks?
This is a question that often comes up… on the one hand, because the financial crisis has left its mark, on the other hand, because alternative forms of financing are emerging, and very often because we only have a fragmented vision of what banks do. One way to answer this question is to ask it differently: Can we do without banks? How can we ensure a controlled exchange of capital between those who have it and those who need it? Let’s take a concrete example, close to home. In Switzerland, 95% of real estate loans are granted by banks. Take away this financial intermediary – would you arrive at the same result? Another example: In 2020, banks enabled the rapid deployment of emergency plans and financial aid. They, therefore, serve as a strong link. They are at the heart of the economic activities of nations, companies, and individuals, like a pump that redistributes capital flows.
The challenge of neo-banks
At the Banking Fair, particular emphasis may be placed on neo-banks. Even though they still represent a small part of the market players, they are becoming more numerous and their offer is ever more important.
This is where the neo-banks have a card to play. The arrival of these new players could certainly change the basic offer and the perception of digital banks in the future. If today they are seen as banks with a limited-service that does not meet the needs of wealthier customers, this could change in the years to come.
Indeed, digitalization and new technological advances have allowed these players to get closer to their customers and offer an increasingly personalized service. Many people are now ready to abandon traditional banks for 100% digital players. Therefore, the possibility of seeing a universal digital bank is not to be excluded for the future!
Having said that, the possibility of seeing the first Banking Fair in Geneva seems unrealistic… With our current degree of digitalization, the Banking Fair might not be in Switzerland, – it might be a digital forum accessible to the whole World.
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Alpian will launch its products and services shortly after its banking license enters into full force and will be available to the public in the third quarter of 2022.