Major Financial Centers Face a Reckoning

Claude Baumann in this article:

An urban exodus, perplexed bankers, political vagaries and ruthless competition are taking their toll on financial centers. The pandemic is an accelerator of an epic, irrevocable structural shift.

Some bankers have no intention of returning to physical office space, others don’t know whether their roles will survive the forthcoming cull, while banks are moving whole divisions from one country to another – the coronavirus has cast a pall over the continent’s and the U.K.’s once-dynamic financial centers, as images show.

The emptiness comes against the backdrop of surging credit defaults as well as higher spending, as finews.com reported. The pandemic is playing out alongside ongoing digitization in the banking industry. The changes come at the expense of traditional financial centers – including Switzerland’s storied banks and wealth managers.

On Switzerland financial centre model:

The coronavirus is providing digitization the biggest surge of momentum possible – laying bare that physical presence is often superfluous. What does that mean for Switzerland?

The alpine nation’s strengths are political stability and neutrality, rule of law, an unpegged currency, a highly-skilled labor force, internationally competitive higher institutes of learning, an environment that is very business-friendly, and an easily accessible location in the heart of Europe (but outside the bloc). This framework is rounded by soft factors like widespread bilingualism and a very high quality of life.

This won’t be enough for a financial center to stand out in the future – new, more innovative advantages will be needed (finews.com outlined a few). These include data security or virtual assets and other technological advances like blockchain. A «trusted counterparty» in a digital age is worth at least as much as a secure banking relationship, Swiss finance professor Sita Mazumder told finews.com.

In general, Switzerland can only survive as a financial center of the future if it manages to convert banking into an «experience» – using its expertise and existing quality standards as well as fostering a hub for sustainable investing. Demand for this type of vehicle is surging since the pandemic, which represents a massive opportunity for Switzerland.

Hmm..

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