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The lights of traditional Christmas lights on Zurich Bahnhofstrasse twinkle outside the windows of the conference hall. Christmas cookies from Sprüngli are offered for the conversation with the president of Zürcher Kantonalbank (ZKB). We gratefully decline the offer of a (non-alcoholic) Christmas cocktail. Urs Baumann (56) is visibly proud that in his first year in office he was able to persuade Switzerland’s third largest bank by total assets to make a major break with tradition.
Blick: Mr Baumann, Zürcher Kantonalbank will abolish fees as of January 1, 2024. Where does this generosity come from?
Urs Baumann: We have a performance responsibility to which we adhere. Since the reversal in interest rates there has been a new starting position for all banks. As the bank of the people of Zurich, we care that small savers can also benefit from this. Besides the interest rate, there are also annual fees for special accounts and debit cards, which we have now eliminated. These are more important to most savers.
You need to explain this.
More than half of savers have less than 5,000 francs in their savings accounts. A savings of 50 or 100 francs in fees results in an interest increase of more than 10 basis points. We want everyone to be able to benefit from the new free everyday banking without any additional conditions. In other words, whether they come to the branch or perform their banking transactions digitally. The amount of assets does not matter either.
How big is the savings impact? Having up to 116 francs seems unrealistic to me for most people – who has three bank accounts? Actually 52 francs?
We are already one of the cheapest: nowhere else will you find a 12-franc special account in a traditional bank. The great success is that in addition to the account, we now also offer the Visa debit card with no annual fee. Our vision is for everyday banking to be free with us.
What else do I need to pay for?
For packages with credit cards, for example, even though these are also significantly cheaper. Or for more complex work such as financial planning, retirement and retirement advice, or tax and inheritance issues. This tends to affect wealthy private clients who benefit from such advice.
How much does it cost to remove daily fees?
We do not give numbers. But you can figure this out. We have approximately 700,000 private customers. Most have at least one account and debit card. This is an important thank you to our customers.
We are talking about a thank you of at least 36 million francs. How will ZKB recoup the money?
In recent years, we have invested in the digitalization of the bank. This means we work more efficiently. The option to open an account digitally reduces costs significantly. This offer is therefore not only valid in the canton of Zurich, in the future customers all over Switzerland will be able to choose ZKB’s digital offer.
What does ZKB hope to achieve from this?
We want to shape the future of banking. It’s not fully digital or fully physical, it’s hybrid. If the customer needs in-depth advice we always offer it in a branch, via video or phone. He can comfortably carry out his daily work on the couch at home. In addition to expanding digital consultancy, we are also investing in the modernization of our 51 branches. We don’t offer either/or; instead we offer a combination of both worlds.
ZKB is progressing rapidly. Will other banks follow the same path?
Time will show us. We see ZKB Banking as the most attractive banking offer at the moment. Our main goal is to further expand our position as number 1 in the canton of Zurich. And of course we are happy with every customer from Switzerland.
National Bank President Thomas Jordan, 60, urged bank customers to switch banks if they are unhappy with savings interest rates. Is there too little competition in the financial centre?
Competition between banks is intensifying. There are over 100 different providers in the retail industry alone. As a mortgage bank, if we make money from mortgage interest, we can pay interest on savings accounts. If interest rates rise quickly, we won’t immediately buy more money because the interest rate on most mortgages is fixed over the long term. So we need to calculate the average interest rate of our mortgage portfolio. This is slower and therefore lower than the SNB’s base interest rate.
The election of Urs Baumann (56) as head of Zürcher Kantonalbank surprised many. The Lenzburg native began his career as a consultant at McKinsey and has worked for various financial services providers and institutions in Switzerland and abroad. In 2015, Baumann co-founded Blue Earth Capital, an investment company for sustainable investments. But his hobbies aren’t the most environmentally friendly: the ZKB boss likes to zip around country roads on his Harley Davidson, and to compensate he occasionally comes to work with his stand-up from the lakeside community of Kilchberg. spade.
The election of Urs Baumann (56) as head of Zürcher Kantonalbank surprised many. The Lenzburg native began his career as a consultant at McKinsey and has worked for various financial services providers and institutions in Switzerland and abroad. In 2015, Baumann co-founded Blue Earth Capital, an investment company for sustainable investments. But his hobbies aren’t the most environmentally friendly: the ZKB boss likes to zip around country roads on his Harley Davidson, and to compensate he occasionally comes to work with his stand-up from the lakeside community of Kilchberg. spade.
Is the removal of fees a declaration of war against other cantonal banks?
No, this is not a declaration of war against other cantonal banks. We position ourselves throughout Switzerland with our strong digital offering. We are in competition with all other digital offerings. These do not respect boundaries. Rather, this is a declaration of war against digital banks.
How many new customers does ZKB hope this will bring?
We are confident in our product and hope that we will win new customers from all over Switzerland.
Topic change: Credit Suisse has been history since March 2023. Did you expect the collapse of CS?
If you had asked me this question before the fall of 2022, I would have answered clearly no. The end of CS is tragic. Two major banks will be important for the financial center and the economy. On the other hand, it was clear that CS needed a solution; Financial markets were quite nervous. In March, there was a certain reluctance towards Swiss banks in general.
How many new customers did you gain thanks to the collapse of CS?
We gained many special customers. But these do not constitute large amounts of new money. We felt general uncertainty when it came to new money, but there was almost no CS effect. We have already experienced a record inflow of new money of 17.8 billion francs in the first half of 2022 without CS. This year, we received 19.3 billion in the first period with CS. The difference is around 1.5 billion.
When will interest rates fall again?
The interest cycle is complete. We expect the first interest rate cuts in the USA and Europe in the spring. In Switzerland this will take a little longer because inflation will rise slightly again at the beginning of the year.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
