Turning regulation into value

Regulation is one of the predominant drivers of strategic change in Swiss Private Banking. In response to the financial crisis and transnational developments towards tax transparency, regulatory authorities have triggered a new wave of regulations for the industry. These are geared among others towards mitigating the risks implied in derivative instruments, protecting client suitability, achieving tax transparency, preventing money-laundering, etc.

Even though it causes additional compliance efforts and costs, regulation does not only have negative impacts. It enforces banks to rethink their strategies and business models, in ways that unregulated markets would not have suggested. Overall, considered over the mid- to long-term, these benefits may outweigh the short-term costs incurred through accommodating the intentions of the regulator.
Based on an empirical investigation in the context of the Swiss private banking industry, this study aims at understanding the business impact of the regulations, as well as the nature of private banks' strategic responses to these regulations.

Overall, we propose that the Swiss private banking industry is achieving higher levels of innovation, industrialization, and customer-centricity through some regulations that benefit both the customer and the industry.