Future of finance
These days, every single bank – large or small – is concerned with digitalisation or adapting its business model to the technology of the 21st century. Generalisations like this cover a broad range of possible changes and innovations for banks, ranging from improving the products and services offered to the way banking procedures operate.
There are many reasons why banks are pressing for these changes. Clients are much more discerning than they used to be. People are now digitally savvy. As a result, they are taking a much closer look at how their assets are managed, which has traditionally been done using old structures. This new generation have different requirements and would rather view their assets on their mobile phone than receive quarterly statements on paper.
There have been lots of technological breakthroughs in recent years that are of interest to banks. In addition, the costs of making technological improvements have gone down considerably in the past few decades. Bank CIC (Switzerland) Ltd. is picking up on this trend. CIC eLounge – Bank CIC’s client interface – was launched successfully and offers clients a detailed overview of their asset allocation, as well as improved trading opportunities. This allows it to drive digital progress in order to keep developing and improving middle and back-office activities.
Are banks now revolutionising the trend? A more cynical point of view would be that banks are simply being forced into making these changes by young, disruptive technology companies. A cluster of dynamic and innovative companies have been set up in the past decade that aim to break the old-school financial model of banks. These firms have challenged all segments of the banks’ business model. Some of these fintech firms have become giants. Revolut, one of the largest neo-banks, was valued at USD 33 billion in July 2021. Klarna, based in Sweden, is rapidly becoming a benchmark in the world of payment systems. Upgrade, a US neo-bank founded in 2017, is a leading platform for consumer credit, offering loans together with tools for credit monitoring and education. It was valued at USD 6 billion in November 2021 and will probably hold an IPO towards the end of the year or at the beginning of 2023.
Bank CIC stands in the middle, in between the rosy picture and the cynical perspective. We are not naïve when it comes to the question of why we are concentrating on the implementation and development of our digitalisation process. We also believe that having competition acts as an incentive to help us to stand out from the crowd. We accept the challenge. Looking at it objectively, you have to admire the success of some of these fintech companies and learn from their achievements. We at Bank CIC see these companies as adding value to the financial ecosystem. We do not shy away from working towards investment solutions that enable our clients to access the growing area of fintech.
Based on this belief, Bank CIC, in conjunction with Stableton, is launching a product that will enable its clients to invest in a broad spectrum of privately owned Fintech companies. Companies we think will help shape the future of finance. The “Future of Finance” investment solution invests money in a broad range of financial segments such as digital banking, payment systems, alternative financing, blockchain custody, InsurTech, plus AI in finance and financial data aggregators.
2021 saw an incredible rise in the number of mega deals (financing rounds of more than USD 100 million), which totalled USD 86.5 billion in 343 rounds. Despite a general decline in fundraising and IPO activities in the first half of 2022 as a result of difficult market conditions, we believe there are signs of a recovery in the IPO market. The latest revaluation of the market is providing us with a multitude of opportunities to enter the market at a significant discount compared with previous valuations. As firm believers in the democratisation of private markets, we ensured that this product – launched in mid-June – is available to private clients too, not just professional investors. The low minimum investment amount (USD 10,000) enables a large number of investors to be part of the future of finance.