Bank Vontobel has already distinguished itself as a crypto-bank. Now, the technology could also cause upheaval in investment banking.
Zürcher Bank Vontobel relies on technology to further meet the needs of its customers. The in-house platform for structured products has made the stock exchange practically obsolete in this area since last month. one can also deposit crypto currencies at the bank.
The blockchain technology behind them could also cause upheaval in traditional investment banking: “This is really something that could democratize the capital markets or cause disruption,” said Roger Studer, chief executive of Vontobel Investment bank.
Deeper hurdles
“He was not sure how to classify crypto currencies against other investments,” Studer said. On the other hand, it is clear that the technology behind it could dramatically lower the hurdle for opening a company. This would make it easier for companies to reach global investors.
In its clear commitment to technology, the Vontobel manager stood out from the other participants in the panel. These by Credit Suisse, J.P. While Morgan and BNP Paribas all reiterated the relevance of the topic. They were rather tentative, especially in the context of Blockchain.
Vontobel is in the process of digitizing all divisions of the investment bank. Among other things, Studer referred to Cosmofunding, a platform through which Swiss municipalities or SMEs can borrow.
Vontobel has a long-term track record of structured products. For more than ten years, the institute has reduced the cost of creating a product by more than 95 percent. If banks succeed in repeating this success in the capital markets business, this should lead to radical changes in the world of highly paid investment bankers.
Regulation prevents acquisitions
However, the comparatively high pace of the Zurich bank could be related to the fact that Studer represented by far the smallest bank on the panel. The worldwide IT budget of J.P. Morgan, at over $ 10 billion, is about 10 times Vontobel’s 2017 revenue.
About one-third of this sum is spent by the American Bank on the development of its own technology, said Nick Bossart, Country Manager of J.P. Morgan in Switzerland. However, he pointed out that big banks could not simply buy fintech competitors. Due to the stricter regulation of large institutions, they might not be able to continue their business.
Accordingly, it is not surprising that Credit issue relies more on partnerships or minority interests than on acquisitions: “We want to get an option on the technology. Of course, we get the ability to potentially buy these companies once. But we want to build an ecosystem, “said Didier Denat, Head of Corporate and Investment Banking at Credit Suisse Switzerland.
Also published on Medium.