Swissquote: Expanding the Reach of its Digital Platforms in Asia

Damian Hitchen, CEO for the Middle East & Asia at digital platform provider Swissquote, spoke with Michael Stanhope, Hubbis founder and CEO, to explain to the audience at the Investment Solutions Forum in Singapore why Swissquote is soon to open its full office in Singapore, and why it has armed itself with the appropriate licences. He highlighted how Swissquote partners with large and small financial institutions, and wealth management firms, especially External Asset Managers, to offer them B2B solutions that significantly upscale their capabilities, their client service and therefore their revenue streams.

“We have been a digital bank for almost two decades,” Hitchen explained. “We are now building our presence in Asia and in Q3 this year will open our office in Singapore, with the appropriate licences, so you will see a great boost in activity levels over the coming months.”

He told the audience that he has for the past five years been running a business which started from zero in the Middle East, and which has already registered USD billions in assets in partnership with clients there.

Asia – a huge opportunity

“Asia,” he commented, “is a much bigger marketplace for us, given the existing community of EAMs and small banks who we work with to provide all services, essentially providing a global custody and trading execution platform. So, from our perspective, Asia is the next major stage in our development, and we are bringing a proven model that is tried and tested elsewhere into the region.”

Swissquote offers a state-of-the-art trading and custody platform and tools to allow its B2b firm’s c to trade on behalf of their wealth management clients.

The B2B model

All Swissquote customers around the world manage their accounts and global trading via a PC, a tablet, or a smartphone. The firm’s clients include B2B, for example, full-service banks, private banks, independent asset managers, insurance companies and family offices, all of which are looking to provide their clients with an enhanced digital experience.

With Swissquote’s execution-only model this means there is no conflict of interest with its B2B partners, as the Partner delivers the wealth planning and advice and then executes on the Swissquote platform.

“In the wealth management space,” Hitchen explained, “Swissquote’s mission is to provide a fully digital platform, so we work with our institutional partners and they use our platform to effectively handle custody and trade and build mandates for their clients.”

Three million products at a click

Offering full information, access, and functionality, Swissquote’s platform houses over three million investment products online. The firm can partner with regulated firms who use their technology platforms for custody and to execute securities trading on behalf of their clients.

Stability is, of course, paramount. Swissquote is both solid and well capitalised, having been listed in Switzerland since 2000. The bank has around USD26 billion in assets under management and with a Tier 1 capital ratio of 29.0%, which is in the top banks in Switzerland in terms of this important stability ratio.

In terms of the outlook for the broader wealth management and private banking space, Hitchen explained that he truly believes there is a positive future ahead for the typical Swissquote clients. “They can feel free to work with us,” he explained, “as we don’t give advice, we are execution only, so we partner with firms who actually offer that advice, and they can avail themselves of our excellent platforms to boost their capabilities and propositions.”

Information as a catalyst

He noted that one core advantage clients typically seek in wealth management and private banking is access to increased information, and they want it from their preferred channel and at their fingertips when they request it. “I think the reality is when we move in the sphere of accredited investors and upwards, they all still place a huge amount of value on advisory services, and we believe that will continue going forward and we will be a core part of that journey with our partners.”

As to fees and the arrangements the firm enters with clients, Hitchen highlighted how Swissquote give the partners explicit transparency, whether that be the custody or platform fee.

Fees – full transparency

“It is quite interesting for me coming here for the last two to three years talking to EAMs as an example, who use the global custody banks, some of whom tell the EAMS they offer 0% custody fees, yet those same custody banks are still charging them 60 , 75, or 85 basis points in terms of the overall relationship with the EAMs.”

“Of course,” he continued, “we must charge fees, but we want to be fully transparent. We have a slightly different model to the one seen in this region before, so it will take some explaining, some education about what we do, but we are very transparent in terms of what we offer and our partners are able to add their margins or mark-ups across many revenue streams.”

As to staffing, Hitchen explains that as a digital business, Swissquote could, through its constant focus on automation, quite comfortably run a business of USD10 billion in Asia with 10-12 people.

Sized to fit the Asia clientele

“People are of course immensely valuable, the right people, but we can actually build a relatively sizable business with a relatively low amount of people. This helps us price our services at the right levels, and we know the pressure on costs in this industry. We are a technology bank, we don’t have physical branches, we don’t have thousands of staff, so we can price fairly and efficiently, but we are in business and we have our costs and we must make a return, so there are sensible limits to our flexibility, we cannot join any race to the bottom in this market.”

Hitchen highlighted the functionality and optionality of the immensely sophisticated and highly versatile Swissquote platform, before closing his talk by reiterating how important the EAM segment is to the firm, how committed Swissquote is to the Asia region and how wealth management is a vital part of the firm’s future.