Scaling in the investment business: How cantonal banks can increase their efficiency and competitiveness

The investment business is becoming increasingly important for Swiss cantonal banks. In view of volatile interest rates and increasing demand for long-term investment solutions, it offers a strategic opportunity to diversify income. Zürcher Kantonalbank (ZKB) recognized this change early on and shows how this business can be scaled efficiently. Claude Pape, Team Leader Product Management Investment Solutions at ZKB, provides insights into the success factors and challenges of this transformation process. But how does ZKB manage to achieve scalability with partners such as Datahouse without losing sight of the individual needs of its customers?

Scaling as a success factor

A modern bank can hardly afford to rely solely on the traditional interest differential business. “The investment business is becoming increasingly relevant, especially in today’s world, where customers have to take on more personal responsibility – for example when it comes to pensions,” emphasizes Pape. As a universal bank, ZKB is pursuing the goal of creating several sources of income, some of which are more stable, while at the same time positioning itself as a trustworthy partner for customers looking for long-term investment solutions.

Scaling the investment business is a key challenge. “Efficient processes are a very important point here. That is the be-all and end-all,” says Pape. In the past, investment advice was manual and heavily dependent on the individual expertise of the advisor, which led to varying results. ZKB has therefore introduced standardized reference portfolios and automated systems to ensure a consistently high quality of advice.

Increased efficiency through innovative technologytive Technologie

“Nowadays, it is unthinkable to invest as much time in manual investment proposals as was once the case. The customer advisor must be able to create suitable offers at the touch of a button and discuss them in detail with the customer. That’s why we’re trying to make sure that the system gives them more time for their customers,” explains Pape.

One of ZKB’s milestones was the introduction of a portfolio optimizer and a specially developed tool for managing reference portfolios, which enable complex analyses, ensure daily portfolio monitoring and allow quick adjustments. Another milestone was the overhaul of asset management processes in 2018.

A key advantage of these digital processes is the time saved for client advisors. “Thanks to these innovations, we have greatly minimized the number of clicks required to open an asset management mandate. In the standard case, the processing time has been tripled. The efficiency gain is enormous, allowing our advisors to spend more time with the client instead of the processes,” says Pape. 

Standardization: The role of the advisory portal

Another key element of ZKB’s scaling strategy is a software solution from Datahouse. It helps advisors to research financial products quickly and effectively, create personalized recommendations and meet compliance requirements at the same time.

“Datahouse’s Advisory Portal is a key component of our scaling strategy. It enables us to perfectly combine standardization and flexibility. It is not just a tool, but a key component that optimizes processes, provides better customer service and supports our growth in the long term.“

Claude Pape, Team Leader Product Management Investment Solutions, ZKB

The Advisory Portal acts as a communication channel for ZKB’s Investment Solutions team and ensures that all relevant investment decisions are made centrally and communicated consistently throughout the organization. Client advisors thus receive all the necessary information on investment strategies, market developments and tactical recommendations. This standardization reduces sources of error, ensures greater transparency in client advice and strengthens the trust of both clients and employees.

Individualization as the next step

Although standardization is a crucial prerequisite for scaling, individualization remains the key to long-term customer loyalty. “If customers can identify with their investments – whether through thematic or personal customization – they not only stay with the bank for longer, but also act as ambassadors for our solutions,” explains Pape.

In future, the system architecture is to be further developed in order to calculate individual portfolios effectively without jeopardizing the existing scalability. Pape explains: “We are working on creating the option of calculating completely individual reference portfolios – and doing so with system support so that there is no additional work for the sales team.” This is a technological challenge that requires close integration between IT, investment strategies and customer needs.

“The future belongs to cooperation” 

In addition to these factors, cooperation is playing an increasingly important role. “Cantonal banks need to ask themselves: ‘What can we do ourselves, and where does it make sense to rely on partners like Datahouse?'” said Pape. This openness towards external solutions is crucial to becoming more efficient and leveraging scaling potential.

This is not just about reducing costs, but also about gaining access to specialized expertise. Pape emphasizes: “It’s not just the process that you buy in, but also valuable expertise.” This insight is particularly important for smaller cantonal banks that do not have the resources of a larger bank.

The future of the investment business

Ultimately, scaling the investment business for cantonal banks is not just a question of technology, but also of setting a strategic course. ZKB shows that standardization and individualization are not contradictory, but can be complementary. Through optimized processes, modern IT solutions and the sophisticated integration of partners, the investment business can be expanded not only cost-efficiently, but also in a customer-oriented manner. These success factors can serve as a blueprint for other cantonal banks that want to make their investment business fit for the future, remain competitive in the long term and offer their customers a value-adding investment experience.