Swissquote Group Holding Ltd is Switzerland’s leading provider of online financial and trading services. Listed on the SIX Swiss Exchange the Swissquote Group has its headquarters in Gland (VD) and offices in Zürich, Bern, London, Luxembourg, Malta, Dubai, Singapore and Hong Kong. The Group currently employs 722 staff. Swissquote Bank Europe is a subsidiary of Swissquote Group and by enabling private investors to access real-time prices free of charge it has followed the firms mission of “democratising banking” by offering transparency, integrity and unbiased information for the benefit of its clients and allowing them to make independent decisions.
Marc, please tell us a little about the Swissquote story and how and when the company came to be set up?
It’s a long story. It all started in a garage in the early nineties with my fellow graduate from the Federal Institute of Technology (EPFL) in Lausanne and friend, Paolo Buzzi. Our first business was to distribute financial information on pagers, these devices that people had attached to their belt, with a tiny 20 digit screen. Then our company, Marvel Communications, launched the Swissquote platform in 1996, it was about sharing financial information from around the world to Swiss clients. The success of that website was such that we naturally went on with the next steps: offer trading services, become a bank, go public etc. Sounds like a fairy tale nowadays but we had our ups and downs along the way. And we are both still here 30 years after.
Please remind us about the scope and range of your current product and service offerings.
I believe that on the latest count, we had over 3.5 million tradable products on our platform, so would need a few years to name them all. More seriously, the range goes from equities, fixed income, investment bonds, derivatives to eForex and all its instruments, we also offer our in-house robo-advisor, developed with our Quantitative Asset Management team, and 4 years ago, we added cryptocurrencies to our offering. Needless to say that the basics are also part of our offering: credit cards, standard bank accounts and custody services.
Why are increasing numbers of investors looking at Swissquote as a One Stop Shop for their professional trading requirements and in what ways are the banks’ values critical to its ongoing success?
The product range mentioned above speaks for itself. But most importantly, people know who we are. And we don’t pretend to be anything else. We give access to a range of products which is unique in terms of numbers and variety. We have a commission based business model so we only depend on the revenue generated by our investors. With that in mind, we are continuously seeking to enhance the service, increase the product range and create the best possible trading experience to our clients. The fact that we don’t offer any wealth management as the traditional banks do, positions us as a “neutral” actor. All this has created trust and loyalty with our clients. We have become everyone’s second bank.
What advantages does being a regulated Swiss bank provide to Swissquote in the highly competitive financial trading market?
For sure it means that the standards in terms of supervision and regulation are among the highest in the world. We have learned to work with it and spread that “swiss” spirit and standard to all our sister companies and subsidiaries. And, as a pioneer in the Swiss market, it happens that our relationship with our regulator becomes a collaborative one. I must say that abroad, our “Swissness” still is synonymous of trust, solidity, seriousness, so in that sense, it definitely helps our business.
Please remind us about the make up of your institutional customer base and the different client sectors that you now cater for?
Historically, our first type of institutional partners were the Asset/wealth managers. From almost the start of Swissquote Bank, we developed our AM platform to let Asset Managers operate directly, pass group orders, manage multiple profile of clients, etc. Then we entered the White Label business, focused on the eFX at the beginning then extended it to our entire offering. Finally, we now offer global custody services to mid-size appropriately regulated banks and brokers around the world.
Swissquote has established strong relationships with hundreds of financial institutions. So how are your services helping them to reduce their operational and trading costs while increasing trading volumes and revenue?
It’s quite simple: they know our costs, they know our level of service, they know what they can and can’t do with us, and they get to know the team that will take care of them. Our offering is transparent from the very beginning, so they make their calculations and decide. We tell them on which aspects we are very competitive, and others where our costs might be higher than what they would find elsewhere. Transparency is the key in this type of business relationship, it’s the pillar on which you build trust for the whole life of the partnership.
Swissquote is considered a pioneer in digital wealth management. How have you built on the services you offer in this space since you entered it in 2010?
Definitely. Algorithms have been enhanced, the investment universe of our robo-advisor has been widened and diversified, and the user interface has been improved to make the client experience the best possible one. On top of that, our robo-advisor is available in a white label format and also for asset managers. It’s an endless work in progress.
In 2017, Swissquote became the first bank to offer five cryptocurrencies. How important are digital assets becoming as part of your product portfolio?
We see digital assets as an increasingly important component of the Swissquote portfolio. The world is becoming more digitised in all aspects, as too are the financial markets. Crypto-assets allow for safe, transparent and cheaper ways of transacting and investing in a more democratised way. Naturally the increasing interest and development in this space will drive more trading of digital assets on the Swissquote platform.
Do you expect to see increasing institutional investor engagement with the digital currency marketplace over the next few years and what might accelerate this further?
Institutional investors are already trading crypto-assets. Smaller, more nimble institutions have been trading in this space for a few years, and many larger institutions have conducted studies and PoC’s (Proof of Concept’s) to understand how they can use these assets for trading and investing, as well as process improvement. There are now a few early adopter larger institutions trading digital assets and we’ll likely see a lot of new institutions appearing by the week as the market becomes easier to invest in due to more availability of infrastructure, clearer regulations, and a larger market capitalisation.
How has Swissquote leveraged technology as a strategic differentiator in electronic trading services which has enabled you to pull away and keep you ahead of many competitors?
Our DNA is technology. Since the very beginning 30 years ago. I guess it helps to have two founders that are engineers, graduates from the EPFL helps in that sense. The philosophy since the creation of Swissquote is to empower investors. And the only way to do that is to offer them the best technology available.
How important is an investment in R&D to Swissquote and in what ways does the bank look to engage with clients to help shape your product offerings?
R&D is at the heart of our business. And obviously innovation. People don’t always understand, even within the Bank, why we invest so much in R&D on a yearly basis, but it’s the only way to stay ahead of the game. And client feedback is part and parcel of our innovations, listening to our clients suggestions, ideas and involve them in pre-launches has been in our processes for years.
How involved has Swissquote been with industry initiatives that are trying to investigate and set standards for the application of new technologies like Blockchain across the capital markets?
Swissquote play an active role in the CMTA (Capital Markets & Technology Association). In a recent experiment between several Swiss banks, the Swissquote trading platform was used to move digital securities across the blockchain between banks through execution on the Swissquote platform. This test proved that decentralized capital markets infrastructure is ready and operational within Switzerland for the issuance and trading of digital securities.
What role do you expect the Asian market to play in Swissquote’s growth strategy over the next few years and what steps have you taken to increase your footprint across the region?
The Asian market is absolutely key in our growth strategy. Our Manchester United sponsorship, signed back in 2015 and still on-going, was built to grow the brand awareness in that fastly developing side of the world. Revenues have doubled over these last five years. For almost a decade now, we have a presence in Hong Kong, with specialists on the eFX side. And more recently, we inaugurated our Singapore subsidiary that will be in charge of the more traditional part of the business and focus on institutional partners from the Far East. It’s definitely a region where we want and need to grow in.
In 2019 Swissquote acquired the Luxembourg-based Internaxx Bank S.A. What benefits has that brought and how has it strengthened your position particularly in the institutional space?
It has strengthened our position in Europe. Definitely. With growing constraints and regulations, we had to offer an alternative to our European investors. Internaxx shared the same DNA as Swissquote. It was an obvious choice for us. And the Luxembourg regulator is equivalent to the Swiss one, so it was a perfect match for both entities.
What are your priorities and ambitions for growing the institutional side of your business still further in the near to medium term?
There are incredible opportunities in the institutional space. We can offer so many smart solutions to small and medium size banks and brokers that can cut significantly their operational costs and multiply their offering that we are just at the beginning of our development in that space. We started a few years ago targeting specific countries and regions, but now, after gathering experience and feedback, we are ready to go global.
Swissquote has talked about wanting to be the world’s most pioneering and intuitive online bank. What does it take to achieve that?
A mindset. The will, the desire that tomorrow we will be better than today. Relentlessly wanting to improve. And focusing on client experience, which is at the heart of all our philosophy. They, our clients, are the ones who will decide at the end if we are a pioneering and intuitive online bank.
Last month Swissquote exceeded market expectations and posted a record year. How has the bank weathered the COVID-19 crisis and what lasting impact do you think it will have on our electronic FX trading marketplace?
It was an incredibly challenging but yet exciting year in terms of our business. From one day to the next, we had to send 90% of our staff to work at home. And everything worked seamlessly. That is when you realize that all these BCP (business continuity plans), and other back-up/fail-over plans have a reason and a meaning. I am not sure that the pandemic and its consequences, will change much of the eFX trading behaviour in the future, but for sure it will change the way the providers of such services must be prepared to face such challenging times.