Service provider for the Swiss economy
Banks, insurers, asset managers and other financial service providers perform key functions for society in everyday life. Without them, consumption, trade, investment, insurance from risks and pension provision would be impossible. The financial centre mobilises capital and makes it available to companies for investment purposes and for putting new business ideas into practice. Internationally active SMEs and large companies rely on cross-border financial services that support their business activities.
The figures show that Switzerland currently has a financial centre that provides the Swiss economy with essential services and contributes to the country's international competitiveness. In 2019, banks supplied CHF 1.212 billion in credit to citizens and businesses; of this, CHF 1.038 billion was in the form of mortgage loans . On capital markets, banks supported bond issues worth CHF 43 billion (CHF 16 billion in net terms) . In 2018, financial institutions managed CHF 865 billion in pension fund assets and CHF 123 billion in third-pillar pension assets.
Insurance institutions (of which there are just under 200) not only allow private individuals and companies to obtain coverage for numerous risks, they are also important investors. Swiss insurers' total capital investments amounted to CHF 542 billion in 2019. In the direct non-life insurance business, Swiss insurers paid out CHF 18 billion on claims in Switzerland in 2018.
Employer and taxpayer
In 2019, the financial centre contributed 9.2% to GDP. Thus, the banking and insurance industry is the second-strongest industry in Switzerland in terms of value added. In 2019, the Swiss financial centre employed 206,419 people, representing 5.2% of total employment. In the same year, the financial centre contributed an estimated CHF 7.9 billion, or 7.2%, to public finances.
Cross-border business, in particular, is a key factor in the financial centre's considerable importance. Switzerland is the most significant centre for cross-border wealth management, with USD 2,400 billion in client assets, compared to USD 1,900 billion in Hong Kong and USD 1,100 billion in Singapore.
As for the growth of the Swiss insurance industry, this is in large part due to Switzerland's increasing importance in the global reinsurance business, as well as to an increase in non-life insurance. Life insurance grew only slightly, owing to the low level of interest rates. The Swiss (re-)insurance location, with its internationally successful companies and great expertise, contributes to the global importance of the Swiss financial centre.
In addition, Switzerland has the third-largest stock exchange in Europe and is one of the world's leading commodities trading centres.
The international importance of the financial centre is also reflected in trade statistics. It is an important export industry, accounting for 24% of service exports in 2019. In 2018, Swiss financial institutions' share of foreign investment amounted to 12.4% of total Swiss capital stock abroad.
Since the 2008 financial crisis, however, the Swiss financial centre's share of GDP has been declining, despite a slightly positive trend in value added. Over the same period, financial sector employment has likewise decreased in both absolute and relative terms. At the same time, the number of banks in Switzerland fell from 325 in 2009 to 246 in 2019, especially in the area of foreign and private banks.
This development can be explained by the changing conditions in the international tax framework and the global wealth management business, the contraction of big banks' investment banking business and increased pressure on margins caused by the low interest rate environment.
Over the same period, the insurance industry's share of value added has risen steadily to CHF 30.9 billion, bringing it close to the banks' share of CHF 33.6 billion. The consolidation in Switzerland also mirrors a trend witnessed across Europe. Other regions of the world have been able to exploit positive demographic and wealth trends.
The emergence of fully digital "neobanks" and fintech service providers is unlikely to have a major impact on the available data, but might reinforce the existing trend towards downsizing and consolidation in the banking sector. By contrast, rising employment has been observed in activities auxiliary to financial and insurance services. This is probably due to the increasing spread of outsourcing and, more generally, to the greater fragmentation of value chains in the financial sector. It can be assumed that these trends will continue.
Last modification 18.11.2021