UBS Digitising Bank Through Expansive Fintech Investments
(1 June 2020 – Europe) UBS Group AG has invested up to USD$20 million into fintech companies in an attempt to accelerate innovation and digitisation.
The bank’s biggest business has traditionally been with high-value corporates typically managed via account managers. However as a result of the COVID-19 pandemic the bank has decided to shift more towards digital services.
Ultimately, the fund will broadly invest in fintech companies that will assist the bank in the following three categories: enhance client engagements, better investing/financing platforms, and improve banking operations.
UBS Group AG reported strong Q1 results despite the coronavirus crisis, and analysts predict the Swiss bank will continue to outperform European peers in Q2 due to their wealth management businesses and flexibility on costs owing to a wide reaching restructure completed in Q4 2018. As a result the bank now benefits from a lower operational cost base, allowing it to continue improving efficiency in the future and free up capital for investment in digitisation.
With a 40 percent year-on-year increase on Q1 net income, UBS pulled in €1.45 billion. In comparison HSBC's net income fell 51 percent while Barclays and BNP Paribas posted declines of over 30 percent. Strong securities trading revenue and lower loan loss provisions than peers was the main driver behind UBS’s robust Q1 result. S&P Global research company Coalition forecasts a slowdown in trading revenues in H2 2020 however even if capital market volatility subsides and provisions rise, Swiss banks such as UBS and Credit Suisse are generally seen as more resilient than their European peers.
“The new venture investment portfolio is a next step to accelerate our innovation and digitisation efforts” says Mike Dargan, UBS’s Global Head Group Technology.