Is it Better to Build or Buy a Bank in Switzerland?
We recently collaborated with groups that are looking to buy a bank. What are my thoughts about the pros and cons of applying for a license versus buying a regulated company?
​Acquiring a regulated entity can present significant challenges, primarily due to the potential inheritance of existing liabilities and obligations. These may include retaining employees who may not align with the new management’s vision, dealing with board members whose reputations could be complex, and managing client accounts with inadequate Know Your Customer (KYC) procedures.
 Such inherited issues can lead to increased compliance risks and operational inefficiencies. For instance, inadequate KYC processes can expose the acquiring company to regulatory penalties and reputational damage.  Therefore, conducting thorough due diligence is essential to identify and mitigate these potential risks before finalizing the acquisition.
Usually, existing banks and asset managers have also existing vendors with depreciated solutions and migration can become a nightmare.
The advantage of buying a licensed company is that you will perhaps save time. You might also consider developing existing businesses with new principles and services, such as bitcoin.
This obviously is interesting if they have a properly manage CRM or client relationship management tool. You need to read the CRM and PMS audit trail first.
If you go to the acquisition scenario, and you wish to buy a company you might have to build a new team, and with the swiss regulation… highly skilled and expensive local professionals. You will need also to apply for official approval for the change of control. This means that the regulator should also approve the new owners. The new board of directors should consist of members with high reputations.
The regulator may also ask you what the new business model is and how it will improve the current situation.
When you start this new bank it is also very likely that the focus will be important on bank inflows. Each time a stakeholder makes any type of inflow or outflow, it is necessary to enforce strong surveillance.
The complexity of this process is actually working fine but regularly needs updates. We could not advise you better than using InvestGlass remediation tools for complex onboarding and continuous monitoring. The goal is to demonstrate to auditors, at any given moment, that due diligence, as well as checks for AML, LBA, sanctions, and proof of funds, were carried out accurately.
Is it better to buy or to build?
If it is to add another shareholder and not change the business operations into an existing structure well definitely it is better to buy.
Now if you have to change everyone on the board, in the operations, and in clunky PMS software then it’s perhaps better to start something from scratch and apply for your own license. This could be the right time to implement a tool for SRI ESG gamified and better onboarding – for the next generation.
And you, would you buy or build?