Swiss banks are facing mounting pressure from technological developments, shifting customer expectations, and intensifying competition from fintech startups, forcing them to spend more to keep up.

According to a new EY study, 57% of the 100 Swiss and Liechtenstein banks surveyed in November 2025 identified rising operating costs as the greatest strain on their income over the next one to two years. This concern far outweighs other challenges, including falling income from maturity transformation, cited by 16% of respondents, deposit shortages, cited by 12%, and pricing pressure in investment banking, cited by 9%.

This cost surge is in part driven by the need to modernize. According to the 2026 IFZ Fintech Study by the Institute of Financial Services Zug (IFZ), though cloud-native and modular “neo-core” solutions are attracting growing attention, established core banking providers remain dominant in Switzerland’s banking industry. These providers lock banks into rigid, expensive legacy systems that are slow to adapt, preventing them from efficiently meeting modern customer demands and competing with agile fintech startups.

This financial tool is illustrated by findings from the IT Cost Survey for Swiss Banks 2025. Drawing on 2024 data, the study found that while operating income per customer across all participating retail banks increased by 4.3% in 2024, the median of IT expenditure per customer rose by 5.1%, reflecting that increased business volumes had not offset the escalading rise of IT costs.

Additional pressure is coming more intensive competition from fintech companies and their increased integration into the financial system. According to the IFZ study, Swiss and Liechtenstein fintech companies are heavily international (81%) and business-to-business (B2B)-oriented, serving financial institutions rather than only retail consumers. Specifically, 60% of fintech companies in these two countries primarily operated in B2B markets, while a further 33% combined B2B and business-to-consumer (B2C) activities.

Furthermore, banking infrastructure is now the largest fintech segment in Switzerland and Liechtenstein, accounting for 39% of all fintech companies in these two countries. This suggests that fintech firms are capturing portions of the banking value chain that were historically owned entirely by banks.

Swiss banks tap new opportunities

Recognizing these challenges, Swiss banks are embracing artificial intelligence (AI) to keep up with younger, and more agile players. Results from the EY study show that AI has moved beyond mere discussion to become a firmly established part of the banking landscape.

In 2025, the proportion of banks that had solely got as far as discussing AI and its introduction fell to 22%, down from 38% the prior year. 78% of banks were already busy implementing AI projects, with 5% stating that they had actually integrated AI into many applications already.

In terms of application, banks are strengthening their focus on process automation. 80% of respondents prioritized this area in 2025, up 13 points from 67% a year prior. The proportion of banks identifying AI in customer and investment advice as the primary source of efficiency gains also rose, increasing from 13% in 2024 to 19% in 2025.

Conversely, a decline of almost 20 points was recorded in the area of risk management, falling from 27% of the institutions surveyed in 2024 to just 8% in 2025. According to EY, banks appear to be shying away from the challenges in data quality and availability, regulatory requirements and low error tolerance.

Despite progress in AI adoption, Swiss banks also identified significant challenges in implementing the technology. In the area of AI governance and AI risk management, banks continue to see data security and ethical aspects as the greatest challenges in implementing and using AI, with 49% of respondents citing data protection and ethics among the biggest challenges, though this figure represents a 5 point decline from the previous year.

At around 30%, banks rated all other aspects the same, including the lack of clear guidelines and standards, difficulties in identifying and assessing risks, insufficient transparency and traceability, insufficient capabilities and training of employees, and definition of AI governance.

Besides AI, the study also examined Swiss banks’ stance on digital assets, highlighting that the new asset class is now established. This is evidenced by the market dividing up and banking groups adapting their respective business models.

Notably, foreign and private banks primarily focus on the various digital asset models, with 64% and 50%, respectively, stating that digital asset business models will be relevant for them in the next one to three years. Foreign banks are focusing on asset management of digital assets in particular, while private banks are concentrating on digital asset brokerage and advisory services.

Meanwhile, regional banks, but mainly cantonal banks, are disproportionately distancing themselves from digital assets, focusing instead on tried-and-tested business models. For cantonal banks, the share of institutions sticking strictly to traditional methods nearly doubled, jumping from 24% in 2024 to 47% in 2025. Regional banks are following a similar trend, though less dramatically, with the number of institutions limiting themselves to traditional models rising from 38% to 61% over the same period.

Featured image: Edited by Fintech News Switzerland, based on image by thanyakij-12 via Magnific