The Effects of Diversification on Swiss Private Bank Performance

Deep dive as part of KPMG’s Private Banking Study “Clarity on Swiss Private Banks 2025”

Professor Tomi Laamanen, Thomas Starck and Joonas Kauto

Swiss private banks have responded to growing complexity and global competition with diverging strategies. This deep dive analyzes whether – and how – geographic and product diversification over the 2015–2024 period impacted the performance of 71 Swiss private banks.

Key Takeaways

  • Two business models lead to superior performance:
     → Large international banks with comprehensive service offerings
     → Focused boutique banks with strong specialization in Switzerland

  • Breadth without scale often leads to weaker performance

  • Strategic clarity and operational efficiency are critical for long-term success

Summary

The Swiss private banking sector has undergone profound transformation over the past two decades. As bank secrecy was phased out and regulatory standards tightened – most notably through the introduction of AEOI in 2017 – many institutions reassessed their strategies.

This study focuses on 71 Swiss private banks that remained active from 2015 to 2024. It examines how their geographic expansion and product/service diversification impacted performance.

Banks that successfully expanded both their international presence and service portfolio – the so-called diversified global players – demonstrated the highest returns and growth, leveraging scale and reach. In contrast, banks with broad services but limited geographic reach tended to underperform due to high complexity without sufficient market base.

Interestingly, focused boutique banks that limited themselves to core offerings and a domestic presence also achieved strong profitability, suggesting that strategic clarity and operational efficiency can compensate for limited scale.

The study concludes that diversification is not a universal recipe. Swiss private banks must choose between becoming global full-service institutions or highly specialized boutiques. In today’s competitive environment, being “stuck in the middle” is not a sustainable path.