Switzerland’s once-expansive financial sector is undergoing a significant contraction, as heightened regulation and industry consolidation force smaller private banks and wealth managers out of the market. The transformation marks one of the most profound shifts in the country’s financial landscape since the dismantling of banking secrecy laws.
Shrinking Numbers in a Changing Landscape
According to the Swiss Financial Market Supervisory Authority (Finma), only 1,570 financial institutions — including portfolio managers and wealth advisers — currently hold licenses, compared with more than 2,000 before new rules took full effect in 2022. Similarly, the number of private banks has fallen from over 100 a decade ago to just 82 today, with KPMG predicting that figure could drop below 70 by 2030.
“The trend is clear,” said Christian Hintermann, partner at KPMG. “We’re seeing fewer banks, larger institutions, and a financial sector that’s becoming leaner, more regulated, and more concentrated.”
While assets under management in Switzerland continue to grow, the pace now trails behind emerging wealth hubs such as Singapore and Hong Kong. The total number of banks, including local lenders, has also fallen from 243 in 2020 to 230 by the end of last year.
The Regulatory Burden on Smaller Firms
Much of this consolidation stems from the Financial Institutions Act (Finia), which became fully enforceable in 2022. Finia introduced licensing requirements for portfolio managers and trustees, bringing smaller, previously unsupervised firms under tighter scrutiny.
“There are many players managing under $100 million in assets — and I don’t see how they survive,” said Sebastian Jeck, partner at Novum Partners, a Zurich-based wealth manager overseeing $10 billion in assets. “I am certain there will be more consolidation.”
For smaller firms, the cost and complexity of compliance have become prohibitive. The end of Switzerland’s traditional banking secrecy and the adoption of international tax transparency rules such as FATCA further dismantled the old model of discreet offshore wealth management.
“It’s no longer a place to hide money,” admitted the head of a Zurich-based private bank. “So many institutions no longer have a reason to exist.”
After Credit Suisse: A New Era of Oversight
The 2023 emergency takeover of Credit Suisse by UBS — creating a banking giant managing more than $3 trillion in assets — marked a turning point in regulatory intensity.
“After Credit Suisse collapsed, there’s been a shift across the industry and at the regulator,” said Jay Bidermann, a partner at Rahn+Bodmer, a Zurich private bank. “Regulation has become stricter, and for firms under $10 billion in assets, it’s now very difficult to survive.”
Switzerland’s government and Finma are now focusing on systemically important banks, particularly UBS, whose assets amount to nearly twice the nation’s GDP. Proposed reforms could require UBS to raise as much as $26 billion in additional capital under a tougher “too-big-to-fail” (TBTF) regime.
The changes also expand Finma’s powers — giving it stronger early-intervention tools and the authority to hold senior executives accountable for governance failures.
A Divergent Global Approach
Switzerland’s tightening stance contrasts sharply with trends elsewhere. In the United States, the Trump administration has sought to ease financial regulations, while both the EU and the UK have delayed or softened implementation of the Basel III standards to protect banking competitiveness.
This divergence has raised concerns that Switzerland could erode its own competitiveness through overregulation.
“We must ensure the TBTF reforms don’t harm the ability of smaller Swiss banks to compete,” warned Benjamin Mühlemann, co-president of the centre-right FDP, Switzerland’s main pro-business party.
Regulator’s Perspective
Finma has defended its approach, insisting that tighter regulation is based on lessons learned from past crises. “For institutions with simpler structures, such as smaller banks, the administrative burden is expected to be minimal,” the regulator said. “The goal is not to overburden these institutions, but to ensure all market participants operate with sound governance and risk management.”
Finma also pointed out that, despite the exits, more than 200 new firms have submitted applications for licenses since 2022, suggesting continued interest in entering the market. However, the regulator acknowledged that “the new requirements represent a challenge, particularly for smaller institutions.”
Balancing Stability and Business Viability
For some industry players, the stricter environment offers both challenges and opportunities.
“Regulation is a selling point, especially for international clients,” said Jamie Vrijhof-Droese, managing partner of WHVP, a Swiss wealth management firm serving U.S. clients. “But it has to be balanced with the realities of doing business.”
Switzerland’s financial sector, long admired for its stability and discretion, now faces the difficult task of preserving its global reputation while adapting to a new era of transparency, compliance, and consolidation. As regulatory pressure mounts, the country’s smaller wealth managers are being forced to decide — merge, modernize, or disappear.
