Liechtenstein’s banks need to digitize, just like banks in every other country. They face similar challenges, but Liechtenstein also provides certain advantages. What’s the state of digital banking in Liechtenstein?

„A future-oriented economy needs a stable banking system,” said Patrick Läser, CEO at Liechtenstein-based Alpinum Bank. “In light of the corona crisis, regulatory authorities believe banks should be more flexible while keeping up a good order. We support these efforts.”

Part of being more “flexible” means being more digital. Alpinum Bank wants to offer more digital services for private banking clients, intermediaries, and entrepreneurs in Liechtenstein, the greater DACH region, and eastern Europe.

That’s in line with the position of the Liechtenstein Banking Association (LBA), which states on their website that Liechtenstein’s banking industry was “in the midst of a far-reaching transformation process that is breaking up the traditional value chain and fundamentally changing our accustomed business models.”

That sounds all wonderfully innovative, but what is actually happening on the ground? There rarely is any bank in the world nowadays that doesn’t talk about digital banking, fintech, and innovation. The issue is that many don’t walk their talk.

Liechtenstein’s banks are digitizing

Just like in neighboring countries, Liechtenstein’s banks do struggle with making the jump into the digital age. That said, things are happening, although maybe not as fast as we may want.

Alpinum Bank will use the months ahead to digitalize several of its service offerings. One of these initiatives is a digital onboarding tool for foundations, to streamline the way these players set up complex wealth structures – a good starting point considering the importance of foundations in Liechtenstein.

Liechtenstein’s second-biggest bank LLB Group is also increasingly pushing its digital agenda. The bank launched a new web portal in 2017, focusing on the user experience and integrating a range of digital services. It’s part of the bank’s strategy StepUP2020, within which LLB Group wants to build up its digital infrastructure, products, services, and channels.

COO Kurt Mäder talks about a multichannel strategy, in which the bank is supposed to become a “place of personal experiences.” Mäder believes the role of technology is to support the bank’s client consulting services. Clients will also be able to communicate with LLB staff via the web portal and video chats, in addition to the branch services of the bank.

With Bank Frick, Liechtenstein is also the home base of one of Europe’s blockchain banking pioneers. The bank was one of the first to offer blockchain banking and has become one of the leading players in this space.

Many advantages but similar challenges

So it’s true that Liechtenstein’s banks are pushing forward in terms of digitalization. One advantage is that Liechtenstein’s banks are comparatively smaller than banks in other countries and thus more flexible. They also see digitalization as a major opportunity to get an edge over the bigger competition, in terms of improved service offerings and lower costs.

Another advantage is the proximity to fintech firms in Liechtenstein and the greater Crypto Valley area, including Zurich. Liechtenstein’s regulatory authorities have also proved to be supportive of digital banking by creating feasible legislation; one example is Liechtenstein’s blockchain act.

Despite these advantages, Liechtenstein’s banks face similar challenges than banks in other countries: There are regulatory hurdles, digitalization needs infrastructure investments, and customers need to trust in new technologies. Liechtenstein’s banking sector is on a good way, but just like in other countries, there is still a long way to go.

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