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UBS bank will spend $1 billion on comprehensive IT overhaul

Mon 17 Oct 2016

Swiss global financial services company UBS, the largest provider of private banking in the world, is set to spend $1 billion on a complete refit of its IT infrastructure.

Speaking to Reuters, UBS’ Chief Operating Officer for the company’s wealth management sector said “This is about integrating our historically fragmented infrastructure that we have globally into one platform”, and added “[We] want to have the same processes, the same way of approaching UBS and we also want to raise synergies and scale in the back office.”

The company, headquartered in Zurich, has not revealed what savings the project might yield over its current IT arrangements.

The IT overhaul, which does not cover the separately managed U.S. section of UBS, seems to be part of a drive toward refocusing from investment banking – which has lost much of its historical worth in the sector in recent years due to the globally low or negative interest rates put in place after the 2008 financial crisis – towards the growing field of wealth management.

Last week UBS launched its SmartWealth offering in the UK, with a minimum entry level of £15,000, including new and existing ISA holdings.

The UK scheme is seen as a test-bed for services which could be rolled out to the company’s APAC region holdings. The Wealth Management division of UBS is worth approximately 947 billion Swiss francs, equivalent to about $925 billion. The company is estimated to manage $1.7 trillion in total customer assets.

Even given the scale of the holdings and potential of the product, $1 billion is an extraordinary level of investment for a private company which is already launching platforms in the market that the proposed IT platforms are intended to support, and almost harks back to the scale of the government IT fiascos of the late 1990s and early noughties.

Banking’s mindset on cloud is very different to the cash-strapped western governments which have developed entire provisioning frameworks and organisations to move their data loads into cloud storage and processing. In a 2015 report Tom Schmidt, Cyber Security Leader at FSO Switzerland, branded cloud-based services and third-party data management tools as ‘new channels of risk’, noting also the increasing threat that IP-based systems could prove to banking infrastructure.


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