Interview with CEO and CFO

“The customer needs to perceive maximum user-friendliness and security.”

We are reading everywhere that “the future of payment is digital”. What are the most important changes that digitisation entails in your sector?

Martin Huldi: We are living in exciting times. The technological upheaval is creating new opportunities. If we move from plastic cards to digital solutions on smartphones, this will make paying even easier and more secure for the customer in the future.

Conrad Auerbach: The contactless terminals that we have had in Switzerland for some years now were the precursors of digitisation. The second phase is now following with the digitisation of the card and payment by smartphone. But that in itself is still not a revolution. Things will get exciting in phase three when the apps and software tools installed on the smartphone come into play and link the payment procedure with other information or offers. That will then be the true digitisation.

Huldi: The customer interface will be decisive in the digital age. We are pursuing a clear strategy of mastering this interface and offering the customer added value – via the data that we make constructive use of and the information that enhances the customer’s security.

How can the Aduno Group utilise the changed parameters brought about by digitisation for itself?

Huldi: Firstly, thanks to our partnership with the major card organisations we can offer our customers a solution that not only works locally in Switzerland but also globally – a uniform standard for the whole world. Secondly, our solution is secure. Customers can rest assured that making digital payments entails no risk. This is also important for merchants.

Auerbach: The third benefit is user-friendliness: it should make no difference for our customers whether they pay by plastic card or smartphone or whether they go shopping in Switzerland or abroad.

Digitisation is attracting powerful enterprises such as Apple, Google and Samsung to the market. How can the Aduno Group hold its own in this environment?

Huldi: By viewing these major companies as partners. By manufacturing smartphones with NFC functionality, they provide the mobile devices required for digital payments on which the credit card is stored as a means of payment, while we ensure POS acceptance with an NFC-enabled terminal infrastructure. They have decided to offer their payment solutions on the basis of credit cards. And when it comes to credit cards, the Aduno Group is a well-established partner.

Auerbach: What is more, these companies are massively speeding up the change. Brands such as Apple, Google and Samsung also have an incredible impact on consumers also in Switzerland. By relying on a scheme-based solution – i.e. a connection to MasterCard and Visa – they give us enormous momentum.

Huldi: We are convinced that the major companies will enter the Swiss market in the course of the year. We are sparing no effort to ensure that we are prepared in terms of payment processing when D-Day arrives.

What specifically did the Aduno Group carry out in 2015 in order to be ready when D-Day arrives?

Auerbach: The main focus last year was placed on preparing the systems to ensure that the procedures prescribed by MasterCard and Visa work smoothly. Implementing such technologies is no trivial matter and called for significant investments. The technical projects ran in the background. The customer was not aware of these.

Huldi: The customer needs to perceive maximum user-friendliness and security. It is with this claim that we launched the new VisecaOne app for authorising transactions, for instance. VisecaOne offers customers the benefit of even easier and more secure payment in e-commerce. The payment can be confirmed with just one click.

What does the customer otherwise stand to gain – apart from more user-friendliness and enhanced security – from the new digital offerings?

Auerbach: The key issue clearly comprises the value-added services we will be able to offer customers in the future. Take, for example, the individual premiums as part of the surprize rewards programme. These are only possible thanks to the digital recording and linking of data.

What was business like overall for the Aduno Group in 2015?

Huldi: It was a challenging but good year. We met our targets and budgets. We successfully completed the important projects we have just been talking about or pushed ahead with them according to plan. All in all, the Aduno Group now has a higher degree of maturity.

What impact did the scrapping of the euro/franc floor have on the financial result?

Auerbach: We have to distinguish various effects here. For one thing, the Aduno Group generates a significant share of its sales in the eurozone. These earnings were devalued by 15 per cent at one fell swoop. That is the negative side. On the positive side, volumes increased considerably. The Swiss are going shopping and spending their holidays more in the eurozone. Although the overall impact was negative, it was not quite as bad as had been feared.

Huldi: The leasing business was heavily affected. Dealers had to grant massive euro discounts on both new and used vehicles. Nevertheless, my conclusion for 2015 is positive: we can be proud of the fact that we succeeded in this environment in maintaining our total portfolio in Consumer Finance and achieving a respectable result.

Auerbach: And we shouldn’t forget that the good result was achieved despite investments in our various projects amounting to around CHF 30 million. The low interest rates helped us. The zero to negative interest rates introduced by the Swiss National Bank have reduced our refinancing costs.

How did the Payment business develop?

Huldi: In the cards business we achieved a further net growth of 3.9 per cent. We distributed over 51,000 additional cards in net terms, above all thanks to the productive collaboration with our partner banks. We upheld the level in the Acquiring business despite the challenges of the euro/franc exchange rate. This too is to be rated positively.

How do you rate business in Consumer Finance?

Huldi: Ambivalently. The personal credit business can boast an impressive performance. We have grown by CHF 59.3 million or 10.4 per cent and in doing so have gained further market shares. However, as mentioned, the leasing business proved extremely difficult.

Auerbach: It should be added that we achieved the increase in the personal credit business with an ongoing restrictive risk policy. We continued to lend carefully and responsibly – in accordance with the expectations of our bank partners. The fact that we nevertheless gained market shares is particularly encouraging.

Huldi: Our innovative strength undoubtedly plays a part here. For example, in 2015 we launched a new product – cashgateCAREER offers study loans. Here we cooperate closely with universities and training institutions. The product covers a genuine need and has created a new business area.

The pricing model with the two fixed interest rates of 7.9 and 11.9 per cent is also innovative. Now that the Federal Government has set the maximum interest rate for private credits at ten per cent, the model has to be adjusted – how?

Auerbach: This step could be seen coming for some time. We have therefore prepared various scenarios and potential courses of action. We will obviously have to reduce the higher interest rate and at the same time take account of what the competition does. We aim to offset falling prices by rising volumes.

Huldi: The dual-price model has already enabled our customers to benefit from fair, market- and risk-adjusted conditions. This is thanks to our positioning and our good reputation in the market. We also wish to retain a degree of price leadership under the new conditions and to be a fair partner.

Speaking of fair partners: the Aduno Group has been involved with the Plan B association since 2010. What exactly is this?

Huldi: The Plan B association embodies a long-standing partnership with Caritas and Pro Juventute. Together we support projects and advisory services on all aspects concerning the responsible handling of money and consumption. The Aduno Group contributes 90 per cent of the financing and undertakes to sensitise customers towards risks of overindebtedness. Our partners implement preventative measures, hold training courses and provide advisory services.

Auerbach: We assume our corporate responsibility with conviction. We have anchored this attitude in our strategy and values. The involvement of the Aduno Group in the Plan B association serves to exemplify this.

How do you see the further development of the leasing business?

Auerbach: The leasing business is set to remain challenging. New cars are only selling sluggishly. Manufacturers are therefore placing their vehicles on the market via their own financing institutions – at conditions against which we neither wish nor are able to compete. On the other hand, the risks in the leasing business are also low, which means that the business therefore remains interesting. However, volumes will stagnate in 2016.

What are your plans for the current year?

Huldi: 2016 will be a decisive year. Together with our partner banks and our merchants we need to complete the preliminary work required for digital payment on time before Apple, Google and Samsung enter the market with their mobile offerings. Because we cover both sides of the market, we are particularly challenged. But this also means we can offer our customers unique solutions for the digital age.