After a general overview of the characteristics of the new players on the online banking market (see article what-is-a-neobank), the next section primarily concerns readers domiciled in Switzerland and includes a list of online banks in Switzerland as of September 2021, but a quick overview can serve as a basis for comparison for all.
Currently, most of the customers use these neobanks as additional options to their main bank. According to the newspapers l’Agefi and Le Temps (see sources), the 6 Swiss neobanks Zak, Neon, Flow-Bank, Yuh, CSX (Credit Suisse) und Yapeal have a total of about 200’000 customers at the end of August 2021, which is relatively low compared to Revolut: The leading foreign player has indeed more customers in Switzerland than all its Swiss competitors combined. German mobile bank N26 and its limited euro offering seems to be less successful than its English Nemesis.
Here is a look at the major players at the start of fall 2021 in Switzerland:
- Zak: An entity of Cler Bank, itself owned by Basel Cantonal Bank (BKB). Zak offers a free basic product. As with CSX (Credit Suisse), customers can use the subsidiaries of the banking group. For the time being, almost all users are new customers: there is therefore no cannibalization of the parent company’s customer base (even if the acquisition costs seem high).
- Neon: Fintech whose accounts are hosted by the Lenzburg mortgage bank, itself holder of a Swiss banking license. The startup focuses on the credit and debit card business (currently 70% of its revenues). The platform also promotes third-party products, such as Smile’s insurance or other management services (generating revenue per lead).
- Flow-Bank: A bank that has recently started its activity and has yet to prove that its offer will be sustainable. It focuses its services on trading and addresses private and institutional clients. The bank has also mentioned its application for a license extension from Finma (Swiss Supervisory Authority) to be able to propose cryptocurrency trading and tokenization, as well as offer a pension solution.
- Yuh: A joint venture between Postfinance and Swissquote, with a 50/50 shareholding, offers trading capabilities like Flow-Bank. Features such as multi-currency and investment function are still too expensive with 0.5% transaction fees compared to IB and Degiro. Yuh also charges an outrageous 0.95% on each foreign currency transaction! Unlike Zak and Neon, there is no possibility to speak with a representative in a PostFinance office.
- CSX (Credit Suisse): Offers a very wide range in its paid solution, but it will be a matter of watching out for cross-selling of unattractive products or additional fees (such as ATM withdrawals) that are charged even in the free version.
- Yapeal: First institute to get a Fintech license from the Swiss Financial Market Supervisory Authority. Like Neon, this fintech company seems to suffer from the international reputation of Revolut on the one hand, and other providers supported by an established banking group with more resources, such as Postfinance or Credit Suisse on the other. For example, Yapeal charges a fee if a transfer is required.
- Revolut: Although it is not a Swiss institution, we should mention Revolut because of its pioneering role and importance worldwide and in Switzerland. The British neobank claims 16 million customers worldwide, including 450,000 in Switzerland. It has entered the Swiss market in 2016 and has been offering an IBAN there since 2019. It was able to take advantage of mobile customers buying online abroad, without being part of the deposit protection system.
Before signing up for a new bank, you should think about what services you need it for in the first place (payments or investment) and whether a neo-bank is really better than a traditional bank to meet your objectives. Based on these needs and comparing the terms and conditions you can consider which provider is the most suitable. For foreign transactions, Revolut seems to be unbeatable now with its credit card allowing purchases in many currencies. For online basic services in Switzerland, Zak and Neon are competing for the top spot thanks to their free basic package and the backbone of a banking license from their partner (you will find under global-tools further current attractive providers in other financial services areas). This situation could change soon, however, with the planned arrival of Radicant (Basellandschaftliche Kantonalbank) as well as offerings from Migros Bank and UBS before the end of 2021. We are still far from the hundreds of banking start-ups that have sprung up in the United States, but the world of neo-banks in Switzerland could well grow in the short term, before a possible consolidation. Especially since giants such as Amazon and Facebook have already started to take an interest in digital finance.
Sources: l'Agefi, Lent décollage pour les néobanques suisses, 4 août 2021, www.letemps.ch Le Temps, Néobanques: une leçon d'opportunisme bancaire, 12 août 2021, www.agefi.com Sites of the mentioned institutes