Neobanking Is on the Rise in Switzerland

Thursday, 13 August 2020 15:48

Neobanking is quickly gaining traction in Switzerland, with new firms adding scores of clients. And that was before the coronavirus forced people to stay at home.

10 percent of Switzerland’s permanent population have used an online-banking solution at least once, according to the Swiss Payment Monitor, a study compiled by University of St. Gallen (HSG) and ZHAW. The interviews with the 1,200 people were conducted at the of 2019 and covered people’s payment habits.

The survey does not include potential changes to habits prompted by the lockdown, which is claimed to have boosted digital payment solutions. The user numbers of Twint, the Swiss payment app, doubled during the lockdown.

Swiss Are Seen as Safe Options

Swiss neobanks Zak, Neon and Yapeal as well as foreign rivals Revolut, Transferwise and N26 will likely have profited from the shift. The banks themselves tend to be less than forthcoming with precise data on their customer base. N26 for instance has only made qualitative statements, while Revolut is known to have some 250,000 Swiss clients. Neon counts 30,000 and Zak 35,000. The total number of Swiss banking clients is 7 million.

The study authors have drawn their own conclusions as to the power of the newcomers. Revolut is the best-known, with 26 percent of the polled saying they knew the firm. Zak was a brand recognized by 16 percent. Revolut and Transferwise, a British provider of payment services, are used most often (with 7 and 3 percent of respondents). Zak and Neon however have the edge over their foreign rivals in terms of perceived safety.

Neobanking: Complementing Main Banking Services

Men in general and young, well-educated Swiss are more likely to use neobanking apps than other parts of society. The younger and well educated obviously are the ones targeted most by the newcomers.

Three quarters of all neobanking clients use the services in addition to the ones available from traditional banks – mainly abroad, where new banks have a clear edge over traditional banks in terms of fees and commissions.

The big banks, UBS and Credit Suisse, recently launched their own card services, which reflect the price challenge by the new players. Credit Suisse also promised news on a digital platform in the autumn, a tool that the bank intends to use extensively to chase new clients.

No to Cashless Society

The study authors also asked whether the surveyed were in favor of a cashless society. A full three quarters said that getting rid of cash as a means to make payments was no option, with half of all surveyed rejecting the idea altogether.

Only about 20 percent of people favor a cashless Switzerland, which shows that the country isn’t ready for such a radical overhaul of society by a long measure. Many of the surveyed Swiss argued that they were concerned about cyber-attacks and fears of being monitored by the state or financial institutions.

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