Revolut is Nipping at the Heels of Traditional Swiss Banks

The Swiss retail banking business is becoming increasingly digitalized. A study sheds light on the newcomers challenging established players.

Efforts to digitize banking services continue to grow in Switzerland, with the gap between retail banks and digital banks narrowing. The biggest differences remain in the functions offered and the customer experience, where neobanks stand out through innovation and their primarily digital customer relationships, according to a digitalization study by Swiss consultancy Colombus Consulting.

The Swiss digitization rankings continue to be led by UBS, Postfinance, Raiffeisen, and Credit Suisse. In eighth place comes Yuh, the first newcomer. The neo-bank emerged from a partnership between Postfinance and Swissquote, overtaking the latter after just 18 months.

Moreover, retail banks are catching up with digital banks and their hybrid services, the report adds. The digital reach of Swiss retail banks increased by 12 percent to 26 million monthly visits, while social media reach increased by 7 percent to 2.3 million subscribers.

According to Jean Meneveau, director of Colombus Consulting Switzerland, traditional retail banks need to score points in the highly competitive market, especially with innovations. Credit Suisse, for example, offeres more digital services with its CSX brand, while CIC was the last bank to enter this niche, launching CIC ON, offering a whole range of digital and personal finance solutions.

In just a few years, mobile apps have evolved from a simple showcase for customer services around e-banking to an offering where banks are concentrating all of their innovation efforts.

In this area, Revolut remains unbeatable, according to the study authors with special functions such as time-limited bank cards and instant payments competing directly with Twint. Nevertheless, large banks in particular continue to prefer this payment solution, but 80 percent of all respondents now use it.

When it comes to social networks, 58 percent of the banks surveyed use Linkedin, while only 20 percent have an active Tik Tok account. Apparently, the aim is to appeal to professionals in a serious setting rather than to younger people in an unconventional setting, the report says.

Another difference is in the content disseminated. Where traditional banks emphasize their ESG products and CSR commitment, neo-banks are more likely to talk about new technologies and cryptocurrencies.

Opening an account is becoming increasingly digitized, with two-thirds of participants offering such services. However, the more conservative institutions in particular, are focusing on a hybrid customer relationship, using both digital channels for simple tasks and personal consultations for more complex customer needs.

Overall, customers are not at the point yet where they want to use digital channels for transactions to do with buying real estate or retirement planning.