In 2019, neobanks have seen the number of clients reach new and impressive levels. Which contender has done well? Where does it leave classic banks? finews.com has been taking stock.

The current year hasn’t been an easy one for Swiss banking. After the disappointments of 2018, one would have thought that things could only get better. But after a calmer stretch early on in the year, markets displayed few signs of calm, with climate change and geopolitical tensions coming back to haunt the business.

But quite apart from the challenges they are facing abroad, Swiss banks also have had to contend with new players in their home market. Smartphone banking is gaining traction: the so-called neobanks have already attracted a total of some 300,000 clients, according to an estimate by finews.com.

Revolut Surges Ahead

Revolut, the U.K.-based unicorn (with a valuation of about $1.7 billion) in August of 2018 had fewer than 50,000 clients in Switzerland.
A few days ago, the company proudly announced that it had reached the number 250,000 clients – which means that this year alone, some 180,000 citizens of Switzerland signed up to the low-cost alternative, either because they became frustrated from paying high banking charges or simply because they felt attracted by innovative services.

N26: Satisfied With Its Start

N26, the other neobank unicorn (valued at 2.3 billion euros), is also slowly gaining traction in Switzerland. The German startup has no Swiss-franc account on offer, no staff and no offices in Switzerland, but nevertheless was ready to face the challenge in September. N26 targets the market with European expats, frontier workers, digital natives and small businesses.

The company didn’t provide a number of clients it has in Switzerland. Georg Hauer, general manager at N26, told finews.com that the company had reached its target for the first month within four days. He was very happy with the start and said that Switzerland remained a very attractive market for the company.

The figure of 20,000 potential clients on a waiting list published earlier this year will likely have influenced the bank’s business goals for Switzerland. The Germans aimed to offer the most attractive euro-account to clients in Switzerland.

Zak and Neon Moving Sideways

Zak, the digital solution of Bank Cler (which is fully owned by Basler Kantonalbank), won 4,000 clients in the first half of 2019, reaching a total of 18,000. At that rate, it will now have reached a total of more than 20,000.

Swiss banking application Neon on Thursday reported that it has 10,000 clients on its books. Neon has a cooperation agreement with Hypothekarbank Lenzburg.

Way to Go

So, in all, some 300,000 people in Switzerland now have an account at a neobank. The major Swiss banks hence remain still comfortably stronger than the upstarts. Raiffeisen Switzerland has 3.8 million clients, Postfinance serves 2.9 million clients and Credit Suisse also has a book of more than a million.

And apart from the sheer number of client, those banks also are making much more money on each account than the new competitors. The new rivals are forced to offer their services almost for free to generate volume. And still, the growth rate of Revolut for instance remains highly impressive.

New Solutions in the Pipeline

The surge in volume witnessed by a single competitor will come as a worry for the establishment and will likely spur them to come up with new services. Credit Suisse for instance in August launched a direct-banking unit aimed at boosting digital service channels.

But even a big player such as Credit Suisse will have its work cut out taking on the multinational, well financed neobanks. They seem equipped to keep going without making huge profits, targeting volume above early profits.