And again there is a newcomer in the business of neobanking while the established players are fighting to bolster their foothold. This raises the question of how many neobanks Switzerland really needs.

It is getting crowded, one is tempted to say: on Monday, the British firm Longevity announced it would open a digital bank in Switzerland next spring.

Is it just another digital bank then? No, the plan is to establish a digital bank for pensioners and people who want to live a long and healthy life. The company will also combine banking services with healthtech offerings and introduce a bonus system that hitherto has been the domain of the health insurance industry.

Banking Below the Million-Franc-Threshold

A few weeks ago, Geneva-based Reyl went public with news that sounded fairly similar: its boss, François Reyl, will launch a product called Alpian, a digital bank for the affluent private client.

And, last but not least, the summer will see another newcomer under the name of  Yapeal. The fintech promises its users the most comfortable banking experience there is. Banking for you and me, and not for millionaires.

Digital Upwards Trajectory

All these announcements have one thing in common: they aim for the pretty narrow Swiss market, a place that already seems over-banked. A country with between 8 and 9 million inhabitants, 7 million banking clients, surely not everyone needs his or her own bank?

But different rules seem to apply to the world of digital banking, in particular in times of the corona-pandemic. Twint, the Swiss payment app, also on Monday announced the latest user figures. And they are going in one direction only: upwards.

Massive Push

The company has registered 45,000 new users every week since the beginning of the year, with the number of transactions rising 50 percent in the process. Today, Twint is on the smartphones of 2.5 million Swiss.

One reason for this massive push is the rising share of e-commerce. The trend received a major boost by the lockdown, when consumers were forced to buy all but the daily goods online. But digital solutions seem to be en vogue in any case, even discounting the corona-effect.

Digital Niche Products

Digital investment adviser Selma Finance for instance has opened some 1,000 accounts this year so far. And N26 is also more than satisfied with the development of business in the German-speaking regions of Europe, as Georg Hauer told finews.com.

Hauer says that clients want a niche product, which is why there is such huge scope for new players in the market. N26 for instance has a euro-account for expats and frequent-travelers, Alpian aims for the rich private clients, Longevity wants to serve pensioners – among others of course.

Looking for the Unique Selling Point

The attempt to serve very special clientele ties neatly in with the new Forrester published last week. It showed that most traditional banks find it difficult to differentiate themselves, to emphasize a unique selling point and therefore look indistinguishable from an outsider's point of view.

The digital bank that focuses on one segment only won't have this problem. It also doesn't have to vie with traditional banks for a share of an ever-smaller market.

Advantage and Disadvantages

Two veterans of the business however will face that problem one day. They are not active in one niche only, but both are fairly successful nonetheless – Swiss digital banks Neon and Zak.

Neon does well not least because of the cooperation agreement with Hypothekarbank Lenzburg. It has doubled the number of clients this year so far, said Julius Kirscheneder, co-founder of Neon: «We have strongly reduced the fees on card payments abroad at the beginning of the year, which led to a massive increase in new clients. The corona-crisis has given a further boost.» Activities have changed of course, because clients won't book any holidays or pay for restaurant bills using Neon – there aren't many of those in the first place. But transactions have shifted to normal household spending and online shopping, said Kirscheneder.

Not Saturated Yet

Zak by contrast has seen growth slow during the crisis. The company says that the slowdown was presumably due to a lack of personal contact and mouth-to-mouth propaganda. In the past two weeks, following the first steps towards a relaxation of lockdown rules, the new client acquisition has bounced back, the company said. 

It is too early to say when the business will become saturated. But if a bank can afford to see growth slump because clients can't exchange about the pros of the service, maybe there is still scope for more players.