Banks

Are neo-banks the solution for the Swiss abroad?


Keystone / Monika Skolimowska

One of the biggest thorns in the side of the diaspora is the high bank charges imposed on Swiss abroad. However, recently, new online banks have appeared and could represent the long-awaited alternative.

This content was published on February 02, 2022 – 15:13

“I closed my account at Credit Suisse – they are crazy with their 500 francs annual fee”. “I pay a monthly fee of 40 francs simply because I am Swiss abroad. Thank you very much but without me”.

The comments left by Internet users on swissinfo.ch about bank charges are not kind. And for good reason. Forced closing of accounts, exorbitant management fees… Many and many Swiss abroad feel, for years, mistreated by traditional banking establishments.

Here we explain the reasons for the high tariffs:

Determined to dust off a Swiss banking market that has fallen asleep on its laurels, new entities have nevertheless appeared. They are called neo-banks. If they are not the miracle solution, they could however prove to be more adapted to the financial needs of the Swiss diaspora.

What are we talking about?

The term neo-bank designates a new generation of digital banks, often 100% mobile and accessible from a smartphone application specific to each.

Regardless of their business model, whether purely digital or more traditional, all banks in Switzerland are required to meet the legal requirements laid down by FINMA (Swiss Financial Market Supervisory Authority). Thus, the neo-banks also must “have sufficient capital and liquidity, be organized in such a way as to be able to manage the risks and offer the guarantee of irreproachable management”, according to its spokesman Vinzenz Mathys. Similarly, their clients’ deposits of money are guaranteed up to 100,000 francs per person, with the exception of fintech establishments, with which the funds are not covered by the deposit guarantee.

It is also important to specify that there is a terminological nuance between online banking and neo-banking. An online bank is usually attached to an existing traditional bank. It offers a dematerialized offer, but with possibilities of often equivalent services. A neo-bank, on the other hand, is a payment entity that has received a banking or fintech licenseExternal link (designates the integration of technology with offers from financial services companies) issued by FINMA and which offers basic banking services.

This is also the reason why the fees charged by neo-banks are much lower. This is confirmed by the Swiss Bankers Association (SBA): “It is true that many digital banks differentiate themselves through transparent and on average lower fee models. In return, they usually only provide a few simple services, such as payments or a basic overview of the account.” Many of them do not offer credit or mortgage options. They also do not have agencies and sometimes do not have real advisers, but only a “chatbot”, namely a chat window animated by algorithms.

The advantages and disadvantages

Besides that, neo-banks are essentially virtual. All transactions are made via their smartphone application, which represents a barrier for people less comfortable with new technologies. Due to their purely digital structure, the question of a possible hack or a bug that would make the application unavailable also arises.

As with traditional banks, some countries are excluded from their services for legal and legal reasons. This is explained by the fact that, in order to be active in other countries, banks must have a license there and comply with the regulations in force there. This entails risks and extra work. This is particularly the case of the United States, the third country in the world which receives the most Swiss from abroad.

Several neo-banks also limit their activities to only a few countries, mainly in the Euro zone.

However, the advantages remain numerous. The most obvious being the fact of not having to appear in person to open an account. The speed of execution of payments and transfers, very low management fees, generally advantageous exchange rates and multi-currency accounts are all points likely to appeal to the Swiss diaspora.

Which neo-banks for the Swiss abroad?

In Switzerland, online banks include CSX from Credit Suisse, Zak from Banque Cler and neon, which works in collaboration with the Lenzburg mortgage bank. These offers are not a priori aimed at Swiss abroad, because you must reside in Switzerland to subscribe to them.

But some have found solutions by keeping their official address in Switzerland, for example with a member of their family, to whom they give power of attorney.

Several foreign neo-banks are active on the Swiss market and accessible to non-residents. The best known include n26, which hails from Germany, as well as Wise (formerly Transferwise) and Revolut, both from the UK.

However, FINMA warns: “Swiss clients should be aware when subscribing to such services from abroad that the providers are not supervised by FINMA.” This also means that in the event of a legal dispute, the owner of the account must defend themselves abroad, where the head office of their bank is located, according to Vinzenz Mathys.

As for the neo-Swiss banks, the most suitable for Swiss abroad seem to be Dukascopy, FlowBank, Swissquote, Yapeal and Yuh.

Dukascopy Bank SA is headquartered in Meyrin. According to the authorization of FINMA, it is an institution specializing in stock market transactions, wealth management and asset management. It offers multi-currency accounts to non-residents of Switzerland.

FlowBank SA is classified by FINMA as a bank under foreign domination. It is a “trading platform”, according to its website. It also offers access to a current account.

Swissquote falls into the same category as Dukascopy. Its head office is in Gland. Its “main activity is closely related to trading”, but it offers other banking services.

Yapeal AG is based in Zurich. In 2020, it became the first Swiss entity to receive a fintech banking license. Its offer particularly targets the Swiss abroad and cross-border workers.

Check out our full article on Yapeal here:

Yuh was born from the collaboration between PostFinance and Swissquote. It “operates under the banking license of Swissquote Bank SA and is thus subject to FINMA”, can we read on its website.

The services in brief:

Dukascopy

FlowBank

Swissquote

Yapeal

Yuh

FINMA banking or fintech license

Free standard account (opening and maintenance)

Debit card

Current 2022

Credit card

X

X

X

Other banking products (savings, credit, mortgage, etc.)

X

X

Countries covered

“All except USA and Iran”

“All except USA, Canada, Israel, Iran, North Korea, Belgium and other sanctioned countries”

“All except restricted countries”

Germany, France, Italy, Austria, Liechtenstein (extension to other countries planned for 2022)

Germany, France, Italy, Austria, Liechtenstein

How to choose?

According to Nicole Töpperwien, director of Soliswiss (mutual aid cooperative society for the Swiss abroad), “to find a good solution, it is important to accurately assess your own needs.” She recommends asking yourself the following questions: “Do I need a credit card, do I want to make payments or above all save or even invest money, what is happening with my mortgage, where should the AVS go? Depending on the country and the needs, different options come into play.”

If you have not yet left to settle abroad, Soliswiss advises to inquire as soon as possible with the various banking institutions. Despite this, “there are always scenarios in which no satisfactory solution can be found”, regrets Nicole Töpperwien. All that remains for the persons concerned is to use the D system.

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In accordance with JTI standards

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