Challenger Digital Banks: Switzerland
Revolut and N26 are challenger digital banks that offer business banking services in Switzerland. Initium is planning to launch in Switzerland this year.
SWITZERLAND & DIGITAL BANKING BACKGROUND
- Switzerland is lagging behind other companies when it comes to digital banking. Other than Revolut and N26, the big names in digital banking do not operate in Switzerland.
- Switzerland's customer base, lack of competition, and a regulator that has just "woken up" to the new digital players, are all mentioned reasons to enter the digital banking arena.
- Barriers for entering the arena include the size of the country (their TAM is the size of a large US city), time to get a license, multiple official languages, and profit margins being largely driven by off-shore wealth.
- Revolut was founded in 2015 and is based in London. In 2017, they reported $15.67 million in revenue, and $17.31 in 2018. From 2016-2017, their revenue growth was 443%. They offer personal and business products.
- Their market valuation is currently $1.7 billion, with $336.5 million in total funding over 12 rounds, with the last being March 27, 2019. They are a private company and considered a tech unicorn.
- Revolut has completed a total of 350 million transactions at a total value of $48.9 billion.
- Revolut states they have 7,000 new accounts opened daily.
- They have nearly 20,000 businesses as customers, along with 4.5 million customers total. In the UK, they have 1.6 million customers.
- Businesses may hold, receive, and exchange 29 currencies without charge.
- Revolut claims they are ten times cheaper than a bank.
- They have had significant reported losses.
- Their business customers have an Open API to integrate their Revolut account into their current workflow and stack.
- Revolut operates in Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.
- Their website may be viewed here.
- Initium, which is Switzerland based company has plans to build a corporate banking group. Initium was founded by Daniel Spier.
- They want to create a fully-licensed bank and have started their first round of investments. Initium will offer deposit taking, local payment clearing, card issuing, and acquiring, and liquidity services.
- Initium wants to target fintech, blockchain, and crypto.
- Their banking services may be viewed here.
- Their website may be viewed here.
STARTUPS TO KEEP AN EYE ON
- Neon and Yapeal neither offer business banking, but they do offer digital banking.
- Neon offers fully service digital accounts and has a goal to simplify customer relationships with banks. Their website may be viewed here.
- Yapeal is a neo-bank that has a goal of redefining banking. They do not offer business services at this time. They have a fully digital on boarding process. Their website may be viewed here.
To locate the top challenger digital banks, we first located industry articles that stated who the best digital challenger banks were. To be included in the next stage of our research, a bank had to be mentioned multiple times. Once we had our list, we then researched each bank separately to obtain an across the board metric. This proved difficult, as some banks did not list their annual revenue. We believe this happened because some banks are operating at a loss due to how new they are. Our next approach was to order them by their customer numbers. This again proved difficult, as the biggest bank we researched did not separate their customer base, and some banks only do business banking. Active users and monthly transactions also ran into the same issues. To combat this problem, we holistically looked at all the metrics we obtained to get our top listings.
Due to the small amount of banks that offer the desired services, and the unique relationship Switzerland has with digital banking, we have provided all challenger banks that operate.
To assess the market penetration, we began by locating industry reports and market studies. This did not give us enough information to triangulate a market share, as most of the information was global. Consulting business press releases from Globe Newswire, PR Newswire and from each business’ website gave us the bulk of our information. To finish our research, we researched available banking information from the government. Again, this gave us a few facts. Ultimately, we were able to put together a snapshot of the market, but not exact figures.