App-based neobanks like Neon, Revolut and TransferWise which offer app-based accounts and favorable pricing have rapidly gained popularity in recent years.
In response to these challengers, established Swiss bank Credit Suisse is launching a new digital banking service at the end of October. Unbiased online comparison service moneyland.ch analyzed the new CSX package.
The results show that the basic CSX bundle which combines a private account and a Debit Mastercard with no annual fees is substantially cheaper for consumers who primarily make cashless transactions than accounts from conventional banks. Additionally, the app already includes many different functions and banking services.
“This new basic digital offer for adults will force other conventional Swiss banks to compete,” believes moneyland.ch CEO Benjamin Manz.
The new CSX service from Credit Suisse explained
The basic CSX account for adults includes a fee private account and a Debit Mastercard. User can choose between two different cards: The Basic White Debit Mastercard which has no annual fees and the Premium Black Debit Mastercard which has a basic card fee of 3.95 Swiss francs per month.
The Basic White Debit Mastercard has a cash withdrawal fee of 2 francs per withdrawal, even for cash withdrawals at Credit Suisse ATMs. The Premium Black Debit Mastercard has no cash withdrawal fee for withdrawals at Credit Suisse ATMs.
Both cards have no foreign transaction fees for purchases in foreign currencies. However, standard Credit Suisse exchange rates are used for currency exchanges. Fees and charges associated with transfers are the same as those used for other Credit Suisse accounts.
For young adults between the ages of 12 and 25 years old, Credit Suisse is launching a CSX Young account which includes a Premium Black Debit Card with no monthly fee.
As with most Swiss private accounts, the CSX account has an interest rate of 0% per annum. A negative interest rate of 0.1% per annum applies to the portion of account balances exceeding 100,000 francs. The standard Credit Suisse negative interest rate tiers apply to higher balances.
moneyland.ch compared CSX to competing offers based on two different profiles: The first without cash withdrawals and the second with cash withdrawals.
Costs for users who do not make cash withdrawals
moneyland.ch evaluated the costs of private accounts including debit cards for an adult who does not make cash withdrawals and compared these with competing offers. The user in this profile has an average account balance of 10,000 francs, uses online banking or mobile banking for transfers, uses a debit card to pay for purchases, and does not make cash withdrawals.
The result: For this user profile, the new Credit Suisse account is one of the cheapest Swiss private accounts available to adults. Without accounting for currency exchange rates, the CSX account with the no-monthly-fee debit card is as cheap for this kind of user as the account from Swiss neobank Neon. Both have no costs. However, when currency exchange fees are accounted for, Neon works out somewhat cheaper for foreign transactions because it has more favorable exchange rates.
For users with this profile who want the Premium Black Debit Mastercard, the account costs 47.40 francs per year.
Private accounts and debit cards from other established Swiss banks are significantly more expensive for this user profile. The annual account costs for the same consumer would be 151.60 francs at UBS, 162 francs at the Zürcher Kantonalbank, 168 francs at Raiffeisen, and 155 francs (private account) or 239 francs (Private Account Plus) at PostFinance. Even the standard private account from Credit Suisse is much more expensive for this profile at 110 francs per year.
Costs for users who make cash withdrawals
moneyland.ch evaluated the costs of the new CSX account and debit card for adult users who make cash withdrawals and compare them with competing offers. The user in this profile has an average account balance of 10,000 francs, uses online banking (mobile banking) for transfers, rarely uses debit cards to pay for purchases, and frequently makes cash withdrawals at out-of-network ATMs.
The result: The CSX account is less affordable for adults matching this user profile than it is for those who don’t make cash withdrawals. This is because of the cost of fees charged for cash withdrawals. CSX users in this profile with a Basic White Debit Mastercard would spend 116.50 francs per year on fees, while Premium Black Debit Mastercard holders would spend 163.90 francs per year.
But CSX is still cheaper than most offers from other conventional banks for users who make cash withdrawals. PostFinance account holders matching this profile would spend 176 francs (Private Account Plus) or 206 francs (private account) on fees each year. The same user would spend 218.70 francs at the Zürcher Kantonalbank, 231.70 at Raiffeisen, and 234.80 francs per year at UBS. If the same user got a conventional Credit Suisse private account, they would spend 250,50 francs per year on fees – making this the most expensive of the accounts included in the comparison.
For consumers who match the cash-withdrawal profile, both Neon (46 francs per year) and Zak Plus from Bank Cler (96 francs per year) are cheaper than CSX.
CSX compared to neobanks
Cards from foreign neobanks Revolut and TransferWise are still more affordable for international transactions than the new Credit Suisse digital account because they have more favorable currency exchange rates. But unlike Revolut and TransferWise, CSX is an actual Swiss bank account in your name and provides Swiss depositor protection. Revolut and TransferWise are not included in the comparison because they do not provide personal Swiss bank accounts.
For adults who need a Swiss bank account and debit card, only Neon is more affordable than CSX. Neon uses currency exchange rates similar to those used by Revolut and TransferWise, while still providing a Swiss bank account (at the Hypothekarbank Lenzburg).
Effects on the Swiss retail banking market
While Swiss banks have long observed the development of neobanks, they increasingly see the need to respond to the advent of these challenger banks.
With the launch of a private account and debit card without annual fees by Credit Suisse, the pressure on other Swiss banks has again increased, observes Benjamin Manz. In the coming years, we can expect to see a whole range of new digital offers appear in the Swiss banking market. This development will likely breathe new life into the somewhat stagnant Swiss retail banking sector.
Credit Suisse still has a lot of room for growth with regards to digital channels for services like mortgages, pillar 3a retirement savings, stock brokerage and asset management. These services are already offered digitally by some competing Swiss financial services providers.
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