Swiss banks and insurance companies are facing increasing competition from foreign IT companies. Predictions of a future in which tech giants bring down Swiss banks and insurance companies with innovative banking and insurance products have been quick in coming. Tech evangelists have worked hard to convince us that Swiss consumers place as much trust in foreign tech giants as they do in Swiss banks and insurance companies. But is that actually the case?
To find out, moneyland.ch conducted a representative, anonymous online survey of 1500 individuals across German-speaking and French-speaking Switzerland. The survey, which was undertaken by Ipsos (formerly GfK Switzerland), required participants to indicate their readiness to open a bank account or get an insurance policy at each of a number of listed companies. Participants rated their readiness on a scale of 1 to 10, with 1 indicating that they would not consider a company at all, and 10 indicating that they were completely ready to open a bank account or get insurance from the corresponding company.
Options for both bank accounts and insurance included: the digital megacorporations Google, Amazon, Facebook, Apple, Tesla, Samsung, Microsoft and Uber; British fintech startup Revolut; Swiss banks UBS, Credit Suisse, Raiffeisen, Zürcher Kantonalbank, Migros Bank, Bank Cler and Valiant; insurance providers Mobiliar, Axa and Generali. In addition to specific companies, Swiss pension funds, Swiss insurance providers and Swiss banks were also included as general options.
Swiss consumers skeptical about tech companies
The results of the survey show that the future of Swiss banks and insurance providers and their battle against tech giants is not as bleak as it is often painted to be. At least insomuch as current sentiment among Swiss consumer would indicate.
“The vast majority of consumers either cannot imagine or can barely imagine banking or taking out insurance from Google, Amazon, Facebook, Apple and similar companies,” according to moneyland.ch CEO Benjamin Manz. Only 23% of consumers rate their chances of using bank accounts from one or more tech giants as good to very good. This figure is lower for insurance, at 18% of consumers. The vast majority of consumers want to continue using Swiss banks and insurance providers.
Little demand for Google as a banking and insurance alternative
Google is widely marketed as a possible future competitor in the banking and insurance space. However, in Switzerland that does not appear likely anytime in the near future. Only 14% of survey participants rate the chance of their considering a bank account from Google as good to very good, while 72% rate the chance at none to poor. Similar results are found in insurance. Only 11% of consumers can see themselves taking out insurance from Google, while 77% rate the chances of their doing this at none to poor.
Consumers leery of Facebook
The fact that it is possible for social media companies to enter the financial services industry has already been proven by companies like China’s WeChat. But Facebook will likely have a more difficult time getting a hold on consumer’s pocketbooks. In Switzerland, Facebook is only superseded by Uber as the least popular option for banking and insurance. Only 6% of Swiss consumers rate their chances of banking with Facebook as good to very good. The portion of consumers who are willing to use Facebook for insurance is also 6%.
Apple bank account? Rather not!
Apple has already entered the financial services sector by way of Apple Pay. But promotions for Apple bank accounts would likely fall on deaf ears in Switzerland. Only 12% of Swiss consumers rate their chances of using an Apple bank account as good to very good. Insurance from Apple would be met with even less enthusiasm – less than one in ten consumers (9%) is likely to consider taking out insurance from Apple.
Little enthusiasm for Amazon as a banking or insurance provider
Tech evangelists love to herald Amazon – even more than Facebook, Google and Apple – as the future threat to banks and insurance companies. But as far as Swiss consumers are concerned, Amazons chances of competing in the banking and insurance space are poor. 80% of consumers rate their chances of using Amazon as a banking alternative as none to poor. Only 7% rate them as good to very good. For insurance, these figures are 82% and 7% respectively.
Microsoft, Samsung, Tesla and Uber
Of all the options included in the survey, Uber received the poorest chances. Apparently Swiss consumers have a hard time imagining getting bank accounts or insurance from a taxi and transportation company. Only 4% of participants rate their chances of opening a bank account at Uber as good or very good. The portion which rate their chances of getting insurance from Uber at good to very good is also 4%.
Figures for other tech giants like Microsoft, Samsung and Tesla were not far better. Only 11% of consumers rate their chances of opening a bank account with Microsoft as good to very good. This figure is 9% for Samsung and 8% for Tesla. Only 9% of consumers can imagine Samsung being an alternative to insurance companies, while 9% can imagine Microsoft insurance and 8% can consider Tesla insurance.
Fintech startups still have an uphill climb
Fintech startups face similar challenges in gaining market share from banks and insurance providers – at least in terms of gaining the trust of Swiss consumers. British startup Revolut, which provides many of the services offered by banks and also offers some insurance products, provides a good example. Although Revolut is somewhat known in Switzerland, only 6% of survey participants rate their chances of using a Revolut bank account as good to very good. The portion of participants whose chances of getting Revolut insurance is good to very good is also 6%.
How do Swiss banks compare?
The vast majority of Swiss consumers expect to continue using bank accounts provided by Swiss banks. Only 5% of participants would consider not using a Swiss bank if they had a viable alternative. 86% of consumers rate the probability of their using a Swiss bank as good to very good.
Consumer sentiment towards individual banks is also interesting: Only 29% of participants rate their chances of using the Valiant regional bank as good to very good. This figure is 33% for Bank Cler, 49% for the Zürcher Kantonalbank, 50% for Credit Suisse, 51% for UBS, 58% for PostFinance, 60% for Migros Bank a surprising 71% for Raiffeisen Bank. Apparently, the recent financial scandals involving Raiffeisen Bank have not seriously damaged its popularity.
How do Swiss insurance companies compare?
Like Swiss banks with regards to bank accounts, Swiss insurance companies are the preferred choice of consumers for insurance products. Only 8% of consumers stated that they prefer not to take out insurance from Swiss insurance companies. On the other hand, 78% of consumers rate their chances of getting insurance from Swiss insurance companies as good to very good. The good to very good ratings of individual insurance companies are lower, with 50% of consumers giving this rating to Axa, 50% to Mobiliar and 44% to Generali.
Differences between regions and gender
Compared to German-speaking Swiss, French-speaking Swiss are more skeptical of tech companies with regards to banking and insurance. Similar differences are found when comparing rural dwellers and urban dwellers and men and women. Rural dwellers are less open to banking and insurance alternatives from tech giants than urban dwellers. Women are less open to these alternatives than men.
Young adults are more tolerant of tech firms
The most significant differences are found between age groups. Younger adults are significantly more open to banking and insurance alternatives from Google, Amazon, Apple and other tech giants than older adults.
For example, 23% of adults aged 18 to 25 years old rate the chances of their considering a bank account from Google as good to very good – compared to 18% of adults aged 26 to 49 and 6% of adults aged 50 to 74 years old. A similar pattern is found in insurance: 20% of adults aged 18 to 25 rate their chances of considering insurance from Google as good to very good – compared to 13% of adults aged 26 to 49 and 4% of adults aged 50 to 74 years old.
In total, 41% of young adults rate the chance of their considering bank accounts from tech companies as good to very good. 37% rate the chance of their getting insurance from tech companies as good to very good.
All finance as an alternative?
Another interesting insight provided by the survey examines the number of consumers who would consider a bank to be a good alternative to an insurance company for insurance and an insurance company to be a good alternative to a bank for banking. 48% of participants rate the chances of their taking out insurance from a Swiss bank as good to very good. On the other hand, only 34% of participants rate the chance of their opening a bank account at a Swiss insurance company as good to very good. “Selling banking products will likely prove more challenging for Swiss insurance companies than selling insurance products is for banks,” says Benjamin Manz.
Competition is edging closer
As the moneyland.ch survey shows, Swiss banks and insurance providers are – by a wide margin – the first choice for bank accounts and insurance policies. U.S. tech giants Google, Apple, Facebook and Amazon (collectively referred to as GAFA) are not currently taken seriously by Swiss consumers as viable banking and insurance alternatives.
“But banks and insurance companies cannot rest on their laurels,” warns Benjamin Manz. The tech giants have not yet launched banking and insurance products in Switzerland. The development of fintech alternatives to banks and insurance companies is also still in its fledgling phase.
“Individual fintech startups will likely develop into genuine competition for conventional banks and insurance companies in the future.” Benjamin Manz is convinced that this will happen. Swiss banks are particularly vulnerable with regards to costs and user friendliness, and these are areas in which lean startups with significantly better or cheaper products can rapidly gain ground.