For many of Switzerland’s residents, stocks and exchange-traded funds (ETFs) are no longer a strange concept. The number of people who invest in the stock market on their own is on the rise. Simultaneously, the number of service providers offering securities brokerage solutions is also on the rise. With the intrusion of neobanks into the market, private investors are no longer limited to using stockbrokers or conventional banks. Most recently, Bank Cler’s neobank Zak has joined existing providers like Neon and Yuh in offering securities investment services.
Online comparison service moneyland.ch analyzed the stock brokerage services from the neobanks Neon, Revolut, Yuh, and Zak, and compared them against offers from conventional banks and specialized stockbrokers. The analysis only accounts for services that enable the customer to buy, hold, and sell individual securities on their own. Robo advisors and other asset management services are not included in the comparison.
The results show that neobanks can be an affordable investment solution for small investors. Those who require a broader range of investments, on the other hand, are better off using a specialized stockbroker.
Low fees for small investments
The main advantage of the investment services from neobanks – apart from their user-friendly interfaces – is that the fees for small investments are comparatively low. That especially applies to Neon, Revolut, and Yuh, which do not charge any custody fees or inactivity fees, and have low minimum brokerage fees of one franc. “That makes neobanks a cost-effective alternative to conventional stockbrokers,” says moneyland.ch editor Dan Urner. “That is particularly true for trades with a value of just a few hundred francs.”
Revolut gives its customers a limited amount of free trades each month. The exact number varies between its different bank packages. The standard package which does not have a basic package fee includes one free trade per month.
Zak’s percentage-based brokerage fees are lower than those of Neon and Yuh. But because Zak has a higher minimum brokerage fee per trade, it works out somewhat more expensive for small investors. Zak also has a 0.25-percent annual custody fee. The brokerage fees – both the minimum fee and the percentage-based fee that applies after that – are 50 percent lower if you use Zak’s premium Zak Plus bank package. However, Zak Plus has a basic package fee of 8 francs per month.
The move by neobanks to use investment services to attract customers has not escaped the attention of other Swiss financial service providers. Both Saxo Bank and Raiffeisen recently lowered their fees for securities investments, possibly as a reaction to the growing competition. While Saxo Bank removed its custody fees for private investors, Raiffiesen lowered its minimum brokerage fee and its minimum custody fee, among other changes. Cornèrtrader, on the other hand, moved against this trend by introducing custody fees.
The limited selection is the main shortcoming
The weakness of neobanks is that they only offer a limited choice of securities. While conventional banks and stockbrokers offer up to millions of different securities titles, Neon and Yuh only let you choose from several hundred. “Your choice is largely limited to the stocks of the most famous companies, and ETFs that replicate the most important stock indexes like the MSCI World,” explains Dan Urner. “It is also worth noting that index investors are limited to a single choice of ETF per index.”
Zak, which offers around 12,000 different securities, and Revolut, with around 6000 titles, both offer more in this regard. But here too, the selection of different kinds of investment vehicles remains limited. For example, none of the neobanks in the analysis offer futures or contracts for difference (CFDs).
Investors who opt to use neobanks also have to accept certain limitations with regards to functionality. For example, certain trading order types like if-done orders and trailing stop orders are not available.
Zak stands out above its competitors in that regard, as customers can choose between different stock exchanges, register as stock owners in company shareholder registers, and receive in-person consultation at branch offices.
The cheapest service providers for a small portfolio
moneyland.ch compared the costs for three different investor profiles: small portfolio; mid-sized portfolio; and large portfolio. The comparison accounts for five offers from neobanks, plus the five cheapest conventional banks and specialized stockbrokers.
Revolut is the cheapest for the small portfolio profile, with just 4.75 francs of total fees. One reason for this – in addition to the monthly free transaction – is that Revolut is not a Swiss service provider, and therefore is not required to levy Swiss stamp taxes on trades. Next in line are Yuh and Neon, while Zak and Zak Plus are more expensive for this profile because of custody fees and higher minimum brokerage fees.
The comparison shows that Saxo Bank, a specialized stockbroker, can compete with the low fees charged by neobanks.
The cheapest service providers for a mid-sized portfolio
For the mid-sized profile too, Revolut takes first place among the neobanks, followed by Yuh and Neon. But Saxo Bank is cheaper than the neobanks Yuh and Neon. That highlights the fact that specialized stockbrokers can be cheaper than neobanks for investing larger amounts. “Saxo Bank has a somewhat higher minimum brokerage fee than Neon and Yuh, but its percentage-based rate that applies after the minimum is lower,” clarifies Dan Urner. “The larger the transaction, the more of a difference that makes.
The cheapest service providers for a large portfolio
Revolut also leads in the comparison for big investors, thanks to its low fees. Yuh and Neon, which take second and third place among the neobanks, lag far behind. Zak Plus and Zak take fourth and fifth place respectively.
For the large portfolio profile, Saxo Bank is cheaper than all the Swiss neobanks. And Saxo Bank is a specialized stockbroker that offers a much wider selection of investments.
Costs vary depending on your specific needs
It is important to note that the moneyland.ch calculations are based on specific investor profiles. The actual costs for you as an investor can vary depending on your individual use case. Depending on how you invest, the cheapest solution for you can differ from the cheapest solutions for the profiles used by moneyland.ch.
Methodology
For this analysis, independent online comparison service moneyland.ch compared the fees of neobanks, specialized stockbrokers, and conventional banks. The fees are calculated for a one-year investment term based on three different hypothetical user profiles using data published by service providers. The interactive stockbroker comparison on moneyland.ch was used to calculate the fees charged by specialized stockbrokers and conventional banks.
The costs account for possible account fees, custody fees, brokerage fees, currency exchange fees, and Swiss stamp duties. Calculations do not account for possibly stock exchange fees, special promotional offers, or special preferential fees. Conversions of US dollars to Swiss francs are based on an exchange rate of 1 USD to 0.75 CHF. The results are rounded to the nearest 5 centimes.
Detailed explanations of the profiles used for the comparisons:
- Small portfolio: The investor holds 1000 francs worth of shares in Swiss stocks, 1000 US dollars worth of shares in US stocks, and 3000 francs worth of shares in Swiss ETFs. In the course of the year, the investor makes one transaction of a Swiss stock on a Swiss exchange worth 500 francs, one transaction of a US stock on a US exchange worth 500 US dollars, and three transactions of Swiss ETFs on a Swiss exchange worth 500 francs each.
- Mid-size portfolio: The investor holds 10,000 francs worth of Swiss stocks, 10,000 US dollars worth of US stocks, and 10,000 francs worth of Swiss ETFs. The investor makes the following transactions at three different points in time within the space of a year: Five transactions of Swiss stocks on a Swiss exchange worth 1000 francs per transaction, five transactions of US stocks on a US exchange worth 1000 US dollars per transaction, and five transactions of Swiss ETFs on a Swiss exchange worth 1000 francs per transaction.
- Large portfolio: The investor holds Swiss stocks worth 20,000 francs, US stocks worth 20,000 US dollars, and Swiss ETFs worth 20,000 francs. The investors makes the following transactions at six different points in time within the space of a year: 10 transactions of Swiss stocks on a Swiss exchange worth 1500 francs per transaction, 10 transactions of US stocks on a US exchange worth 1500 US dollars per transaction, and 10 transactions of Swiss ETFs on a Swiss exchange worth 1500 francs per transaction.
The comparisons always account for the five analyzed neobank offers. Additionally, each comparison also accounts for the five cheapest specialized stockbrokers and the five cheapest conventional banks for the corresponding profile.
This methodology is used to account for the fee-free transactions included in the Revolut offer (one free trade per month). The calculations are based on the assumption that the first transaction at each point in time (the fee-free transaction) is used for a transaction of Swiss stocks. The fee-free trades are accounted for when calculating the total costs for the one-year comparison term.
More on this topic:
Compare Swiss stockbrokers now
Using neobanks to invest: A practical guide
Deal of the Day 
