Swiss banking: the apps putting customers first

Many Swiss banks still operate the traditional way: that means turning up in person just to open an account and paying hefty fees for basic services and any card usage abroad.

Swiss banking: the apps putting customers first
But that's finally starting to change with neobanks that offer customer-focused innovation and low costs. How about opening an account digitally at any time 24/7 and in under 10 minutes? Do it on your commute – or from your couch! And then do all your account management at no cost via an intuitive app.
The largest independent offering of the neobanks is neon – which offers all of this and much more. Here, we take a closer look at the changes in Swiss banking and some independent comparisons between the new names and the old.

Reader offer: get a 20CHF starter credit and your first neon card free when you download the app and use the promotional code 'thelocal'

Get out of the Swiss banking slow lane …

While a fintech revolution has swept Europe over the past decade, banking in Switzerland has remained a little more set in its ways. The Swiss have never worried about being different. 

As well as keeping their own currency and continuing to love cash, they have hundreds of well-established Swiss banks to choose from (including the 24 cantonal banks). But how many meet your everyday banking expectations (let alone doing so at low cost)?

On arriving in Switzerland, you may find even on visiting one of these banks in person that it could take weeks to get an active account. You may also have to wait to see a staff member who speaks English. And beware trying to visit in your lunch break – some branches are closed.

Save time and money (with the arrival of the apps)

There has clearly been a gap in the market that the neobanks are now filling with savvy solutions. 

“The immediacy of information in the neon app about transactions and the exchange rate is really customer-friendly,” says Lefteris Coroyannakis, a Canadian neon user living in Zurich. “It was also a nice experience to set it up with digital ID verification. With retail banks like UBS, they work nine to five with a lunch break and there's a lot more of a paper trail.”

Independent online comparison service says app-based services also offer “notably better currency exchange rates and lower fees” than conventional Swiss banks.

Living in a small country with many borders, you may particularly value low-cost card usage abroad. A comparison found neon, Revolut and TransferWise are “significantly cheaper” for foreign transactions than Swiss app Zak and Swiss credit cards.

For anyone making frequent card purchases abroad, neon was the lowest cost provider – ahead of international rivals Revolut and TransferWise. Using a Credit Suisse standard credit card for the transactions in’s comparison would cost you over 500 francs more in a year than using neon.

Reader offer: get a 20CHF starter credit and your first neon card free when you download the app and use the promotional code 'thelocal'

Photo: Getty Images

neon was also one of the three best options if you withdraw large amounts of money outside Switzerland – taking into account both exchange rates and any fees charged. Revolut and TransferWise fared best for occasional ATM withdrawals.

“With neon, Switzerland now has a local app-based banking solution with currency exchange rates and foreign transaction fees that can compete with TransferWise and Revolut,” states in its review.

Other neon features that make life in Switzerland easier – and are not offered by international competitors – include using eBills, paying payment slips, a Swiss IBAN that makes it easy to receive your salary, and coverage by the Swiss depositor protection scheme.

Swiss security not secrecy

You may not be a billionaire in need of a secret bank account. But you do want to know your funds are safe.  

With neon, your funds are kept in a Hypothekarbank Lenzburg account and the depositor protection scheme guarantees up to 100,000 CHF. Your personal data will also stay in Switzerland.

While Revolut and TransferWise are well-known for their international benefits, they may not offer everything you want as an expat in Switzerland. According to, neither “provides a stand-alone alternative to a Swiss bank account”.

The comparison site states that “receiving incoming transfers (from Swiss employers, for example) is not practical” and no coverage by the Swiss depositor protection scheme is a further disadvantage.

Transparency and trust

Fintech has broken down barriers by introducing a degree of transparency that is alien to older banks. In doing so, the new players seek to build trust with their users and let them make their own choices.

In this spirit, neon recently launched a partnership with TransferWise. It allows you to send money directly to an international account for a 0.4 percent convenience fee on top of what TransferWise charges. For this small cost, your money could arrive within a few minutes – and always far quicker than with Swiss alternatives.

To get a neon account, you need to be over 16, resident in Switzerland with a B or C permit and resident for tax purposes exclusively in Switzerland. Google Pay is now available with neon (although Apple Pay is not yet). You also get a choice of four languages – English, German, French and Italian – and customer service at weekends.

Tradition has its place. But when it comes to managing your money, isn’t it time for some innovation and choice?

Special offer for readers of The Local: get a 20CHF starter credit and free distribution of your first neon card (usually 10CHF) when you download the app and use the promotional code 'thelocal'








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EXPLAINED: Why not paying off your mortgage in Switzerland can save you money

The idea is strange to most of us, but the majority of people in Switzerland choose not to pay off their mortgage - and save money in the process.

EXPLAINED: Why not paying off your mortgage in Switzerland can save you money

Many of us who have been raised with the goal of one day owning property will have one thing on our mind as soon as that deal is done: pay it back. 

From avoiding credit rating issues to not seeing the erosion of our hard-earned money due to interest, there are a number of reasons we want to get out of mortgage debt as fast as possible. 

But in Switzerland, due to a variety of factors, it sometimes makes more financial sense not to pay off your mortgage – or at least to pay off less than you can afford to. 

Estimates vary, but statistics show that a majority of Swiss do not pay their mortgage off before retirement. 

Not only that, but Switzerland has the highest mortgage debt per capita of any country anywhere in the world, according to OECD figures. 

READ MORE: Buying property versus renting in Switzerland: What is actually cheaper?

Here’s what you need to know. 

Why would you not want to pay your mortgage off in Switzerland? 

There are a number of factors which contribute to Switzerland’s unique framework when it comes to mortgages. 

These include the country’s wealth tax, the dual system of mortgages and traditionally low interest rates. 

At this stage, it is important to mention that while a majority of people don’t pay off their mortgage during their working life, this does not mean they skip out and run for the Caymans upon retirement (although presumably some do). 

Instead, it means people are not actively paying off their principal, but investing the funds in an account with their bank. 

When they retire, they use the money in the account to pay off their mortgage debt – and keep the change. 

This sounds complicated because it is – and is explained at length below. 

For more information on buying property in Switzerland, check out this link. 

The Swiss mortgage system: Dual obligations

The reason you may not want to pay your mortgage off in full in Switzerland is partially because of the unusual structure of mortgage obligations. 

The Swiss mortgage system differs from that in most countries in that you effectively take out two mortgages when you buy a property, or more accurately, the mortgage is split into two mortgage obligations. 

The first obligation resembles a traditional mortgage seen abroad, in that it has an indefinite repayment period and covers the majority of the purchase price. 

This will usually be around 60 percent of the total purchase price, less the deposit and the amount included in the second mortgage obligation. 

The second will cover approximately 15 percent of the purchase price. 

Importantly, this will have a fixed repayment period, usually around 15 years (at around one percent per year) or by the time you retire (if shorter than 15 years). 

EXPLAINED: How to save on your mortgage in Switzerland

While you must pay off this amount, the ‘optional’ part relates to the other component of the mortgage. 

Mortgage rates in Switzerland are low by international standards. Photo by PhotoMIX Company from Pexels

Should you choose direct or indirect amortisation? 

Amortisation is an accounting term which refers to reducing the book value of a loan or debt, but basically means paying off your mortgage. 

In most countries, the only option is ‘direct amortisation’, which means paying money to the bank to cover your debt. 

Direct amortisation not only reduces the debt, but the interest (as the interest is based on the quantum of the debt). 

Indirect amortisation is something relatively peculiar to Switzerland and is where the idea of not paying off your mortgage comes in. 

Finding a flat in Switzerland: How to stand out from the crowd

Swiss financial advice site Beobachter points out that the system in Switzerland is effectively set up to allow long-term non-repayment of mortgages. 

“In hardly any other country are the amortisation standards as lax as in Switzerland… In no other national economy can debts remain “forever” in this way”, they explain.

Instead of paying off the mortgage directly, you make regular payments into a ‘third pillar’, which is basically an investment account or fund offered by the same bank. 

This money is then used as a security against the property. 

Keep in mind the amount you need to repay will be the value of the property when you bought it, not the value of the property when you retire. 

During this time you will continue to pay interest on the debt.

This interest will not decrease as you are not paying off the principal, although Switzerland’s low interest rates make this an attractive option. 

Eventually, the debt will be taken from the third pillar. Usually, this will happen when you retire, but you can also sell the property, organise some form of reverse mortgage or sell it to your kids and have them rent it to you, among other options. 

Why is this beneficial?

The main reason this is advantageous is for tax purposes.

In Switzerland, you can deduct mortgage payments from your tax. Also, the money you pay into a third pillar is not taxable. 

Another major reason is the country’s wealth tax, which is not as unique but still relatively uncommon. 

Property: Why you can be taxed four times over for owning a home in Switzerland

In most countries, you pay tax primarily on your income. In Switzerland, you are liable to be taxed on your total wealth as well (under one percent per year). 

The wealth tax is calculated by your total assets minus your total debts. If you have significant debts – including a mortgage – then this will reduce your wealth tax. 

Importantly, the money in your third pillar does not count towards your wealth tax. 

Look, I just clicked on this article to find out about my mortgage, can you speak English please? 

While this all sounds incredibly complicated and you are advised to seek the support of a licensed agent, the calculus is relatively simple. 

Calculate the amount you would pay if you invested the money in a third pillar – keeping in mind the tax savings – by the end of the mortgage, minus the interest payments and the mortgage principal upon retirement. 

Compare this to the amount it would cost you to pay off the mortgage completely, including interest payments, keeping in mind that your tax savings will decrease over time as your regular payments decrease as you pay more of the mortgage off. 

Generally speaking, your financial advisor will present this to you as comparable percentages over time, which means your income will be a major factor in your final decision, as will your retirement plans and the tax rate in the canton and municipality you live in. 

EXPLAINED: How where you live in Switzerland impacts how much income tax you pay

It is important to note that your bank is likely to offer a combined form of both direct and indirect amortisation, which will allow you to spread the risk/burden somewhat. 

Editor’s note: Please keep in mind this report is intended as a guide only and should not replace legal and financial advice from a qualified agent or advisor.