Although Switzerland is a global banking hub, a study commissioned by financial technology company Crealogix found low adoption of digital features and low satisfaction rates with digital banking among Swiss small and medium-sized enterprises (SMEs).
The survey, which interviewed SMEs in the UK, Germany and Switzerland, found that in these three jurisdictions, Switzerland had the lowest adoption rate of digital banking features for SMEs and levels of lowest satisfaction, suggesting that the available solutions are either irrelevant or too difficult to use.
The survey results revealed that only 22% of SMEs in Switzerland are satisfied with their bank’s digital offerings, compared to an average of 40% in the survey. At the same time, Swiss SMEs have been shown to be very enthusiastic about adopting digital services, with almost 80% of respondents indicating that they want to increase the number of digital touchpoints with their bank.
These attributes make Switzerland an attractive market for SME banking fintechs, according to the report, where existing services appear to fall short of demand.
An underdeveloped industry
Digital banking for SMEs is an underdeveloped fintech segment in Switzerland, although SMEs represent 95% of the national economy.
Last year, serial entrepreneur and former CEO and co-founder of German neobank Penta Lav Odorovic said he would enter the market with a new banking startup for SMEs.
Relio says it will provide businesses in Switzerland with digital bank accounts, fast and remote integration, as well as advanced tools and software integrations that allow SMEs to easily manage their finances. The company, which applied for a Swiss fintech license, closed a CHF 700,000 pre-seed funding round in April 2021.
Relio’s next corporate account will be the first local banking product for SMEs in Switzerland and will join similar proposals from foreign digital banking startups, including N26 and Revolut.
These startups operate in a sector where Swiss incumbent operators are slow to innovate. Credit Suisse CSX’s affordable digital banking offering is only available for the retail market, and UBS appears to lack a digital banking product for SMEs and instead provides online banking capabilities as well as discounts on fees. fees for startups.
But 2021 saw a handful of Swiss banks making efforts to better serve the SME market. Raiffeisen Switzerland, for example, teamed up with digital banking software provider Backbase last year to revamp customer engagement and improve the experience.
The bank said it would base its digital offerings for individuals and SMEs on the Backbase Engagement Banking platform to deliver a new customer experience and consolidate all of its digital services into one platform. This strategic move will allow Raiffeisen to deliver seamless experiences to customers, including digital engagement channels and services delivered at local branches, he said.
Europe’s hot SME neobanking industry
These developments are explained by the rapid growth of the digital banking sector for SMEs in Europe.
In the UK, SME business account provider Tide is one of the country’s fastest growing fintech startups, serving more than 350,000 SMEs. The startup launched its operations in India in 2020, its first international market.
In France, Qonto serves SMEs and the self-employed, providing services such as deposit accounts, financial management, debit cards for business expenses, payment solutions, etc. Qonto is one of the best-funded fintech startups in France and is said to be in talks to close a € 400 million funding round at a massive valuation of € 4.4 billion.
In Germany, Penta has accumulated more than 25,000 professional clients, allowing them to manage all of their financial activities from a single platform. The startup closed a round of funding of 22.5 million euros in series B last year.
And in Greece, Viva Wallet raised $ 80 million in April 2021 to expand its presence across Europe and the services it offers. Viva Wallet currently serves clients in 23 European countries with services including business accounts, digital debit cards, small business payment solutions and credit card acceptance. The startup is said to be working on a new funding round that could include the participation of JP Morgan.