The First Swiss Digital Private Bank

Key findings

Options available to Swiss residents for growing their savings are lacklustre: The median interest rate for cash accounts in Switzerland, for adults with a capital of 100,000 CHF, is 0.0%. For saving accounts the median interest rate is 0.75%.
With the current inflation rate in Switzerland standing at 2.1%, it means that Swiss residents can only offset a third of the erosion of their purchasing power with the median interest rate offered by banks on saving accounts.
In most banks, depositing more money into savings accounts does not yield higher rewards. The median interest rates for a capital of 500,000 CHF drop to 0.56% and 0.53% for 1 Million CHF.
Although savings accounts generally offer better interest rates on average, the additional yield compared to cash accounts comes at a significant cost: Accessing your own capital becomes difficult.
Among the 136 cash and savings accounts analysed in our sample, only 5 offer interest rates higher than 1.0% without any restrictions on capital access.
Most banks pay interest rates annually, which limits people from fully enjoying the benefits of depositing their money with the bank.
From a positioning standpoint, Alpian's offering is quite distinctive: clients benefit from favorable interest rates, starting at 1% and going up to 1.50%, even for large sums. Additionally, the interest is paid on a monthly basis, and users can access their capital at any time.

Introduction

Cash accounts are an essential component of personal finance, serving as the primary vehicle for managing day-to-day monetary transactions for most individuals. They enable the holder to deposit and withdraw funds and perform basic banking operations. However, one of their drawbacks is that they are not a particularly efficient tool for saving. They offer lower interest rates compared to other financial products, such as savings or investment accounts, and provide limited protection against inflation.

Savings accounts typically provide higher interest rates, but this often comes at the cost of reduced access to capital. Users' ability to withdraw their funds is usually subject to various restrictions associated with savings accounts, such as:

Limits on the amount that can be withdrawn monthly or annually
Required notice periods for withdrawals exceeding certain limits
Penalty fees for urgent withdrawals
Possible additional fees or restrictions on making payments from the account
Charges imposed by some banks for closing the account or on new deposits

Additionally, the criteria to qualify for higher interest rates can vary significantly among banks, including minimum balance requirements, maximum deposit limits, time-bound offerings, and promotional interest rates applicable only to new deposits.

While savings accounts offer certain benefits, such as stable interest with limited risks, they also require foresight. Users often become aware of the true limitations and costs, such as penalty fees, only when attempting to access their capital in full, perhaps to meet unexpected expenses or to finance real estate purchases. For instance, a penalty fee of 2% can easily negate several years' worth of interest earnings.

Overview of Alpian’s offering

Every Alpian account comes with a multi-currency account (CHF, EUR, GBP, USD) — all connected under a single IBAN
The interest rates structure on CHF deposit is as follows:
1% on CHF deposits up to 50’000 CHF
Deposits between CHF 50,001 and CHF 1,000,000 earn a 1.5% interest rate.
The interest rate is paid pro-rata on a monthly basis
Alpian’s clients have unrestricted access to their capital, with no limitations on withdrawal amounts, no required notice periods, and no penalty fees
As a Swiss bank, deposits are insured up to 100,000 CHF

Panel – Selection of providers

To assess our competitive standing, we focused on both Swiss banks and foreign banks operating in Switzerland that offer cash and savings accounts. Our analysis includes a wide range of financial institutions, encompassing most universal banks, cantonal banks, and neobanks active in Switzerland. We focused on basic cash accounts and basic saving accounts available to mass affluents. We excluded from our analysis:

Saving accounts only reserved to a specific segment of the population (young individuals or seniors for example)
Bonus savings accounts, as they typically impose even more restrictions on users. Our objective is to compare the default options available to Swiss residents.

In total, we surveyed 73¹ banks. The number of cash and saving accounts in our sample is displayed below.

Cash accounts: 70 banks.
Savings accounts: 65 banks.

Data collection method

The data was gathered on January 31st, 2024, directly from the websites of various banks and their fees and conditions brochures. It was cross-checked using Moneyland. All interest rates are shown gross, not including taxes.

Limitations

This study focuses solely on the interest rates offered on basic cash and saving accounts offered by banks active in Switzerland. We omitted bonus savings accounts, which might offer higher interest rates, to ensure a fair comparison across institutions. The aim was to evaluate the default options available to Swiss residents. Additionally, for similar reasons, we excluded private banks from our sample. This analysis does not take into account the costs associated with maintaining a banking relationship or taxes. Lastly, the findings are based on the conditions present at the time of this analysis, and interest rates are subject to change.

Findings

Interest rates: what Swiss residents can realistically expect?

The general observation we can make is that the options available to Swiss residents for growing their savings are lacklustre. The median interest rate for cash accounts in Switzerland, for adults with a capital of 100,000 CHF, is 0.0%. For saving accounts the median interest rate is 0.75%. In comparison, the current interest rates banks receive from the Swiss National Bank for sight deposit range from 1.25% to 1.75%². With the current inflation rate in Switzerland standing at 2.1%³ , it means that Swiss residents can only offset a third of the erosion of their purchasing power with the median interest rate offered by banks on saving accounts.

While individuals can expect higher interest rates by moving their money from cash accounts to savings accounts, the increase to 0.75% comes with significant limitations. Essentially, users give up the ability to access their capital freely. Most banks set limits on the amount that can be withdrawn per month. A typical savings account offer:

Median interest rates ranging from 0.75% to 0.53%, depending on the capital deposited.
Restrictions on performing basic banking operations.
An average monthly withdrawal limit of around 17,000 CHF.
A required notice period of around 3 months for accessing larger amounts.
A penalty fee of 2% for emergency withdrawals.
Interest paid annually.

These conditions highlight the trade-offs faced by Swiss residents when choosing between cash and savings accounts. Generally, Swiss residents are not fully aware of all the fine print associated with savings accounts and often learn about them the hard way, such as when they need to access their funds for significant expenditures like purchasing a property.

Statistics – Interest rates offered on cash accounts for various deposit sizes

Statistics – Interest rates offered on savings accounts for various deposit sizes

The lack of diversity leaves Swiss resident with limited options

In our study, we discovered a startling fact: the interest rate structures and solutions offered across the board are quite standardized, not just in terms of structure but also regarding conditions. As indicated by the quartile values, most banks fall within a narrow range. This led us to ask, "What are the best conditions Swiss residents can hope for while maintaining full control over their money?" The answer was surprising: out of 73 banks, only 7 currently offer an interest rate above 0.25% without any constraints. For individuals seeking an interest rate above 1.00%, the number of options dwindles further to between 3 and 5, with Alpian being among them.

Statistics – Number of banks offering interest rates above specified thresholds without constraints on capital accessibility

Wealthier doesn’t mean better off, quite the opposite

An interesting observation that may contradict public perception is that wealthier individuals do not necessarily receive better conditions on their deposits.

Since most banks adopt a decreasing interest rate structure, interest rates for larger deposits tend to be lower. For instance, the median rate for a 25,000 CHF deposit is 0.75%, but it drops to 0.59% for a deposit of 500,000 CHF.

Not only are users not rewarded for increasing their capital in their account, but they also feel the impact of constraints on capital access more acutely. For example, withdrawing 25,000 CHF when the average withdrawal limit is 17,000 CHF means it will take the user two months to fully access their capital. For 500,000 CHF, using the same limits, it would take 30 months.

While this example may seem extreme, as withdrawal limits can sometimes be bypassed, notice periods and potential penalties (up to 2%) may apply, negating all the benefits of interest rates that are already modest. According to our study and as of 31^st January 2023, Alpian was the only bank offering interest rates above 1.25% for deposit of 1MM CHF without constraints.

Payment frequency: not Christmas every month

Another limitation that hinders Swiss residents from fully enjoying the benefits their hard-earned money could provide is the frequency of interest payments.

Typically, one must wait until the end of the year to see the interest that has been accrued. This is a curious restriction that seems more aligned with accounting industry practices than with commercial considerations.

While this may seem trivial from a bank's perspective, it is significant for users, as most of our expenses, and the interest rates associated with them (such as those on mortgages), operate on a monthly basis. Alpian was one of the few banks willing to change this standard approach.

A glimpse of hope

Our study highlights the extent of standardisation within the banking industry, as reflected in the uniform range of solutions offered to clients. With the rise of digital banking, we observed that a few players are introducing alternatives. A key finding is the blurring lines between cash and savings accounts. Modern users expect higher interest rates coupled with fewer constraints. As a result, banks that adopt innovative approaches can offer better conditions for their clients and manage their treasuries more dynamically.

Average interest rates for various deposit size per type of financial institution

Appendix

Our findings are consistent with the following study Where Can I Earn the Most Interest? - moneyland.ch

¹Aargauische Kantonalbank, Acrevis, AEK bank, Alpha Reintal, Alpian, Appenzeler Kantonalbank, BancaStato, Bank avera, Bank BSU, Bank EEK, Bank EKI, Bank Ganstrisch, Bank Leerau, Bank Zimmerberg, Banque cantonal du Valais, Banque cantonale du Jura, Banque Cler, Banque Migros, Banque Wir, BBO Bank (Bank Brienz Oberhasli), Banque cantonale de Genève (BCGE), Banque Cantonale Neuchâteloise (BCN), Banque cantonale vaudoise (BCV), Berner Kantonalbank, Bernerland Bank, Bezirks Sparkasse, Banca Popolare di Sondrio (BPS), CA next bank, Caisse d'épargne d'Aubonne (CEA), Cembra, CIC, Clientis, CSX, DC Bank, EKR (Ersparniskasse Rüeggisberg), Freiburger Kantonalbank, Graubündner Kantonalbank, Glarner Regionalbank, Hypo Vorarlberg, Hypothekarbank Lenzburg, Kontomat, Leihkasse Stammheim, Luzerner Kantonalbank, Neon, Nidwaldner Kantonalbank, Obwaldner Kantonalbank, Postfinance, Radicant, Raffeisen, Regiobank, Revolut, St.Galler Kantonalbank, Schaffhauser Kantonalbank, Spar- und Leihkasse Bucheggberg, SLG (Spar + Leihkasse Gürbetal), SLR bank, Spar- und Leihkasse Wynigen AG, Spar & Leihkasse, Sparhafen, Sparkasse Schwyz, Swissquote, Schwyzer Kantonalbank, Thurgauer Kantonalbank, UBS, Urner Kantonalbank, Valiant, Will be, Yuh, Zürcher Kantonalbank, Zuger Kantonalbank, Zurcher Landbank, Zuger KB, Zurcher Landbank.

²https://www.snb.ch/en/the-snb/mandates-goals/monetary-policy/implementation

³https://www.bfs.admin.ch/bfs/en/home/statistics/prices.html