Switzerland awards first fintech banking license

A new breed of digital challenger banks is lining up in Switzerland. Keystone / Robert Günther

YAPEAL has become the first financial institution in Switzerland to receive a fintech banking license. The new digital bank plans to challenge the traditional retail banking sector with personalized accounts tailored to individual clients.

The bank is building a community-style customer base known as “Yapsters” who will be among the first to try out its services based around their own needs.

This might include a new style of account for customers’ children or a robo-advisory service that balances income, fixed household costs and a client’s desire for different goods.

YAPEALExternal link says it will charge simple flat fees rather than the complex system of opaque fees that high street banks typically charge clients. It also pledges not to lend out customer’s money unless they first give approval. YAPEAL also stated on Friday that it intends to launch a Visa debit card.

“YAPEAL is very pleased to have reached this fundamentally important milestone,” co-founder Andy Waar said in a statement. “We are working with high intensity to achieve market entry.”

“We are introducing a completely different style of banking,” Waar told swissinfo.ch in 2018. “I’m not even sure if you would call it banking – we don’t want to be put in the same frame as traditional banks. We will provide intelligent financial services that fit in with clients’ lifestyles.”

New brand of license

Fintech licensesExternal link were launched in Switzerland at the start of 2019, but it has taken well over a year for the first one to be awarded. Banks with this type of license are restricted to taking deposits of no more than CHF100 million ($106 million). The bank is not allowed to invest client assets or charge interest on them.

The license category was designed to cater to a growing number of so-called “challenger” banks, start-ups operating mainly in the digital space that offer customers a different array of services. While the Swiss Financial Market Supervisory Authority (FINMA) demands such banks to comply with certain strict criteria, the new license category is designed to be easier to obtain in other respects.

For example, fintech license banks only need a capital of at least CHF2 million compared to the minimum amount of CHF10 million typically demanded for a full banking license. The fintech license is envisaged by FINMA to be a stepping stone to a full banking license.

Lawyers contacted by swissinfo.ch in recent weeks said that only a handful of other financial firms have also applied for such a license. FINMA, which last year awarded full banking licenses to two banks offering crypto asset services, would not reveal how many fintech license applications it has received.

But lawyers also reported that a number of other firms are taking advice but are holding back to see how the front-runners fare in the application process. They speculate that the time delay in issuing the first fintech license may be down to the process being new to both start-ups and regulators.

This may result in the early applications taking more time and costing a bit more than for companies that apply later.