Retail banking

Retail banking generally consists of basic banking services provided to the broad public. It comprises a standardized and readily understood range of products designed for individuals with maximum net assets of CHF 250,000 to 1 million, depending on the bank. The service offer includes account management, payments, credit cards, simple investment products as well as mortgages and loans.

All banks in Switzerland offer these services, except banks that specialize exclusively in private banking and investment banking. Retail banking is offered through various distribution channels, including the banks’ own branches, the ATM network, and e-banking and by telephone. Compared to other business areas such as private or business banking, the volume of individual retail banking transactions is relatively small, but the number of transactions to be processed is large. Consequently, retail banking is based on highly standardized products and services rather than tailored solutions. Business volume is mainly based on interest spreads, which are traditionally the key source of revenues for a retail bank. Retail business usually serves as a basis for building long-term client relationships, is often used as a platform for cross-selling business and paves the way to more sophisticated banking services.

Retail banking is a business of great relevance in Switzerland. A large number of banks and banking groups engage mainly or exclusively in this type of banking business. Retail banking is part of the traditional business for most cantonal banks, which generate about half of their earnings from interest spreads. The economic output of Raiffeisen and regional banks is based almost exclusively on retail business. The Swiss big banks are also strongly committed to domestic retail banking.

Savings and personal accounts

Saving money being the primary objective of a savings account, monthly withdrawals and general services are limited for this type of account. In return, interest rates on savings accounts are distinctly higher compared to other accounts. The personal account is used primarily for effecting payment transactions and crediting salaries or retirement pension. While monthly withdrawal limits are generously set, interest rates on deposits are lower than on savings accounts. Since January 2010, interest income up to CHF 200 on savings and personal accounts has been exempt from withholding tax.

The preferential claim in bankruptcy is an important safety aspect in savings and personal accounts. In the event of a bank’s failure, deposits up to CHF 100,000 per client are treated preferentially. If the bank’s liquidity is insufficient to satisfy such preferential claims, deposit assurance is provided by the Swiss Banks’ and Securities Dealers’ Depositor Protection Association .

Consumer lending and mortgages

The term consumer credit (also known as private or small loan) stands for loans granted to private individuals for non-business purposes and without the cover of pledged collateral (such as assets). Due to the higher risk for the bank, interest rates on consumer credits are relatively high. Consumer credits usually have to be repaid within 12 to 60 months.

A mortgage is a long-term loan secured by the pledge of a property. Before granting a mortgage, providers evaluate the real estate property and examine the creditworthiness of the applicant. Mortgage applicants are usually required to contribute 20% of equity. Three types of mortgage are typically offered in Switzerland: fixed rate mortgage, variable-rate mortgage and money market mortgage.

Investment products

Private retail banking clients can choose from a wide range of investment products, including:

Payments

Payments include all transfers of means of payment between economic agents. One of the banks’ core functions is to enable the simple execution of payment transactions. To this end, most banks offer the following retail banking products:

Retirement provisions

Most banks offer a range of standardized retirement products, which are tax privileged or tax free. Such typical products include:

Clients, who are prepared to bear the financial market risk, may combine these retirement products with an investment fund account and benefit from potentially higher returns.