Revolut Surpasses One Million Customers in Switzerland Amid Controversial Marketing Strategies

Revolut has achieved a significant milestone by surpassing one million customers in Switzerland, positioning itself as a major player in the digital banking sector. However, the company's aggressive marketing tactics have sparked some discontent among users.

With a focus on expanding its services, the UK-based fintech aims to become a primary banking option for its Swiss clientele. To access new offerings, existing customers are required to switch to a new account under Revolut's structure.

Established banks in Switzerland have struggled to adapt to digitalization, a challenge highlighted by Raiffeisen Switzerland's recent announcement to discontinue its app development, incurring costs of approximately 47 million Swiss francs. Meanwhile, neobanks, including Revolut, have seen notable growth, with Revolut leading the pack.

Since launching in Switzerland in late 2017, Revolut has significantly outpaced local competitors like Yuh and Neon, which have customer bases of 300,000 and 240,000, respectively. Globally, Revolut reports over 50 million users, but skepticism surrounds its customer figures in Switzerland. Experts suggest that while the growth is impressive, it is essential to scrutinize the nature of these banking relationships.

To be classified as a customer, individuals simply need to download the app, register, and complete the verification process. More than half of Revolut's Swiss users reportedly engage with their accounts at least once a month, although competing neobanks like Neon claim higher active user rates.

The Swiss market is vital for Revolut, which generates revenue through various subscription models. Although the exact percentage of revenue from subscriptions in Switzerland remains undisclosed, the country ranks among the top five markets for these services. The company aims to attract an additional 250,000 customers annually, with aspirations to serve as the main banking platform for Swiss users. Planned offerings include QR code billing, joint accounts, and electronic billing services, with ETF savings plans in the testing phase.

In preparation for these new services, Revolut has reorganized its operations in Switzerland, officially registering the Revolut Schweiz AG. Additionally, the Revolut Bank UAB from Lithuania has established a representative office in Switzerland, authorized by the Financial Market Supervisory Authority (Finma). Despite these developments, Revolut does not yet hold a Swiss banking license, necessitating customers to transition to the Lithuanian bank to access new features. Previously, customer accounts were managed via a collective account at Credit Suisse.

Revolut's marketing strategy has raised concerns among users, with some alleging misleading information regarding the transition to the Lithuanian bank. Initially, customers were promised personal Swiss IBAN numbers, which turned out to be virtual IBANs linked to a central account held by the Lithuanian bank. This arrangement complicates processes such as salary payments, as employers typically require the account name to match the employee's. Payments in Switzerland are processed through PostFinance, which has refrained from commenting on client relationships.

Experts suggest that while Revolut's transition strategy is on the right track, the company must enhance its services to establish itself as a primary banking option in Switzerland. The introduction of virtual IBANs has not significantly simplified the user experience, raising challenges for customers wanting to use Revolut as their salary account.

Revolut acknowledges some communication issues regarding the virtual IBANs and has since adjusted its messaging. However, to provide genuine Swiss IBANs, the company requires access to the Swiss clearing system, which is contingent on obtaining a banking license. Although rumors of a license application exist, officials have not commented on this matter.

Customers will need to complete the switch to the new structure soon, as the collaboration with UBS, which facilitated the previous account system, will end in late June. Following this date, users who have not transitioned will be unable to process domestic bank transfers to their Revolut accounts, although other transfer options will remain unaffected. The existing accounts are expected to operate as usual until the end of the year.