In recent years, Swiss bank profits have fluctuated and even declined since 2019, yet financial institutions still achieved a substantial profit of 6.52 billion Swiss francs in 2022. A main reason for Swiss banks' high profits is rising interest rates. The Swiss National Bank (SNB) has raised its key rates multiple times in recent months to combat inflation, which stands at 7% globally. With success! In Switzerland, the inflation rate is just 2.1%.
However, this has also raised interest rates on loans. Banks haven't passed on these rate increases to their customers in equal measure. Most Swiss banks still offer very low interest rates: the current average return is approximately 0.5% p.a.
Why Aren't Banks Keeping Up with Rate Increases?
Domestic banks generate 75% of their profits from interest business. This means nearly all market players currently have strong interest in rising interest margins. They can even ensure this themselves since they control letting deposit rates rise more slowly than lending rates.
The fact that Swiss banks are increasing profits without rewarding customers is drawing nationwide criticism. Consumer advocates and politicians are calling on banks to adjust rates for savers and borrowers.
Crowdlending as an Alternative
The beauty of the financial system is that you can seek other, more lucrative options. An alternative to traditional banks is crowdlending platforms. In crowdlending, private individuals or companies jointly finance loans to other individuals or businesses.
Crowdlending offers several advantages over traditional banks: Since no bank acts as intermediary, crowdlending interest rates are typically significantly higher than classical banks. Additionally, greater flexibility and participation in choosing which credit projects to invest in is another advantage.
Investors benefit: Interest rates up to 10 percent for P2P loans are not uncommon—significantly more than average bank investment rates.
Positive Example: Cashare AG
Cashare AG is Switzerland's first crowdlending platform specializing in various loan types, successfully establishing and positioning itself in the market since its 2008 founding in Zurich.
Whether SME or personal loans, real estate financing or other consumer credit: Cashare AG has developed into one of Switzerland's leading crowdlending platforms. With over 50,000 members and nearly 4,000 facilitated credit projects, the platform has achieved great success in the competitive crowdlending market.
Conclusion
Swiss banks' high profits at customer expense is a current problem. Nationwide, consumer advocates and politicians are calling on banks to adjust rates for savers and borrowers.
A clever alternative is crowdlending—a modern form of lending that has gained significant importance. Both investors and loan seekers benefit from crowdlending platforms' success and growing popularity.
Cashare AG has made a name for itself as a Swiss fintech pioneer, far ahead of traditional financial institutions.
