Finstar banks with top rankings in terms of success and cost-income ratio
Blog
2/19/2025
In the Retail Banking Study 24 published by the Institute of Financial Services Zug (IFZ) at the end of 2024, several Finstar banks once again took first place in terms of their business success and cost-income ratio - confirming the results of previous years and the profitability of Finstar as a provider of comprehensive core banking services.
“Finstar masters the standard and is ready to support specific business models.”
For Patrick Vogt, the fact that five of the fifteen most successful banks according to IFZ rely on Finstar is no surprise and no coincidence. According to the Head of Finstar Professional Services, successful banks rely on Finstar on the one hand, while on the other, the total banking solution helps the banks to succeed. According to Vogt, the platform allows customers to minimize their costs and be innovative: “We have mastered the standard and are also prepared to support specific business models.” With AMINA as the first crypto bank, Freie Gemeinschaftsbank with its anthroposophical approach or Hypothekarbank Lenzburg with embedded finance, he cites just a few examples of Finstar's flexibility and modularity. “We are known for implementing special requirements for banks and fintechs. I think that's where the future of the banking and banking software market lies - because anyone can do zero-eight-fifteen.”
“We have the system under control because, in addition to development, we also take over the operation of Finstar”
When asked whether the deviation from the standard does not lead to higher costs, Vogt replies: “We have the system under control because we not only develop it but also operate it”. This allows Finstar to handle bank-specific requirements in a cost- and time-efficient manner. “Our software is flexible, highly configurable and parameterizable. Thanks to our modularity and extensive APIs, we can also take over individual parts of a banking transaction and increase efficiency. As is the case with AMINA or Cembra, to name just two examples”.
“A specific process based on standard components doesn't cost much more. This ensures individuality.”
Vogt also has a differentiated view on another key issue: in his opinion, complete standardization of banking processes is not necessary for cost efficiency. This is because the goal can also be achieved with standardized software modules that are combined in a bank-specific way. “A bank must retain its individuality in order to position itself successfully on the market”. For example, customers of neobanks and regional banks use exactly the same system and yet have a very different user experience. Vogt continues: “A customized process is always more expensive than a standard one. But a specific process based on standard components doesn't cost much more. In this way, individuality can be ensured without having to pay for an individual process - as is often the case, the solution lies in the golden mean.”
“Finstar is also able to operate smaller institutions at low cost”
3 compared with more than 300 full-time equivalents. Total assets of CHF 300 million here, over CHF 7 billion there: the three most successful Finstar banks according to the IFZ study differ in these key figures and in their business models - yet they still occupy top positions. Vogt explains this with the comparatively low fixed costs that enable smaller banks to be economically successful. “Finstar is able to operate smaller institutions at low cost”. The software is also flexible in terms of scalability and offers volume-based models. At the same time, Finstar covers regulatory and legal requirements in addition to other issues. “The development of this basis is supported by the entire community”, says Vogt, ‘the institutions bear their share of the costs depending on their size’. This also explains Caisse d'Epargne de Nyon's 12th place in the IFZ study '24 in terms of the cost-income ratio compared to the 91 retail banks surveyed. “We grow with our customers in terms of FTE and functionalities.”
“For us, a low cost-income ratio is not the goal, but the result of our efforts”
When it comes to the further development of the Finstar organization, Vogt does not focus on values such as the cost-income ratio, but on the question of whether Finstar can invest in innovation: “We have to generate enough margin to ensure that we remain innovative in the future in order to ensure that our banks can implement their strategy efficiently and effectively.” According to the Head of Finstar Professional Services, it is counterproductive in the long term to cut costs in research and development in order to achieve a good CIR. “Our focus is on innovation. For us, a low cost-income ratio is not the goal, but the result of our efforts. We concentrate on pragmatism and efficiency.”
(Translation with deepl.com; the German version is authoritative).
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