Digital Banks - China

China

In China, the projected Net Interest Income in the Digital Banks market market for the year 2024 is estimated to be US$0.97tn.
Looking ahead, it is expected that the Net Interest Income will experience an annual growth rate (CAGR 2024-2028) of 12.61%, which would lead to a market volume of US$1.56tn by 2028.
When comparing globally, it is worth noting that in China is anticipated to generate the highest Net Interest Income in the Digital Banks market market, reaching US$969,200.0m in 2024.
China's digital banking market is experiencing rapid growth, driven by the increasing adoption of mobile payment platforms and the government's push for financial inclusion.

Key regions: United Kingdom, Japan, China, United States, Brazil

Definition:

Digital Banks refer to the emerging market for purely digital banks that offer financial services via online and mobile platforms. Unlike traditional banks, digital banks also known as neobanks, do not have store-based branches and instead rely on technology to deliver their services. But in contrast to digital-only direct banks, which focus on providing traditional banking services in an online format, the digital banks/neobanks covered in this analysis prioritize cutting-edge features and a modern user experience.
Digital Banks offer a wide range of financial products and services, including savings and checking accounts, credit cards, personal loans, and investment products, among others. They aim to provide a more convenient, accessible, and user-friendly banking experience by leveraging technology such as mobile apps and artificial intelligence. They also provide a digital identification and onboarding process, often via smartphone.
The Digital Banks market is growing rapidly as consumers increasingly demand more convenient, digitally focused financial services. Neobanks/Digital Banks are able to offer these services at a lower cost compared to traditional banks, as they have lower overhead costs and a more efficient operating model.
However, digital banks face challenges in building trust and establishing their reputation in the financial services industry. They must also navigate the complex regulatory landscape and comply with the same rules and standards as traditional banks.
Overall, the Digital Banks market represents a growing and exciting opportunity for financial services providers to deliver innovative and convenient solutions to consumers.

Structure:

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income as well as the number of ATMs.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Bunq, Tomorrow, and Revolut.

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Analyst Opinion

The Digital Banks market in China has been experiencing significant growth and development in recent years.

Customer preferences: Customers in China are increasingly gravitating towards digital banking services due to the convenience and efficiency they offer. The younger generation, in particular, is more inclined to use digital banking platforms for their everyday financial needs. This shift in customer preferences is driving the demand for innovative digital banking solutions in the market.

Trends in the market: One notable trend in the Digital Banks market in China is the rise of online-only banks. These banks operate exclusively through digital channels, without any physical branches, allowing them to reach a wider customer base at a lower cost. Additionally, partnerships between traditional banks and fintech companies are becoming more common, leading to the introduction of new digital banking products and services in the market.

Local special circumstances: China's large population, rapid technological advancements, and changing regulatory environment are shaping the digital banking landscape in unique ways. The government's push for financial inclusion and digital transformation is creating opportunities for digital banks to expand their reach and offerings. Moreover, the competitive nature of the market is driving digital banks to differentiate themselves through personalized services and innovative solutions.

Underlying macroeconomic factors: The growing middle class, increasing internet penetration, and rising smartphone adoption rates in China are key macroeconomic factors driving the growth of the Digital Banks market. As more people gain access to digital devices and the internet, the demand for digital banking services is expected to continue rising. Additionally, the government's efforts to promote a cashless society and improve financial infrastructure are further fueling the expansion of digital banks in the country.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.