Digital Banks - Pakistan

Pakistan

In Pakistan, the Digital Banks market market is expected to witness significant growth in terms of Net Interest Income.
By the year 2024, it is projected to reach a substantial amount of US$376.90m.
Looking ahead, there is an anticipated annual growth rate (CAGR 2024-2028) of 3.02%, which will contribute to a market volume of US$424.60m by 2028.
When comparing globally, it is worth noting that in China will generate the highest Net Interest Income in the Digital Banks market market.
In 2024, it is estimated to reach a staggering US$969,200.0m.
Pakistan's digital banking sector is experiencing rapid growth, with a rising number of consumers opting for online banking services.

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 Pakistan is experiencing significant growth and development.

Customer preferences: Customers in Pakistan are increasingly looking for convenient and accessible banking solutions. The rise of digital banks in the country is largely driven by the growing demand for hassle-free banking services that can be accessed anytime, anywhere. With the majority of the population owning smartphones, there is a strong inclination towards digital banking platforms that offer seamless user experiences.

Trends in the market: One of the prominent trends in the Digital Banks market in Pakistan is the focus on financial inclusion. Digital banks are playing a crucial role in bringing unbanked and underbanked populations into the formal financial system by providing them with easy-to-use and cost-effective banking services. Moreover, partnerships between traditional banks and digital banking platforms are becoming more common, allowing for the integration of innovative digital solutions into the existing banking infrastructure.

Local special circumstances: In Pakistan, the regulatory environment is evolving to accommodate the growth of digital banks. The State Bank of Pakistan has introduced regulations and guidelines to ensure the stability and security of digital banking operations while promoting innovation in the sector. Additionally, the young population of Pakistan, with a high percentage of tech-savvy individuals, is driving the adoption of digital banking services in the country.

Underlying macroeconomic factors: The increasing internet penetration and smartphone usage in Pakistan are significant macroeconomic factors contributing to the expansion of the Digital Banks market. As more people gain access to the internet and mobile devices, the potential customer base for digital banks continues to grow. Furthermore, the government's initiatives to promote digital payments and financial inclusion are creating a conducive environment for the development of the digital banking sector in Pakistan.

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.