Digital Banks - Saudi Arabia

Saudi Arabia

In Saudi Arabia, the Digital Banks market market is anticipated to witness a significant increase in Net Interest Income, with projections reaching US$485.40m by 2024.
Moreover, it is expected that there will be a steady annual growth rate of 9.25% between 2024 and 2028, leading to a market volume of US$691.50m by the end of 2028.
When compared on a global scale, in China is projected to generate the highest amount of Net Interest Income, with an estimated value of US$969,200.0m in 2024.
Saudi Arabia has seen a surge in the adoption of digital banking services, with traditional banks investing heavily in digital transformation to cater to the growing demand.

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 Saudi Arabia is experiencing significant growth and development in recent years.

Customer preferences: Customers in Saudi Arabia are increasingly gravitating towards digital banking services due to their convenience, accessibility, and time-saving features. The younger tech-savvy population, in particular, is driving the demand for digital banking solutions as they seek seamless and user-friendly platforms to manage their finances.

Trends in the market: One of the key trends in the Digital Banks market in Saudi Arabia is the rapid adoption of mobile banking apps. Customers are increasingly using their smartphones to access banking services, make transactions, and monitor their accounts on-the-go. This shift towards mobile banking is reshaping the traditional banking landscape in the country. Moreover, the introduction of innovative fintech solutions and digital payment methods is also driving the growth of the Digital Banks market in Saudi Arabia. Banks are leveraging technology to offer personalized services, improve customer experience, and stay competitive in the market. As a result, the digital banking sector in the country is witnessing a surge in investments and collaborations to enhance its offerings.

Local special circumstances: Saudi Arabia's Vision 2030 initiative, which aims to diversify the economy and promote digital transformation, is playing a significant role in shaping the Digital Banks market in the country. The government's push towards a cashless society and the increasing internet and smartphone penetration rates are creating a conducive environment for the growth of digital banking services. Furthermore, the regulatory environment in Saudi Arabia is evolving to accommodate the advancements in the digital banking sector. The Central Bank of Saudi Arabia has been introducing regulations and guidelines to ensure the security and stability of digital banking operations, thereby fostering trust among customers and encouraging further adoption of digital banking services.

Underlying macroeconomic factors: The growing young population, coupled with increasing internet penetration and smartphone usage, is fueling the demand for digital banking services in Saudi Arabia. As the country continues to invest in digital infrastructure and technology, the Digital Banks market is poised for sustained growth and innovation. Additionally, the rising competition among traditional banks and digital-only banks is leading to a more dynamic and customer-centric banking landscape 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.