Digital Banks - United States

United States

In the United States, the Digital Banks market market is anticipated to witness a significant growth in its Net Interest Income.
By the year 2024, it is projected to reach a staggering amount of US$388.00bn.
Looking ahead, this market segment is expected to exhibit a steady annual growth rate of -5.87% from 2024 to 2028, resulting in a substantial market volume of US$304.60bn by the end of 2028.
It is noteworthy that, in terms of global comparison, in China is poised to generate the highest Net Interest Income, amounting to US$388.00bn in 2024.
The United States is experiencing a surge in the adoption of digital banks, with consumers embracing the convenience and flexibility of 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 United States has been experiencing significant growth and evolution in recent years.

Customer preferences: Customers in the United States are increasingly drawn to the convenience and accessibility offered by digital banks. The ability to manage finances, make transactions, and access customer support through mobile applications has become a key priority for many individuals. Additionally, the competitive interest rates and lower fees associated with digital banks are appealing to customers looking to maximize their savings.

Trends in the market: One prominent trend in the United States' Digital Banks market is the rise of partnerships between digital banks and traditional financial institutions. This collaboration allows digital banks to expand their customer base and offerings, while traditional banks benefit from the technological advancements and innovative services of digital banks. Moreover, there is a growing trend towards personalized financial solutions and AI-driven services in the digital banking sector, enhancing the overall customer experience.

Local special circumstances: The regulatory environment in the United States plays a significant role in shaping the Digital Banks market. Compliance with stringent regulations, such as KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements, is crucial for digital banks operating in the country. Additionally, the competitive landscape, dominated by established traditional banks, presents a challenge for digital banks to differentiate themselves and gain market share.

Underlying macroeconomic factors: The overall economic stability and technological infrastructure in the United States provide a favorable environment for the growth of digital banks. The increasing adoption of smartphones and digital devices across all age groups further supports the expansion of digital banking services. Moreover, the changing consumer behavior towards online shopping and digital payments has accelerated the demand for seamless and secure digital banking solutions 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.