Digital Banks - Worldwide

Worldwide

In the Digital Banks market market, the projected Net Interest Income worldwide is set to reach US$2.19tn in 2024.
Looking ahead, it is expected that the Net Interest Income will display an annual growth rate (CAGR 2024-2028) of 9.95%, leading to a market volume of US$3.20tn by 2028.
When compared globally, in China is expected to generate the highest Net Interest Income, amounting to US$1,262,000.0m in 2024.
Digital banks in the worldwide banking market are rapidly gaining popularity, with countries like the United Kingdom leading the way in terms of adoption and innovation.

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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Market

Region

Region comparison

Currency

Analyst Opinion

Digital banks have been rapidly transforming the banking industry worldwide, offering customers convenient and efficient ways to manage their finances.

Customer preferences: Customers are increasingly drawn to digital banks due to their user-friendly interfaces, 24/7 accessibility, and low fees compared to traditional banks. The convenience of opening accounts remotely, conducting transactions online, and accessing customer support through digital channels has been a key driver of the growing popularity of digital banks.

Trends in the market: In the United States, the digital banking market has seen a surge in competition with both traditional banks launching digital platforms and new digital-only banks entering the market. These digital banks are focusing on personalized customer experiences, innovative financial products, and seamless integration with other financial services. The emphasis on data security and privacy has also been a significant trend, with digital banks investing heavily in cybersecurity measures to build trust with customers.

Local special circumstances: In Europe, the rise of digital banks has been fueled by regulatory changes such as the Revised Payment Services Directive (PSD2), which promotes competition and innovation in the banking sector. Countries like the United Kingdom have seen a proliferation of digital banks catering to specific customer segments such as millennials or small businesses. The presence of tech-savvy populations and high smartphone penetration rates in countries like Sweden and Norway has further accelerated the adoption of digital banking services in the region.

Underlying macroeconomic factors: Developing regions like Asia Pacific have witnessed a rapid growth in the digital banking market driven by factors such as rising internet penetration, increasing smartphone usage, and a large unbanked population. Countries like China and India have emerged as hotspots for digital banking innovation, with tech giants and startups offering a wide range of financial services through digital platforms. Government initiatives to promote financial inclusion and digital payments have also played a crucial role in shaping the digital banking landscape in these markets.

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.