Market Definition
The Neobanking Market refers to the digital banking sector characterized by innovative financial technology (FinTech) companies that offer banking services exclusively online or through mobile applications. Neobanks, also known as digital banks or challenger banks, operate without physical branches and leverage technology to provide seamless, user-friendly, and cost-effective banking experiences to consumers and businesses. These financial institutions typically offer a range of banking services, including savings accounts, current accounts, payment services, loans, and financial management tools, with a focus on digital-first customer experiences.
Market Outlook
The global Neobanking market was valued at USD 42.2 Billion in 2022 and it is anticipated to grow up to USD 428.7 Billion by 2032, at a CAGR of 26.1% during the forecast period.
The Neobanking Market is experiencing rapid growth driven by factors such as increasing consumer demand for convenient and accessible banking services, rising adoption of digital banking solutions, evolving regulatory frameworks, and technological advancements in financial services. As consumers seek more flexible, transparent, and personalized banking experiences, neobanks are disrupting traditional banking models and reshaping the financial services landscape with their innovative digital offerings. With their agile and customer-centric approach, neobanks are well-positioned to capitalize on the growing demand for digital banking solutions in an increasingly digital and interconnected world.
One of the primary drivers of market growth is the increasing consumer demand for convenient and accessible banking services. Neobanks cater to the needs of digitally-savvy consumers who prefer the convenience of managing their finances online or through mobile applications. By offering intuitive, user-friendly interfaces, seamless account opening processes, and 24/7 access to banking services, neobanks empower consumers to take control of their finances and conduct banking transactions anytime, anywhere, without the constraints of traditional branch banking.
Furthermore, the rising adoption of digital banking solutions is fueling the growth of the Neobanking Market. As consumers become more comfortable with digital technologies and mobile banking apps, they are increasingly turning to neobanks for their banking needs. Neobanks offer a range of innovative features and services, such as instant account opening, real-time transaction monitoring, budgeting tools, and personalized financial insights, that appeal to tech-savvy consumers seeking modern banking experiences tailored to their lifestyles and preferences.
Moreover, evolving regulatory frameworks are creating favorable conditions for neobanks to enter and compete in the financial services market. Regulatory initiatives such as open banking and PSD2 (Payment Services Directive 2) are promoting competition, innovation, and consumer choice by enabling neobanks to access customer account data from traditional banks and offer value-added services such as account aggregation, payment initiation, and personalized financial advice. Additionally, regulatory sandboxes and licensing regimes tailored for fintech startups are lowering barriers to entry and fostering innovation in the neobanking sector.
Additionally, technological advancements in financial services are driving innovation and differentiation among neobanks. Neobanks leverage cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), blockchain, and biometrics to enhance security, automate processes, personalize customer experiences, and deliver innovative financial products and services. By harnessing the power of technology, neobanks can offer frictionless onboarding experiences, optimize operational efficiency, and provide personalized financial solutions that meet the evolving needs and preferences of their customers.
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Research Objectives
- Estimates and forecast the overall market size for the total market, across product, service type, type, end-user, and region
- Detailed information and key takeaways on qualitative and quantitative trends, dynamics, business framework, competitive landscape, and company profiling
- Identify factors influencing market growth and challenges, opportunities, drivers and restraints
- Identify factors that could limit company participation in identified international markets to help properly calibrate market share expectations and growth rates
- Trace and evaluate key development strategies like acquisitions, product launches, mergers, collaborations, business expansions, agreements, partnerships, and R&D activities
- Thoroughly analyze smaller market segments strategically, focusing on their potential, individual patterns of growth, and impact on the overall market
- To thoroughly outline the competitive landscape within the market, including an assessment of business and corporate strategies, aimed at monitoring and dissecting competitive advancements.
- Identify the primary market participants, based on their business objectives, regional footprint, product offerings, and strategic initiatives
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Market Segmentation
The report analyses the global Neobanking market based on Account Type, Service, Application and Region.
Global Neobanking Market by Account Type
By account type, the market is segmented into business account, and savings account. The business account segment accounted for significant market share in 2021 and is expected to register lucrative CAGR over the forecast period. This is led by the gradual shift of enterprise clientele toward neobanks for bulk payout services. Neobanks have strategically aligned their business account features with the needs of SMEs and enterprise end-users, incorporating services such as instant credit limits, detailed account insights, and international transfers. The growing need for reduced complexity in banking operations is driving the business account segment growth. Traditional banks have multiple rivals and multiple portals, which are often inconvenient for corporates with multiple banking relationships. Neobanking services reduce the complexity of managing cash and transactions across multiple bank relationships.
Global Neobanking Market by Service
By service, the neobanking market is classified into mobile banking, payments & money transfer, checking/savings account, loans, and others. The payment & money transfer services segment accounted for significant revenue in 2021. Digital payments are predicted to witness a customer-led revolution as rising penetration of smartphones and increasing use of neobanking apps have triggered the growth of the segment. The U.S. mobile commerce industry is expanding rapidly and presenting SMEs with an ever-increasing opportunity to tap into the new revenue streams. It is expected that nearly 35% share of the overall e-commerce market is through mobiles, powered by rising smartphone usage amongst older demographics and high usage among the 18- to 24-year-old age group, where smartphones enjoy a 93% penetration. Increasing presence of small to mid-size vendors on neobanking platforms will provide lucrative industry growth opportunities.
Global Neobanking Market by Application
The application segment of the market is bifurcated into Enterprise, Personal, and others. The enterprise are expected to register highest CAGR between 2022 and 2028. The advent of neobanking model across the region, which leverages the use of digital technology and is aimed at meeting the evolving needs of enterprise customers, is providing stiff completion to traditional market players. Several foreign neo banks, such as Revolut and Wise, have approached the Japan market, which has further buoyed the industry expansion of the segment. The Japanese government has set a target of doubling its cashless transactions defined as credit cards, debit cards, and e-money to 40% of transactions by 2027. This is part of its “Society 5.0” future investment strategy. The government considers that going cashless would save banks about USD 9.4 billion a year, which is slated to provide lucrative growth opportunities for neobanking companies.
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Major Players
The neobanking market is analyzed to be highly competitive due to the presence of both multinational companies and fintech start-ups in the space. These market participants are mainly focusing on collaboration with banking institutes to gain revenue share. Prominent leaders operating in the market are placing an ever-growing emphasis on delivering advanced digital banking solutions that can cater to the dynamic requirements, especially during the rise of AI-enabled automation amid the ongoing pandemic.
The key players in the Neobanking market Atom Bank Plc, BBVA S.A., BMTX, Inc., Chime Financial, Inc., Citigroup Inc., Dave, Inc., Deutsche Bank AG, Digibank, Equitable Bank, and HSBC Holdings Plc., among others.
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Research Scope
- Scope – Highlights, Trends, Insights. Attractiveness, Forecast
- Market Sizing – Product Type, End User, Offering Type, Technology, Region, Country, Others
- Market Dynamics – Market Segmentation, Demand and Supply, Bargaining Power of Buyers and Sellers, Drivers, Restraints, Opportunities, Threat Analysis, Impact Analysis, Porters 5 Forces, Ansoff Analysis, Supply Chain
- Business Framework – Case Studies, Regulatory Landscape, Pricing, Policies and Regulations, New Product Launches. M&As, Recent Developments
- Competitive Landscape – Market Share Analysis, Market Leaders, Emerging Players, Vendor Benchmarking, Developmental Strategy Benchmarking, PESTLE Analysis, Value Chain Analysis
- Company Profiles – Overview, Business Segments, Business Performance, Product Offering, Key Developmental Strategies, SWOT Analysis
- Market Size in 2022 – $42.2 Billion
- Market Size in 2032 – $428.7 Billion
- CAGR % – 26.1%
- Historic Period – 2016 – 2021
- Forecast Period – 2023 – 2032
- Base Year – 2022
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