Market Definition
The Neobanking market encompasses the sector of banking services provided by digital-only banks, commonly known as neobanks. These banks operate exclusively online without traditional physical branch networks, offering a wide range of financial services including checking and savings accounts, payment services, loans, and investment products through mobile and web applications.
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Market Outlook
The Neobanking market is experiencing rapid growth driven by the increasing adoption of digital banking solutions, advancements in financial technology (fintech), and the changing preferences of consumers towards more convenient and accessible banking options. Neobanks are revolutionizing the banking industry by providing cost-effective, user-friendly, and innovative financial services.
One of the primary drivers of the Neobanking market is the growing demand for digital banking services. Consumers are increasingly favoring digital-first solutions for their banking needs due to the convenience, speed, and flexibility they offer. Neobanks provide seamless, 24/7 access to banking services through mobile apps, enabling customers to manage their finances anytime and anywhere. This shift towards digital banking is accelerating the growth of neobanks globally.
Technological advancements in fintech are also propelling the growth of the Neobanking market. Innovations such as artificial intelligence (AI), machine learning, blockchain, and big data analytics are enhancing the capabilities of neobanks. These technologies enable neobanks to offer personalized financial services, improve risk management, streamline operations, and enhance customer experiences. The continuous evolution of fintech is driving the development and adoption of neobanking solutions.
The increasing preference for cost-effective banking solutions is another significant factor contributing to the growth of the Neobanking market. Traditional banks often have higher operational costs due to their physical branch networks, which can result in higher fees for customers. Neobanks, operating without physical branches, can offer lower fees and competitive interest rates, attracting cost-conscious consumers and businesses. This cost advantage is driving the shift from traditional banking to neobanking.
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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.
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
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