Appearing naturally as the result of global digitalization, Neobanks are becoming increasingly trusted by consumers in many parts of the world.
The number of digital-only banks at the end of 2020 had increased at least 4 times compared to two years earlier. Moreover, as consumers transfer their banking transactions into digital even being clients of traditional banks, many of them realize that the challenger banks offer attractive conditions together with fully online services. This and some other factors led to the increased Neobank consumer penetration rate by six percentage points, globally. Additionally, as both the demand and supply rise, Internet-only banks started to feel the need to differentiate themselves not only from the traditional banks but also from their direct competitors by targeting certain population groups and offering specific services that are still new to the market, as detailed in the new yStats.com publication.
In the ranking of the leading digital-only banks, 8 out of 20 top Neobanks had their origin in the United States, showing the growing importance of the Internet-only in the country, which was also reflected in the number of Neobank account holders there. In Europe, consumers seem to be rather conservative when it comes to choosing a bank and opening an account, as the newness of the challenger banks contrasts in the region significantly dominated by large, sometimes state-owned established traditional banks. In Asia-Pacific, regulatory implementation of Neobanking is still in the developing phase, however, some markets such as Australia and Hong Kong, already clearly stand out in adaptation. Meanwhile, in Latin America, mainly thanks to Brazil and Mexico, the number of Neobanks has been increasing by almost 30% annually in the last decade, with NU Bank being currently the largest one in the region by its customer base. At the same time, the Middle East and Africa have still a long way to go to reach the level of digital-only banks market development in that part of the globe. Nevertheless, with the high level of fintech adoption, the market is promising.