Neobanking Market Analysis And Forecast To 2032: By Account Type (Business Account, Savings Account), Service (Mobile Banking, Payments & Money Transfer, Checking/Savings Account, Loans), Application (Enterprises, Personal), and Region

Neobanking Market Analysis And Forecast To 2032: By Account Type (Business Account, Savings Account), Service (Mobile Banking, Payments & Money Transfer, Checking/Savings Account, Loans), Application (Enterprises, Personal), and Region

The global Neobanking market was valued at USD 42.2 Billion in 2021 and it is anticipated to grow up to USD 428.7 Billion by 2031, at a CAGR of 26.1% during the forecast period.

Neobanking is a term used to describe financial institutions that offer digital-only banking services. These institutions are typically online-only and lack a physical branch presence. Neobanks typically offer a suite of services that are similar to those offered by traditional banks, such as checking and savings accounts, debit cards, personal loans, and investment products. However, neobanks often differ from traditional banks in terms of their business model, technology platform, and target market.

Global Neobanking Market Scope and Report Structure

Market Trends and Drivers

The market growth is attributed to the sophisticated digital advisory services offered by such banks. By 2021, neobanks were offering around ten features on average compared to only four functions provided by traditional banks. These four features, search, view balances, view transactions, and customize notifications, only provide basic insights for users, which has initiated a seismic consumer behavior change toward neobanking services.

Market Restraints and Challenges

Neobanking, also known as digital banking, is a type of banking that is conducted online or through a mobile app. Neobanking is a relatively new concept, and as such, there are a number of restraints and challenges that come with it. One of the key restraints of neobanking is the lack of regulation. This is because neobanking is not yet a fully developed concept, and as such, there are no set regulations in place. This lack of regulation can make it difficult for neobanks to operate, as they may not be able to meet all the requirements that traditional banks have to meet. Another challenge that neobanks face is the lack of customer trust. This is because neobanks are not yet as well-known or established as traditional banks, and as such, customers may not be as willing to trust them with their money. This lack of trust can make it difficult for neobanks to attract and retain customers. Finally, neobanks also face the challenge of competition from traditional banks. Traditional banks have a significant advantage over neobanks in terms of brand recognition and customer base. This means that neobanks will need to work hard to differentiate themselves from traditional banks in order to attract and retain customers.

Global Neobanking Market Segmental Overview

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.

Geographical Analysis of Global Neobanking Market

Region-wise, it is studied across North America, Europe, Asia Pacific, and the Rest of the World. Europe Neobanking market revenue is poised to grow significant CAGR during the forthcoming years. owing to the adoption of an omnichannel strategy by neobanks to meet various customer needs. Digital channels have strong penetration in the region with both individual & corporate customers, impelling the industry progression. Hefty investments in financial technologies in the region are fueling digitization and fostering the regional growth. For instance, total investments in financial technology across France, Germany, and the UK rose to USD 15 billion in 2021, compared to USD 5 billion in 2020. The European Union was an early mover in updating its Payment Systems Directive, ushering innovation-friendly regulatory frameworks that helped the development of neobanking services across the regional market.

Major Players in the Global Neobanking Market

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.

COVID-19 Impact

COVID-19 has taken a toll on the global economy, it has catalyzed the digital transformation of various industries. The market is amongst the many business models that flourished during COVID-19. The need to embrace neobanks became more urgent than ever as they successfully solved the practical problems of traditional banking (physical branch visits, long queues, and handling cash) in the wake of the pandemic. Several end-use markets have witnessed an uptick in neobanking engagement due to increased acceptance during the lockdown. These include both enterprise and personal consumers.

Recent Developments

In May 2022, IIFL Finance Ltd and Open Financial Technologies, announced a joint venture (JV) to launch Indias first neobank that would cater to banking and credit requirements of Micro and Small Enterprises (MSMEs).

In November 2021, Fedo, a health tech company, announced the launch of a health savings account named Fedo HSA in partnership with Open, a neobank. Through this partnership, Fedo HSA planned to offer combined accounts that help customers meet their required spendings through a combination of insurance, smart savings, and line of credit bundled in savings accounts with health credit and debit card features.

In April 2021, Google pay co-creators announced the launch of Fi, a neobank, in partnership with the Federal Bank to provide an instant savings account with debit cards for salaried millennials.

In June 2020, N26 announced the extension of its partnership with TransferWise, a technology leader for international payments, to offer international money transfers in over 30 currencies through the N26 app.

Frequently Asked Questions

Q1. How big is the Neobanking market?

Ans. The global Neobanking market was valued at USD 42.2 Billion in 2021 and it is anticipated to grow up to USD 428.7 Billion by 2031, at a CAGR of 26.1% during the forecast period.

Q2. What is the Neobanking market growth rate?

Ans. The growth rate of the Neobanking market is 26.1%

Q3. Which region holds a major market share for the market?

Ans. North America holds a major market share of the Neobanking market in 2021.

Q4. Which segment accounted for the largest Neobanking market share?

Ans. By application

, the rnterprise segment accounted for the largest Neobanking market share.
Q5. Who are the key players in the kidney stones management market?

Ans. The global Neobanking market report includes players such as 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.

Q6. What are the factors driving the Neobanking market growth?

Ans. The major factors driving the growth of the market are he growing adoption of internet services, coupled with the increased use of smartphones,

Q7. What are the key growth strategies of Neobanking market players?

Ans. The key growth strategies of Neobanking market players are product launch and product approval.

Q8. Which region will provide more business opportunities for the Neobanking market during the forecast period?

Ans. The Asia-Pacific region will provide more business opportunities for the Neobanking market during the forecast period.

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