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Neobanking sector is witnessing drastic transformation disrupting the conventional paradigm of banking services through the digital innovation and more of the customer first approaches. The financial industry is facing an influx of fintech innovators who are disrupting the sector with an array of market factors.
The use of contactless payment-method and the rise of online banking system has made everybody’s life easier and much convenient than before. Neobanks incorporate technology to provide customers with super convenient, mobile banking apps, which definitely appeal to customers who prefer borderless transactions and on-time bank account administration. Being able to do things like check account balances, transfer money, and make payments when you are not confined to operating a business inside a physical branch are ideas that many people find helpful in this world of digital and mobile revolution.
Besides, the neobanks industry draws its share of customers from customers who increasingly claim to have altered expectations. Nowadays, individualized and custom made financial services are getting into vogue and consumers require them to match their personal service needs. Right now, neobanks, without the legacy systems, can operate faster and as a result, respond to the evolving customer expectations in a timely fashion. They do so by providing fresh things like the budgeting tool, real-time notification, and personalized insights which are all tailored to what customers want. With that flexibility neobanks manage to create a more versatile and customer-oriented banking experience which is in turn another differentiator from typical banks.
Financial inclusion is one of the most stimulator of the neobanking one. Neobanking sector mostly seeks over those markets that tend to be underbanked by traditional banking institutions, for example, young professionals, freelancers and individuals who might have limited financial services. In that way, neobanks your contribution of the open and inclusive financial services is to empower the bigger the population and achieve the financial inclusion and financial empowerment.
Low-price feature is an intensive inducement both for consumers and providers in neobanking segment. While traditional banks commonly bear the burden of a large financial cost for staffing physical branches and outdated infrastructure, fintech companies generally have much lower overhead expenses. With neobanks mostly operating in the digital stage, they can offer you lower fees, competitive rates of interest and reduced overhead costs that conventional banks have to keep in mind. The price effectiveness enables neobanks to retain customers apathetic toward cost and be able to destroy the age-old structure of traditional banks regarding fees, and the last one means competitive market.
The regulatory sphere have the tilt in the direction of shaping the neobanking environment. Regulatory assumptions based on innovation and competition are the factors that underpin the expansion in the neobanks` number. Some regulator agencies are making policies that makes it easier for new digital banks to get into the financial system as a way of fostering more dynamism and competitiveness in the ecosystem. Nevertheless, keeping a tight grip on the balance between innovation and what the client can cope with is a task that authorities have to fulfill while at the same time grasping the fast-changing reality of neobanking.
Covered Aspects:
| Report Attribute/Metric | Details |
|---|---|
| Segment Outlook | Account Type, Application, and Region |
Neobanking Market Highlights:
Global Neobanking Market Overview
Neobanking Market Size was valued at USD 65.9 Billion in 2022. The Neobanking market industry is projected to grow from USD 100.7 Billion in 2023 to USD 3009.90 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 52.90% during the forecast period (2023 - 2032). Convenience and accessibility, reduced fees and costs personalized and innovative services, fast account opening and onboarding, global expansion and borderless banking, financial inclusion, partnerships and ecosystem integration, evolving regulatory environment, changing consumer preferences, data security and privacy, are the key market drivers enhancing the market growth.
Figure 1: Neobanking Market Size, 2023-2032 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Neobanking Market Trends
Reduced fees and costs personalized and innovative services is driving the market growth
Reduced fees and costs and personalized and innovative services have both had a significant impact on the growth of neobanks in the financial services industry. These factors have altered the competitive environment of the financial sector as well as how customers view banks. Reduced costs and fees is one of the most convincing arguments for neobanks' quick adoption is their capacity to provide services at much reduced fees and costs than conventional brick-and-mortar banks. Neobanks operate with a minimal physical infrastructure and a focus on digital services to avoid the overhead expenses of keeping physical branches open.
Neobanks can pass on savings to their customers through lower fees for a variety of services, such as transaction fees, foreign exchange fees, and account management fees, thanks to this cost-effective strategy. Customers are becoming more attracted to neobanks as they look for justice and transparency in financial services. Many different types of people, from tech-savvy millennials to small business owners, are drawn to the idea of avoiding the myriad fees that traditional banks frequently demand. Neobanks are an appealing alternative to conventional banking alternatives since this charge decrease not only increases customer loyalty but also helps customers manage their finances more efficiently.
The vanguard of utilizing cutting-edge technology to deliver individualized and creative financial solutions is Personalized and Innovative Services for Neobanks. Neobanks learn about the spending patterns, financial objectives, and preferences of its customers through data analytics, artificial intelligence, and machine learning. With this information, neobanks are better equipped to provide individualized financial advice and suggestions. Modern consumers, who desire personalized experiences in all facets of their lives, are drawn to this level of personalization. Neobanks give their clients the power to take charge of their financial security by giving them real-time information on their spending habits and providing budgeting tools that help them make wise financial decisions. In addition, some neobanks go beyond typical banking by including investing platforms, robo-advisors, and insurance choices to build whole financial ecosystems. Thus, driving the Neobanking market revenue.
Neobanking Market Segment Insights
Neobanking Account Type Insights
The global Neobanking market segmentation, based on account type, includes business account and savings account. The business account segment dominated the market in 2022. Business accounts may include sophisticated financial management capabilities, such as functionality for managing payroll, invoicing, and taxes, that are tailored to the particular requirements of enterprises. These technologies help businesses run more efficiently and keep accurate financial records.
Figure 2: Global Neobanking Market, by Account Type, 2022 & 2032 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Neobanking Application Insights
The global Neobanking market segmentation, based on application, includes enterprises, personal and others. The enterprises category generated the most income in 2022. Large businesses understand how crucial it is to embrace technology improvements in order to stay competitive. Research & development investments, together with the use of cutting-edge technologies like IoT (Internet of Things), big data analytics, and artificial intelligence (AI), foster innovation and allow companies to provide cutting-edge goods and services.
Neobanking Regional Insights
By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The North America Neobanking Market dominated this market in 2022 (45.80%). Because of their high costs, lack of innovation, and lengthy procedures, traditional banking models are unpopular with some customers in North America. These unsatisfied consumers relate to Neobanks' emphasis on lower fees, clear interfaces, and cutting-edge technologies. Further, the U.S. Neobanking market held the largest market share, and the Canada Neobanking market was the fastest growing market in the North America region.
Further, the major countries studied in the market report are The U.S., Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.
Figure 3: GLOBAL NEOBANKING MARKET SHARE BY REGION 2022 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Europe Neobanking market accounts for the second-largest market share. The Neobanking environment has been significantly shaped by the updated Payment Services Directive (PSD2) of the European Union. Open banking is encouraged by PSD2, which permits third-party providers to access financial information with consumer approval. Through the use of APIs (Application Programming Interfaces), neobanks have been able to offer cutting-edge services and streamline the banking process. Further, the German Neobanking market held the largest market share, and the UK Neobanking market was the fastest growing market in the European region.
The Asia-Pacific Neobanking Market is expected to grow at the fastest CAGR from 2023 to 2032. Neobanks are putting traditional banks in Asia-Pacific under more and more pressure. Neobanks are better equipped than traditional banks to provide cutting-edge, client-focused financial solutions. Traditional banks are being forced by this to innovate and provide additional digital banking options. Moreover, China’s Neobanking market held the largest market share, and the Indian Neobanking market was the fastest growing market in the Asia-Pacific region.
Neobanking Key Market Players & Competitive Insights
Leading market players are investing heavily in research and development in order to expand their product lines, which will help the Neobanking market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, Neobanking industry must offer cost-effective items.
Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the global Neobanking industry to benefit clients and increase the market sector. In recent years, the Neobanking industry has offered some of the most significant advantages to medicine. Major players in the Neobanking market, including Atom Bank PLC, Fidor Bank Ag, Monzo Bank Limited, Movencorp Inc., Mybank, N26, Revolut Ltd., Simple Finance Technology Corporation, Ubank Limited, and Webank, Inc. and others, are attempting to increase market demand by investing in research and development operations.
Revolut Ltd (Revolut) is a supplier of banking and payment services. The company offers peer-to-peer payments, bank transfers, and currency conversion using a mobile app and multi-currency cards. Additionally, it offers financial services for businesses and individuals. Using the Revolut platform, users may set spending limits and evaluate their expenditure, use open banking, exchange currencies at interbank prices, and monitor their money in real time. The company also provides services for security, international transfers, insurance, and cryptocurrency exchange. Revolut provides services to freelancers, small and medium-sized businesses, individuals, and corporate clients. It conducts business in the Asia-Pacific area, Europe, and North America. London, United Kingdom, serves as the home base for Revolut.
Movencorp Inc., a financial technology company, develops digital banking solutions for banks and non-bank partners. The company's platform provides real-time expenditure data, financial wellness tools, and personalized engagement elements to help customers make better financial decisions. Movencorp was founded in 2011 by Alex Sion and Brett King, and it is headquartered in New York City.
Key Companies in the Neobanking market include
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Atom Bank PLC
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Fidor Bank Ag
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Monzo Bank Limited
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Movencorp Inc.
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N26
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Revolut Ltd.
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Simple Finance Technology Corporation
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Webank, Inc.
Neobanking Industry Developments
August 2023: Revolut Ltd. launched Instant Card Transfers in Singapore.
July 2023: Revolut Ltd. announced the launch of its new Joint Accounts product in the UK.
October 2022: Kitzone Neo Bank, situated in Rajasthan, is launching India's First Assured Cashback Debit Cards and also offering the Mini ATM and Pos Terminal.
Neobanking Market Segmentation
Neobanking Account Type Outlook
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Business Account
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Savings Account
Neobanking Application Outlook
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Enterprises
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Personal
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Others
Neobanking Regional Outlook
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North America
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U.S.
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Canada
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Europe
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Germany
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France
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UK
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Italy
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Spain
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Rest of Europe
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Asia-Pacific
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China
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Japan
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India
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Australia
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South Korea
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Australia
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Rest of Asia-Pacific
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Rest of the World
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Middle East
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Africa
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Latin America
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