What Has Been the Growth of the Neobanking Market So Far?
The neobanking market has seen considerable growth due to a variety of factors.
• The scale of the neobanking market has seen a remarkable expansion in the preceding years. The progression predicts an upsurge from $176.05 billion in 2024 to a whopping $262.36 billion in 2025, indicating a compound annual growth rate (CAGR) of 49.0%.
The hike during the historical period can be tied to customers' need for comfort, cost-effective solutions, a dependable regulatory environment, the globalization trend, and the surge in cross-border transactions. The efforts towards financial inclusion and the utilization of big data also played a key role in this growth.
What is the Forecasted Market Size and CAGR for the Neobanking Market?
The neobanking market is expected to maintain its strong growth trajectory in upcoming years.
• The neobanking industry is projected to witness significant expansion in the coming years, with its market size forecasted to swell to $1228.17 billion in 2029, representing a compound annual growth rate (CAGR) of 47.1%.
The surge within the predicted period can be attributed to numerous contributing factors such as open banking initiatives, the emergence of embedded finance, the rising presence of challenger banks, and the broadening of product provisions and services beyond the basic banking functions. Furthermore, the forecast period expects trends like the assimilation of open banking platforms, collaborations with fintech firms and big tech, advancements in AI and machine learning for bespoke finance, the deployment of virtual and contactless banking attributes, and the adoption of a customer-focused approach.
What Factors Are Driving Growth In The Neobanking Market?
The surge in demand for digitalisation across global banking institutions is driving the expansion of the neobanking sector. Essentially, digital banking refers to the complete digitisation of banking procedures, replacing the physical bank location with a constant online service that removes the need for customers to visit a branch. This modern banking system automates traditional financial services. With digital banking, bank customers can access banking services and products through the internet or an electronic platform. Neobanking plays a crucial role in this digital shift, enabling financial organisations to operate online sans physical locations while offering digitally rendered versions of all banking services. Technology like artificial intelligence (AI), automation, and cloud computing enables neobanks to deliver highly tailored services at reduced costs. For example, Softtek, an Information Technology company in Mexico, anticipates that digital banking will yield approximately $8.646 billion by 2025. Consequently, the escalating demand for digitalisation in the banking sector is predicted to fuel the neobanking market's growth.
What are the Market Segments in the Neobanking Market?
The neobanking market covered in this report is segmented –
1) By Account Type: Business Account, Savings Account
2) By Service: Mobile Banking, Payments And Money Transfer, Checking/Savings Account, Loans, Other Services
3) By Application: Enterprises, Personal, Other Application
Subsegments:
1) By Business Account: Sole Proprietorship Accounts, Partnership Accounts, Corporate Accounts, Freelancer Accounts
2) By Savings Account: Regular Savings Accounts, High-Interest Savings Accounts, Goal-Based Savings Accounts, Joint Savings Accounts
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What Trends are Shaping the Neobanking Market?
The neobanking sector is being driven by technological developments, with artificial intelligence playing a significant role in enhancing service efficiency. AI aids in customizing solutions to customer needs and provides helpful alerts and notifications, making banking more comfortable and helping save money. It is also beneficial for credit decisions, risk assessment, trading, and tailored services. In a notable example, BranchX, a pioneering Indian neobank, became the first in the country to offer personal loans through the Open Network for Digital Commerce (ONDC) in July 2024. This step was designed to improve financial inclusion for India's large populace, with a focus on the rising middle class, young professionals, small company proprietors, and entrepreneurs who often struggle to secure traditional loans.
Who Are the Key Players in the Neobanking Market?
Major companies operating in the neobanking market include:
• Webank Inc.
• Nubank
• Chime Financial Inc.
• SoFi Technologies Inc.
• Green Dot Corporation
• Robinhood Markets Inc.
• Revolut Ltd.
• Upgrade Inc.
• Monzo Bank Ltd.
• Aspiration Inc.
• N26 GmbH
• Starling Bank Ltd.
• Ubank Limited
• Bunq BV
• Daylight Financial Corp
• Vivid Money GmbH
• Monese Ltd.
• Varo Money Inc.
• Current Financial Inc.
• Acorns Grow Inc.
What are the Regional Insights into the Neobanking Market?
Western Europe was the largest region in the neobanking market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the neobanking market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
