Neobanking Market

Neobanking Market Outlook (2024 to 2034)

Revenue from the global neobanking market is expected to reach US$ 97.45 billion in 2024 and increase swiftly at 35.6% CAGR to settle at US$ 2,048.29 billion by the end of 2034.

Widespread use of smartphones and reliable Internet is increasing reliance on technology in all walks of life. Neobanks, which operate without physical branches, provide the convenience of skipping queues and completing transactions swiftly.

Ease of accessing neobanks on various devices, especially smartphones, plays a crucial role in their adoption. Moreover, key companies are focusing on incorporating artificial intelligence and machine learning, further promoting neobanking market growth. This ensures 24x7 services for customers, regardless of their location. Another factor contributing to global neobanking market growth is the partnerships and collaborations between neobanks and traditional banks, which help build customer confidence in using neobanks.

Key Market Growth Drivers

• Main reason why neobanking usage is surging is because customers find these services easy, convenient, and seamlessly integrated into their daily routines.
• A key neobanking market trend is the growing preference for mobile banking and digital transactions among consumers, especially youth who favor apps for managing their accounts over visiting physical branches.
• Neobanks are beneficial due to their strategy of digital-only as this enables them to provide services that are competitive or even fee-free, drawing clients who want to lower their banking expenses.
• Several neobanks provide customized services, automate processes, enhance security, and offer advanced financial products like automated savings accounts and stock or crypto trading due to advancements in blockchain, artificial intelligence, and machine learning.
• Number of countries are formulating new frameworks, taking initiative, and supporting fintech innovation such as neobanking for a better future.
• Neobanks generally work together with other financial institutions, fintech companies, and payment processors to increase the range of services they provide and enhance clients’ experience.
• Rising use of digital banking solutions globally is a significant factor contributing to the expansion of the neobanking market size.

Report Attribute	Detail
Neobanking Market Size (2024E)	US$ 97.45 Billion
Forecasted Market Value (2034F)	US$ 2,048.29 Billion
Global Market Growth Rate (2024 to 2034)	35.6% CAGR
North America Market Share (2024E)	33%
East Asia Market Growth Rate (2024 to 2034)	37% CAGR
Saving Accounts Segment Value (2034F)	US$ 1,065.11 Billion
Enterprises Segment Value (2034F)	US$ 1,167.53 Billion
Key Companies Profiled	Atom Bank PLC; Ubank Limited; Simple Finance Technology Corp.; Fidor Bank Ag; Movencorp Inc.; Monzo Bank Ltd.; MyBank; N26; Revolut Ltd.; Webank, Inc.; Albo; Green Dot Corporation; Fintech Farm; Bunq.

What is the Reason Behind Surging Use of Neobanking?

“High Preference for Digital Transactions among Youth”

Consumers, especially millennials and Generation Z, are increasingly preferring digital transactions and mobile banking. They are drawn to the convenience and accessibility of mobile apps for managing their finances. Features such as easy bill payments, seamless integration with other digital services, and real-time transaction updates are particularly appealing to younger users, driving the adoption of neobanking.

To stay competitive, traditional banks are partnering with neobanks. These collaborations benefit neobanks by leveraging the trust still held in traditional banking. Neobanks are well-positioned to meet these expectations with their tech-forward and flexible strategies, coupled with their lack of physical branches. They excel in providing creative, affordable, and user-friendly financial solutions.

What are the Challenges Encountered by Neobanks?

“Vulnerability to Cyber Threats and Risk of Decreased Consumer Trust”

Neobanking solution providers are increasingly concerned about security issues, as they face vulnerabilities to various cyber threats such as fraud, phishing, and data breaches. Unlike traditional banks, neobanks operate solely through mobile apps and internet platforms, making them more susceptible to cyberattacks. It is crucial for neobanks to implement robust security measures to protect consumer information, prevent unauthorized access, and minimize financial losses.

This includes deploying strong encryption methods, implementing multi-factor authentication, continuously monitoring transactions for anomalies, and conducting regular security audits. Instances of cybersecurity breaches can erode consumer trust, leading to reduced profitability for neobanks.

Country-wise Insights

North America is poised to hold 33% neobanking market share in 2024. Demand for neobanking solutions in the East Asian region is forecasted to increase at a noteworthy 37% CAGR through 2034. Companies in East Asia are offering completely contactless platforms. This is attracting consumers to use neobanking as services are available 24x7.

Why is Demand for Neobanking High in the United States?

“Low Cost and Clear Pricing of Neobanking Solutions”

Attribute	United States
Market Value (2024E)	US$ 14.31 Billion
Growth Rate (2024 to 2034)	35.3% CAGR
Projected Value (2034F)	US$ 294.22 Billion

The United States is poised to hold 44.5% revenue share in North America in 2024. Demand for neobanking solutions is increasing in the United States due to their lower costs and clear pricing. Neobanks provide more affordable fees and competitive rates for their services because they do not have to pay the overhead involved with running physical branches. Customers who are cost-conscious and get impatient with traditional banks are finding neobanking is an ideal choice for them which driving the market growth in the country.

Because of their affordability and openness, neobanks are a becoming desirable substitute for people who want to cut down on their banking costs and stay away from unforeseen fees in the United States.

What is the Market Outlook for Neobanking in Japan?

“Advanced Financial Services and Products Tailored to Lifestyles of Tech-Savvy Consumers”

Attribute	Japan
Market Value (2024E)	US$ 6.62 Billion
Growth Rate (2024 to 2034)	37.2% CAGR
Projected Value (2034F)	US$ 156.57 Billion

Neobanks in Japan are attracting tech-savvy consumers with their advanced financial services and products that fit into lifestyles. These include budgeting tools that assist people in managing their finances more easily through tracking and individualized insights, and fast money transfers, which leads to quick and convenient transactions.

Another reason behind the growing use of neobanks in Japan is they provide consumers with customized suggestions for savings, investments, and spending through the use of AI and advanced data analytics. These latest products improve banking overall by making it easier to use, more effective, and consistent with modern consumers' digital habits. As a result, neobanking services are becoming more popular in Japan.

Category-wise Insights

Based on account type, the market is segmented into business accounts and savings accounts. In 2024, business accounts are expected to hold 52% revenue share.

Which Account Type Holds Substantial Portion of Revenue Share?

“Convenience and Accessibility of Managing Savings Accounts through Mobile Apps”

Attribute	Savings Account
Segment Value (2024E)	US$ 46.78 Billion
Growth Rate (2024 to 2034)	36.7% CAGR
Projected Value (2034F)	US$ 1,065.11 Billion

Neobanking is becoming popular among people who are technologically sound, particularly the younger generation because it provides competitive interest rates and advanced services. In comparison with traditional banks, neobanks offer reasonable rates for services and other things because of their minimal operating costs. Managing savings accounts is becoming easy and accessible with mobile apps.

Consumers seeking to improve their financial health also are adopting neobanking solutions due to they provide individualized financial insights, automated saving features, and exclusive saving options.

Will Adoption of Neobanking Gain Traction in Enterprises?

“Will benefit from Easy Connectivity with Existing Financial Systems”

Attribute	Enterprises
Segment Value (2024E)	US$ 52.62 Billion
Growth Rate (2024 to 2034)	36.3% CAGR
Projected Value (2034F)	US$ 1,167.53 Billion

Enterprises are looking for digital banking solutions that are easy to connect with their current financial systems and procedures being provided by neobanking. Real-time cash flow tracking, automatic spending management, and API-driven connections with accounting software are just a few of the customized services that neobanking provides for enterprises.

Use of neobanking is increasing in enterprises as it lessens manual workers, improves financial operations efficiency, and offers improved financial transparency. Multi-currency accounts and foreign transactions are usually more flexible and affordable with neobanks, making them especially beneficial for enterprises.

Competitive Landscape

Key players in the neobanking market are offering financial products, insurance, and lending services in addition to conventional banking to create new revenue sources. Some neobanks are introducing upgraded features and incentives for paid accounts to monetize their most active consumers.

• In May 2024, Fintech Farm, a London-based business, raised US$ 32 million in funding. The company offers technology to medium-sized banks in developing countries so they may create digital tools. The funding comes from two Series B rounds: the first, led by London-based venture firm Nordstar, and the second, led by Bank of Georgia, a company listed on the London Stock Exchange.
• In March 2024, three new fintech companies joined Green Dot Corporation's expanding network of Green Dot Network partners. Green Dot Corporation is a top digital bank and fintech that offers businesses and consumers seamless banking and payment services. Through Green Dot's extensive nationwide network of thousands of retail locations, REPAY, FACEBANK, and Pana can now provide customers with easily accessible and reasonably priced cash transactions and services.
• In September 2023, Albo, a neobank based in Mexico, announced that it had closed a US$ 40 million growth investment round. Morpheus Ventures, a United States-based company, led the most recent infusion. Significant support was also provided by previous backers, including Mexico's Nazca Ventures and the United States-based Valar Ventures.

Fact.MR provides detailed information about the price points of key providers of neobanking solutions positioned across the world, sales growth, production capacity, and speculative technological expansion, in this updated market report.

Segmentation of Neobanking Market Research

• By Account Type :

  • Business Accounts
  • Savings Accounts

• By Application :

  • Personal Use
  • Enterprises

• By Region :

  • North America
  • Western Europe
  • Eastern Europe
  • Latin America
  • East Asia
  • South Asia & Pacific
  • Middle East & Africa