Digital Banking Market was valued at USD 10.01 billion in 2024 and is expected to reach USD 32.67 billion by 2035, growing at a CAGR of 15.45% from 2024-2035.
The market for digital banking is experiencing a dramatic shift, driven by technological innovation, changing consumer behavior, and growing internet penetration. Consumers are looking for easy and effective banking solutions, which has motivated both conventional banks and fintech firms to innovate their digital services.
One of the key drivers of growth is increased smartphone usage, which has revolutionized the way consumers interact with banking services. Latest government statistics indicate that more than 300 million smartphone users in the U.S. are significantly improving access to mobile banking apps. Moreover, the increasing demand for digital wallets and contactless payment solutions is revolutionizing payment processes, fueling the need for hassle-free banking experiences.
Government policies are equally important to the development of the digital banking industry. For example, the Federal Reserve’s “Faster Payments Task Force” aims to enhance the speed and efficiency of payment systems within the United States. In the case of Europe, the EU PSD2 regulation promotes competition and innovation through the authorization of third-party providers to have secure access to bank data, which increases customer options as well as enhances the digital banking experience. According to a World Bank report, over 1.7 billion adults globally are unbanked, and the prospect of digital banking solutions is high for increasing financial inclusion, particularly in developing countries.
Here’s a table that outlines different types of digital banking platforms, reflecting the various offerings in the Digital Banking Market:
| Type of Digital Banking Platform | Description |
|---|---|
| Mobile Banking Apps | Applications that allow users to manage their finances on mobile devices, offering features like balance checks, transfers, and bill payments. |
| Digital Wallets | Services that allow users to store and manage payment information securely for online and in-store purchases. |
| Cryptocurrency Exchanges | Platforms where users can buy, sell, or trade cryptocurrencies and manage digital assets. |
| Digital Insurance Platforms | Platforms that provide digital insurance solutions alongside banking services, often allowing for seamless integration. |
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| Segments covered | Banking, Service, Mode, End users |
|---|---|
| Growth Drivers |
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| Pitfalls & Challenges |
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Key players
- Ant Group – (Alipay, MyBank)
- PayPal – (PayPal Digital Wallet, Venmo)
- Square, Inc. – (Cash App, Square Payments)
- Revolut – (Revolut Banking, Cryptocurrency Trading)
- N26 – (N26 Bank Account, N26 Business Account)
- Chime – (Chime Spending Account, Chime Savings Account)
- Robinhood – (Stock Trading App, Cash Management Account)
- Monzo – (Monzo Current Account, Monzo Business Account)
- Starling Bank – (Starling Personal Account, Starling Business Account)
- Sofi – (SoFi Invest, SoFi Money)
- Stripe – (Stripe Payments, Stripe Atlas)
- LendUp – (LendUp Loans, LendUp Credit Card)
- Zelle – (Zelle Payment Service, Zelle App)
- NuBank – (NuConta, NuPay)
- Varo Bank – (Varo Bank Account, Varo Savings Account)
- Fidor Bank – (Fidor Smart Account, Fidor Business Account)
- Tink – (Tink API, Tink Payments)
- Curve – (Curve Card, Curve Money Management)
- TransferWise – (Wise) (Wise Currency Exchange, Wise Multi-Currency Account)
- Klarna – (Klarna Pay Later, Klarna Checkout)
Segmentation
Market, By Banking
- Retail
- Corporate
- Investment
Market, By Service
- Transactional Services
- Cash deposits and withdrawal
- Fund transfers
- Auto-debit/auto-credit services
- Loans
- Non-Transactional Services
- Information security
- Risk management
- Financial planning
- Stock advisory
Market, By Mode
- Online banking platforms
- Mobile banking apps
Market, By End users
- Individuals
- Online banking platforms
- Mobile banking apps
- Government organizations
- Online banking platforms
- Mobile banking apps
- Corporates
- Online banking platforms
- Mobile banking apps
Digital Banking Market Trends
Mobile banking has grown more popular as shoppers look for ease and accessibility when it comes to managing their finances, combined with an increased focus on sustainability. For example, in June 2024, Danske Bank launched a new feature in its mobile app that gave customers direct insights into sustainable finances in their portfolios.
This function enabled clients to simply monitor the percentage of sustainable investments and gauge their performance against different criteria of sustainability including climate footprint, equality, human rights, and biodiversity. The move reflects bringing in sustainability as a criterion to online banking offerings as a result of growing customer demand for green investment products among Nordic consumers.
Moreover, the “buy now, pay later” phenomenon has revolutionized consumer consumption patterns by providing instalment payment at checkout through popularizing interest-free or low-interest schemes for online and offline purchases, targeting especially the millennials and Gen Z segment. This change indicates a shift towards flexible payment options from the conventional credit card, encouraging prudent spending and increasing average order values for merchants. These developments underscore an increasing need for digital convenience and tailored financial solutions, leading to increased innovation and cooperation between financial institutions and fintech companies.
Digital Banking Market Share
Infosys and SAP are major players in the world of digital banking, owning a considerable slice of the pie. To keep the competition hot on their heels, they’ve come up with some smart plans. Temenos is all cloud computing and artificial intelligence intelligence, while Finastra emphasizes open APIs for straightforward connectability. Infosys employs AI to personalize services for every client, whereas Tata Consultancy Services emphasizes digital right from the outset. Oracle relies on its scalable technology, and Sopra Steria perfected end-to-end digital overhauls. Finally, Appway AG’s got client onboarding nailed down through automation to keep banks ahead of the curve. So, these firms aren’t merely players—they’re making the future of digital banking possible.
| Aspect of Financial Inclusion | Contribution of Digital Banking |
|---|---|
| Access to Accounts | Enables account opening via mobile devices, even in remote areas. |
| Reduction in Banking Costs | Low transaction costs compared to traditional banking, making it more affordable. |
| Convenience and Reach | Provides 24/7 access to banking services without physical limitations. |
| Financial Education | Digital platforms offer educational tools to improve financial literacy. |
| Cashless Transactions | Promotes digital payments, reducing reliance on cash and enabling secure transactions. |
Digital Banking Market Segment by Deployment
On-premise dominated the market in 2023 and held a revenue share of 74.2% that is set to record the highest CAGR growth during the forecast period. It is sought after for its superior security as it gives IT and security personnel direct access to the software on their network, where they have total control over its configuration, management, and security.
The cloud segment, with the second-highest revenue share of 2023, is expected to progress at the highest CAGR in the forecast period. SaaS and cloud solutions are the driving forces behind inclusive banking due to the availability of flexible and affordable financial services for underprivileged populations.
By Mode
Online banking in 2023 dominated the market of the digital banking platform and accounted for 82.8% of revenue. As the latest means of providing retail bank services, online banking offers facilities such as inter-account transfer, balance reporting, and other typical retail banking operations. These services enable customers to get information and make transactions, such as paying bills, via telecommunications networks, without physically leaving their residences or workplaces.
On the other hand, the mobile banking segment is expected to register a CAGR of 12.1% over the forecast period, led by rising smartphone penetration, widening internet coverage, and rising customer demand for easy, on-the-go banking services. Lower service charges, better user experience through simple app interfaces, and better security features have also helped it grow. Moreover, increasing financial inclusion initiatives, especially in developing economies, and the inclusion of value-added services such as payments, investments, and lending also increase mobile banking uptake.
By Component
In 2023, the platform segment dominated the digital banking platform market that accounted for 60.6% of the revenue share. The growth of the platform segment in the digital banking platform market is driven by banks that are increasingly adopting digital transformation to respond to shifting consumer demands and improve their value propositions. Growth of fintech and other technological advancements have fostered the creation of more advanced digital platforms. Drivers of this growth are integration with cloud services, enhanced scalability, cost-effectiveness, and increased emphasis on user experience. Moreover, the increasing need for secure and seamless banking solutions is fueling increased adoption of these platforms.
The services segment is expected to expand at the highest CAGR over the forecast period. With the advent of fintech, fueled by technology giants launching new business platforms, banks have stepped up digital transformation. To address customer demands and bring in new products proactively, banks are increasingly using digital technologies. The migration of financial services to the cloud facilitates a customer-centric strategy by lowering entry barriers and increasing access to banking solutions. This transformation also supports the development of new services based on scale, data, and technology, allowing for quicker and more streamlined access to data for regulatory needs, risk mitigation, and anomaly detection in risk management.
By Service
The professional service segment led the market with a revenue share of 65.01% in 2023. The professional services segment of the digital banking market is growing due to various factors such as rising regulatory compliance needs that require professional guidance and support, leading banks to approach professional services for managing compliance.
The managed service segment is anticipated to witness the highest CAGR through the forecast period. Managed data center services have the capability to streamline corporate processes in a hybrid IT setup by improving business automation and management. As the number of cyberattacks increases, the demand for managed security services in industries is anticipated to grow.
Managed security services are extensively applied in business operations to safeguard sensitive information. The need for managed security services is fueled by the major complexity issues related to increasing network complexity, which makes efficient data security management challenging. As a result, the demand for managed security services has increased, as they assist businesses in automating compliance monitoring and detecting and reducing risks through detailed security audits.
By Type
The retail banking segment held the largest market share and accounted for more than 31.4% of revenues in 2023 and is expected to expand at a CAGR of 11.2% over the forecast period. Digital bank expansion, technology innovation, incorporation of industrial ecosystems, and a growing focus on innovation create opportunities and challenges for the banking industry. Customers are increasingly leveraging digital platforms and fintech technologies, which are upending time-tested relationships in core financial products such as deposits, loans, payments, and investments. At the end of July 2024, the Unified Payments Interface (UPI) in India posted strong growth at a total transactions volume of 14.44 billion, reflecting a year-over-year growth rate of 45%. The overall value of transactions amounted to ₹20.64 lakh crore (approximately USD 2.5 trillion), up by 35% from the previous year
In contrast, the investment banking division captured a substantial share of revenue in 2023. International market reopening and stimulus programs by the government have spurred a considerable spike in investment banking activity. Investment banks have started office operations again and are carrying out limited in-person client interactions. In addition, to make deal origination processes more effective and efficient, investment banks are adopting hybrid conference strategies combined with the most recent technologies.
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Regional Analysis
The Asia Pacific region was the leader in the digital banking market with a 32.7% market share in 2023. This is because of growing demand for online and mobile banking services. New digital companies are transforming the industry for businesses and consumers alike, providing immense opportunities for new entrants and incumbent firms as regulators open up licensing and establish new norms.
