The global neo-bank market is expected to see significant growth in the coming years, with an estimated market value of USD 47.39 billion in 2021 and a projected value of USD 927.12 billion by 2028.
This growth is attributed to the increasing demand for easy-to-access financial services and the ability of neo-banks to provide tailored banking experiences through technology.
Neo banks, which are digital banks that do not have physical locations and rely on mobile platforms, have disrupted the traditional financial services industry by using innovative solutions and emerging technologies.
India currently has the highest adoption rate for neo-banking at 87%, while the United States has over 23 million neo-bank consumers and is expected to see this number increase to between 47 and 50 million users by 2025.
Key Developments in Neo Bank Market
- Tonik, the first neo-bank in the Philippines, has acquired TendoPay, a company that offers payroll-enabled financial solutions to businesses. As a result of the acquisition, Tonik has expanded its core loan portfolio and integrated payroll-enabled financial services into its operations.
- BharatATM, a neo-banking platform, allows small retail businesses to offer customer banking services. The startup’s “bank sakhi” project, which aims to financially empower women, has helped 11,230 women earn an average of Rs 8K per month.
Leading Financial Group providing Neo Banking Platforms lucrative Investments
According to market research firm SkyQuest, neo-banks like Chime and Varo are expected to gain approximately 19 million US account holders between 2021 and 2025.
This growth will contribute to a total of nearly 40 million US individuals with accounts at digital-only banks by the end of 2025. The Southeast Asian region is also expected to attract attention from global investors looking to tap into untapped markets.
Neobanking is expected to play a significant role in the digitalization of the financial industry by providing unique savings and investment opportunities and promoting financial inclusion for various segments of society.
There may also be increased collaboration and innovation from leading banks, technology companies, and regulatory organizations in the neo-banking sector.
UK market dominated with more than 60% of the share
The UK e-commerce sector is generating over 35% of revenue and is providing small and medium-sized enterprises (SMEs) with opportunities to be part of new revenue streams.
The growth of the sector is partly due to the increased adoption of mobile devices among young adults aged 18 to 25.
Neo banks are also adapting their business service offerings to meet the needs of enterprise end-users and SMEs, with a focus on international transfers and instant credit limits.