Neobanking Market - Size, Share, Industry Trends, and Forecasts (2024 - 2031)

By Service Type:

Based on service type, the market is segmented into payments & money transfers, loans, mobile banking, accounts, and others.

Trends in the Service Type:

• Mobile banking services make it easier for users to utilize banking services using their screens with just one click. These services include QR Payments, setting transaction limits, and investing in funds.
• The ease of access has made transactions seamless, allowing users to transfer money across the world without having to pay any additional charges.

The payments & money transfers segment accounted for the largest revenue of 29.83% of the neobanking market share in 2023.

• Since payments & money transactions are the basis of neobanking, all transactions including international and national are extremely fast.
• Instant payment methods and fund transfers make the process of transferring money seamless and attractive to consumers.
• Moreover, other than providing biometric authentication and muti-layered encryption, neobanks can handle transactions that are large in volume.
• In September 2022, Revolut introduced an instant card transfer feature that allows users to transfer money from their bank account directly to their relative's or friends' cards using just the card number. Users don't need to worry about account details, exchange rates, or currency conversion while transferring money.
• Therefore, the rising requirements for instant transfers and ease of access further accelerate the neobanking market demand.

The loans segment is anticipated to register the fastest CAGR during the forecast period.

• Neobanks provide multiple categories of consumers ranging from individual and startup loans, as well as a few underbanked communities.
• They require photo ID, Aadhaar card, and other documents to perform online verification of identity and ensure secure bank transfer.
• The AI-powered credit assessment systems of these banks have made the process of analyzing customer data and financial history much faster, thereby resulting in more accurate and rapid lending decisions.
• For instance, N26 Credit provides instant quotes directly within the N26 app for loans between €1,000 and €50,000. Consumers don't have to go through the hassle of physically signing documents; they can complete the paperwork digitally.
• As per the market analysis, AI-enabled processes and the requirement for seamless approvals and transfers drive the neobanking market trends.

By Application:

Based on application, the market is bifurcated into personal and enterprise applications.

Trends in the Application:

• Neobanks allow enterprises to utilize several services ranging from tracking expenses, invoicing, and integration with business platforms making financial operations much more efficient.

The personal segment accounted for the largest revenue share of the global neobanking market in 2023.

• Neobanks provides multiple features including tools for budgeting finances, dashboards specifically designed for financial wellness, and notifications indicating real-time spending. These features make banking much easier and more accessible for the end-users.
• Moreover, new-age consumers, including Generation Z and millennials, find the no-fee or zero-fee deposit feature appealing. The personalization of services based on baking needs adds to the allure.
• For instance, in 2022, Monzo introduced a new feature called "targets" in trends. This feature allows the users to set monthly spending targets for multiple categories, as well as schedule payments based on those targets, making budgeting easier for individuals.
• As per the analysis, the personal segment drives the neobanking market demand, due the technological advances and low-cost deposits.

The enterprise segment is anticipated to register the fastest CAGR during the forecast period.

• Enterprises are continuously looking for cost-effective banking solutions, as well as scalable in nature.
• Neobanks with their increasing focus on services like processing payments in bulk, invoicing, and tracking the overall cash flow positions them to meet the growing requirements.
• Moreover, the increasing focus of Fintechs towards neobanking services for small businesses, creates more opportunities, along with tailored solutions in order to enhance business operations.
• In May 2021, Sage and Tide entered into a partnership, to provide a banking and accounting product that solves the complex process of setting up and handling banking operations for startups or small businesses.
• In conclusion, the rising requirements for affordable enterprise banking services are driving the rapid development of the enterprise segment in the market.

By Account Type:

Based on the account type, the market is bifurcated into savings and business accounts.

Trends in the Account Type:

• The new and secure integrated APIs and SDKs make the banking user journey much more seamless.
• The rising trend in AI-enabled features such as financial forecasting helps businesses, maintain their financial operations.

The savings account segment accounted for the largest revenue share of the neobanking market share in 2023.

• In terms of saving accounts, neobanks provide much higher rates of interest compared to traditional banks.
• They offer multiple features such as low-cost deposit, zero minimum balance, and tools to manage savings, which significantly appeal to the users, especially the new-age generation.
• These accounts provide customized recommendations based on the user spending habits, utilizing AI-driven features.
• For instance, the "automatic savings" feature built-in with the chime saving account, allows users to save money without the hassle of tracking it manually. This feature rounds up the money spent and transfers that amount from the checking account to the savings account.
• In conclusion, the surge in the neobanking accounts for the increasing demand for saving accounts among the younger generation.

The business account segment is anticipated to register the fastest CAGR during the forecast period.

• The rising trend in business towards customized financial solutions, based on the business needs and goals making financial operations and management much easier. Neobanks with their flexible features cater to these needs at an affordable rate.
• The services offered include processing payroll in a single tap, without any additional steps, dashboards that provide various business insights, and access to a dedicated marketplace.
• For instance, Bunq's business account offers various features, including budgeting tools, contactless payments, AutoVat, and easy sharing of the account with co-directors. These features allow businesses to operate seamlessly, reducing the hassle of managing financial operations.
• In conclusion, the demand for personalized and informed banking solutions drives the neobanking market trends.

Neobanking Market Regional Analysis:

The regions covered are North America, Europe, Asia Pacific, the Middle East and Africa, and Latin America.

Asia Pacific region was valued at USD 25.40 Billion in 2023. Moreover, it is projected to grow by USD 37.24 Billion in 2024 and reach over USD 608.18 Billion by 2031. Out of this, China accounted for the maximum revenue share of 31.8%.

This is driven by the demand for easy-to-use banking services and informed financial solutions. Additionally, countries like Japan, China, and India are increasingly inclined toward these services due to the rising prevalence of advanced banking solutions among the youth, further accelerating neobanking market expansion in the region.

• In 2021, YouTrip, an Asian neo-bank, raised US$30 million in Series A funding to expand its B2B offerings. They will also expand their offerings to wider Southeast Asia, improving its overall profile by allowing cross-border payments.

North America is estimated to reach over USD 841.63 Billion by 2031 from a value of USD 38.06 Billion in 2023 and is projected to grow by USD 55.42 Billion in 2024. This market growth is driven by the increasing shift towards AI-driven solutions provided by the neobanks, which further makes banking easier and accessible for everyone. Additionally, the region's increasing investment in fintech companies further drives the market.

• In 2022, Winden an American fintech startup secured $5.3M in seed funding, in order to support the expansion of financial operations.

The analysis shows that the increasing number of fintech partnerships and the adoption of innovative and advanced technologies are driving the growth of the market in Europe. Additionally, the surge in the adoption of cashless transactions and regulatory support by the government contributes to this growth.

Over the years, the Middle East, Africa, and Latin America are expected to experience significant growth. This growth can be attributed to the increasing shift toward online banking services and the adoption of cashless payment technologies. Moreover, the growth in financial literacy and the adoption of mobile banking options bolsters neobanking market expansion.