Digital Banking Market
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Digital Banking Market size was valued at USD 10.9 trillion in 2023 and is estimated to register a CAGR of over 3% between 2024 and 2032. Industry has been experiencing substantial growth driven by technological advancements, evolving regulatory demands, and the widespread adoption of digital solutions. Digital banking platforms play a critical role in improving financial services, accelerating transaction processes, and reducing operational costs across various sectors such as retail banking, corporate banking, and fintech.
For instance, in March 2024, AsiaVerify announced a partnership with Visa to strengthen digital payments and banking in the APAC region. AsiaVerify's proficiency in KYB, UBO verification, and KYC services, combined with Visa's vast network and resources, empowers financial institutions such as DBS Bank and HSBC to bolster their customer onboarding, monitoring, and regulatory compliance efforts.
| Report Attribute | Details |
|---|---|
| Base Year: | 2023 |
| Digital Banking Market size in 2023: | USD 10.9 Trillion |
| Forecast Period: | 2024 - 2032 |
| Forecast Period 2023 - 2032 CAGR: | 3 |
| 2023 Value Projection: | USD 15.4 Trillion |
| Historical Data for: | 2021 - 2023 |
| No of Pages: | 260 |
| Tables, Charts & Figures: | 300 |
| Segments Covered: | Banking, Service, Mode, End users |
| Growth Drivers: |
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| Pitfalls Challenges: |
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Government regulations play a pivotal role in fostering the growth of digital banking by providing a structured framework that ensures security, trust, and efficiency in financial transactions. For instance, in January 2024, Singapore government implemented the revised Payment Services Act, which expanded the scope of permissible financial activities, established clear guidelines for consumer protection, and mandated stringent measures against financial crime.
These regulatory standards create a conducive environment for innovation and investment in digital banking technologies. Ensuring transparency boosts consumer confidence and incentivizes financial institutions to adopt advanced digital solutions that enhance operational efficiency and stimulate overall growth within the digital banking sector.
The critical need for robust cybersecurity measures to safeguard sensitive customer data amidst rising cyber threats is a major growth challenge for the digital banking market. Simultaneously, navigating diverse regulatory landscapes presents complexities that vary across jurisdictions and can hamper expansion. Another significant hurdle lies in effectively managing the transition from traditional banking methods to digital platforms, requiring substantial efforts in customer education and trust-building.
Mobile banking has become increasingly popular as consumers seek convenience and accessibility in managing their finances, coupled with a growing emphasis on sustainability. For instance, in June 2024, Danske Bank introduced a new feature to its mobile app, providing customers with clear insights into their sustainable finances within their portfolios.
This feature allowed users to easily track the proportion of sustainable investments and assess their performance across various sustainability parameters such as climate impact, equality, human rights, and biodiversity. This move highlights the integration of sustainability criteria into digital banking services, responding to increasing demand among Nordic customers for sustainable investment options.
Additionally, the "buy now, pay later" trend has transformed consumer spending habits by offering instalment payment options at checkout by popularizing interest-free or low-interest plans for online and in-store purchases, appealing particularly to the millennials and Gen Z demographic. This shift reflects a preference for flexible payment methods over traditional credit cards, promoting responsible spending and boosting average transaction sizes for merchants. These changes highlight a growing demand for digital convenience and personalized financial solutions, prompting further innovation and collaboration among financial institutions and fintech firms.
For instance, in May 2024, Google Pay introduced three new features aimed at enhancing online shopping convenience and security. These updates were rolled out to allow users to view card benefits at checkout and expanding "buy now, pay later" (BNPL) options like Affirm and Zip across more U.S. websites and Android apps. This integration enables users to split payments into manageable installments directly within Google Pay, streamlining the checkout process and offering flexibility in payment methods.
Based on banking, the market is categorized into retail, corporate and investment. The LTE segment is projected to exceed USD 9 trillion by 2032. Retail banking encompasses services tailored for individual consumers, such as savings accounts, personal loans, and credit cards. This segment holds the largest share due to the sheer volume of retail customers who rely on these everyday financial products and services.
Retail banking is characterized by its focus on accessibility, convenience, and personalized customer experiences, driving significant revenue for banks through transaction fees, interest income, and service charges. For instance, in 2023, the Governor of the Reserve Bank of India (RBI) reported significant growth in retail digital payments in the country, noting an increase from 162 crore transactions in FY13 to over 14,726 crore transactions by FY24.
Based on service type, the digital banking market is divided into transactional services & non-transactional services. The transactional services segment held a major market share of around 82% in 2023. Transactional services in digital banking are essential for facilitating immediate financial needs. For instance, cash deposits and withdrawals provide convenient access to funds, reducing reliance on physical branches. Fund transfers enable swift and secure money movement across accounts and borders.
Automated services like auto-debit and auto-credit streamline recurring payments, ensuring timely transactions without manual intervention. Digital loan processes offer simplified applications and faster approvals, enhancing accessibility to credit. These services collectively drive the adoption of digital banking by enhancing efficiency and convenience for users.
Asia Pacific dominated the digital banking market with a share of over 69% in 2023, attributed to the expanding population base and widespread internet connectivity. Countries such as China, India, and Indonesia are at the forefront of this transformation. For instance, in China, mobile payment platforms like Alipay and WeChat Pay have become integral to daily transactions, from purchasing goods to paying utility bills. In India, digital payment systems such as Paytm and Google Pay are popular, offering convenient solutions for peer-to-peer transfers and online purchases. Similarly, in Indonesia, mobile banking apps like GoPay and OVO are widely used.
In North America, banks deploy robust cybersecurity measures including encryption, multi-factor authentication, and real-time monitoring to protect customer data. For instance, in June 2024, Visa partnered with Expel, a Virginia-based security operations provider, to increase clients' defenses against cyber threats. This collaboration aims to enhance security for clients in North America by addressing the increasing challenges posed by cybercrime with proactive and scalable solutions.
In Europe, the digital banking market is characterized by a robust adoption of advanced technologies aimed at enhancing customer experience and operational efficiency by integrating AI-driven customer service, biometric authentication, and cloud-based banking platforms. These innovations not only streamline banking processes but also ensure compliance with stringent regulatory standards such as Payment Services Directive 2 (PSD2) and General Data Protection Regulation (GDPR).
Infosys and SAP hold a significant market share of over 1% in the digital banking industry. These top digital banking firms, including Temenos AG, Finastra, Infosys Limited, Tata Consultancy Services, Oracle Corporation, Sopra Steria, and Appway AG, employ focused strategies to excel in the competitive landscape. Temenos AG prioritizes cloud-native solutions and AI-driven analytics, while Finastra emphasizes open APIs for seamless integration. Infosys leverages AI for personalized experiences, Tata Consultancy Services adopts digital-first approaches, and Oracle provides scalable technologies. Sopra Steria offers end-to-end digital transformation, and Appway AG specializes in client onboarding automation, ensuring they stay at the forefront of digital innovation in banking.
Major players operating in the digital banking industry are:
Market, By Banking
Market, By Service
Market, By Mode
Market, By End users
The above information is provided for the following regions and countries:
Etronika, Fidor Solutions AG, Finastra, Infosys, Oracle Corporation, SAB, SAP, Tata Consultancy Services Limited, Technisys S.A, and Temenos AG.
The market size of digital banking reached USD 10.9 trillion in 2023 and is set to witness 3% CAGR between 2024 and 2032, led by supportive government policies and growth of the ecommerce industry.
Asia Pacific market accounted for 69% revenue share in 2023, driven by rapid internet connectivity, large populations, and widespread adoption of mobile payment platforms.
The transactional services segment held 82% of the market share in 2023, owing to the immediate financial needs, streamlined fund transfers, automated payments, and simplified digital loan processes offered by transactional services.