Neobanking Market Report 2025

The neobanking market size has grown exponentially in recent years. It will grow from $176.05 billion in 2024 to $262.36 billion in 2025 at a compound annual growth rate (CAGR) of 49%. The growth in the historic period can be attributed to consumer demand for convenience, cost efficiency, regulatory environment, globalization and cross-border transactions, financial inclusion initiatives, leveraging big data.

The neobanking market size is expected to see exponential growth in the next few years. It will grow to $1.22 trillion in 2029 at a compound annual growth rate (CAGR) of 47.1%. The growth in the forecast period can be attributed to open banking initiatives, embedded finance, rise of challenger banks, expansion of product offerings, expansion beyond core banking services. Major trends in the forecast period include integration of open banking platforms, partnerships with fintech and tech giants, AI and machine learning in personalized finance, virtual and contactless banking features, customer-centric approach.

The increasing demand for digitalization among banking institutions worldwide is fueling the growth of the neobanking market. Digital banking refers to the transformation of all banking processes into a digital format, replacing physical bank locations with a continuous online presence, which eliminates the need for customers to visit branches. Digital banking automates traditional financial services, allowing bank customers to access products and services online or through electronic platforms. Neobanking facilitates this digitization by enabling financial institutions to operate online without physical branches, providing digital versions of all banking services. Neobanks leverage technologies like artificial intelligence (AI), automation, and cloud computing to offer highly personalized services at lower costs. For instance, a report by Softtek, a Mexico-based information technology company, predicts that digital banking will generate approximately $8.646 billion by 2025. Thus, the rising demand for digitalization in the banking sector is set to drive the growth of the neobanking market.

The increasing penetration of smartphones is expected to further boost the growth of the neobanking market. A smartphone is a mobile device that integrates the functionalities of a traditional mobile phone with advanced computing capabilities. The neobanking market is experiencing significant growth due to the rise in smartphone usage, which facilitates greater access to digital financial services through mobile applications, allowing neobanks to reach a wider audience with convenient banking experiences on the go. For example, a report from Uswitch Limited, a UK-based online and telephone comparison service, noted that there were 71.8 million active mobile connections in 2022, representing a 3.8% increase from the previous year. By 2025, the UK is expected to have a population of 68.3 million, with an anticipated smartphone penetration rate of 95% among its residents. Therefore, the growing smartphone adoption is driving the expansion of the neobanking market.

Technological advancement is a key trend driving the neobanking market. Artificial intelligence plays a crucial role in enhancing neobanking services and solutions by improving efficiency. AI enables the delivery of highly personalized solutions, along with logical reminders and notifications that help consumers save money and experience greater convenience. It also supports credit decisions, risk management, trading, and personalized services. For example, in July 2024, BranchX, a pioneering neobank based in India, made headlines as the first neobank in the country to launch personal loans through the Open Network for Digital Commerce (ONDC). This initiative aims to boost financial inclusion for India's large population, specifically targeting the emerging middle class, young professionals, small business owners, and entrepreneurs who often struggle to access traditional loans.

Prominent companies in the neobanking market are actively engaged in developing innovations, specifically neobanking products, to cater to larger customer bases, increase sales, and boost overall revenue. Neobanking products are financial services or solutions offered by digital-only or online-based banking institutions, known as neobanks. An example of such innovation is the launch of Sendwave Pay by Zepz, a UK-based payments firm, in June 2023. Sendwave Pay streamlines the process of sending funds to Africa and stands out by offering an FDIC-insured bank account coupled with a debit card. Account holders enjoy significant cost savings, with the potential to save up to 25% on transaction fees for remittances to countries such as Kenya, Ghana, and various other African nations. The unique benefits extend to international transactions, as users receive reimbursements for fees incurred when using their Sendwave Pay debit card outside the US. Additionally, account holders can earn monthly interest of up to 0.51% on the funds held in their Sendwave Pay account, providing a comprehensive and advantageous financial solution.

In May 2023, Greenwood, a US-based digital banking platform designed for Black and Latino communities, announced its acquisition of Kinly for an undisclosed amount. This acquisition brings approximately 300,000 Kinly customers to Greenwood's existing base of 1 million members, significantly enhancing its reach and service offerings. Kinly is a US-based neobank.

Major companies operating in the neobanking market include Webank Inc., Nubank, Chime Financial Inc., SoFi Technologies Inc., Green Dot Corporation, Robinhood Markets Inc., Revolut Ltd., Upgrade Inc., Monzo Bank Ltd., Aspiration Inc., N26 GmbH, Starling Bank Ltd., Ubank Limited, Bunq BV, Daylight Financial Corp, Vivid Money GmbH, Monese Ltd., Varo Money Inc., Current Financial Inc., Acorns Grow Inc.

Western Europe was the largest region in the neobanking market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the neobanking market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the neobanking market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Neobanking pertains to digital banks that operate without physical locations and cater primarily to tech-savvy clients. These digital banks offer a wide array of financial services, predominantly in digital and mobile formats, encompassing payments, debit cards, money transfers, lending, and more.

The primary types of business accounts in the neobanking market encompass business accounts and savings accounts. Business accounts within neobanking services cater to business account holders, facilitating the management of funds, bulk pay-outs, credits, detailed account insights, and international transfers. Neobanking services cover a range of offerings, including mobile banking, payments and money transfers, checking/savings accounts, loans, and other financial services. These services find application across enterprises, personal use, and other sectors.

The neobanking market research report is one of a series of new reports that provides neobanking market statistics, including Feed yeast industry global market size, regional shares, competitors with a neobanking market share, detailed neobanking market segments, market trends and opportunities, and any further data you may need to thrive in the neobanking industry. These neobanking market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The neobanking market includes revenues earned by entities by a full stack neobank or a front-end focused neobank. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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