Digital-only banks have 1 billion customers

Digital-only banks have 1 billion customers

The transition towards the financial sector’s digital future is well underway but there are many questions about its ultimate destination.

Traditional financial institutions are using their considerable capital and customer bases to push into areas that, for a while, were the exclusive domain of fintechs.

Two new reports shine some light on some aspects of the digital finance market in 2022.

Firstly, challenger banks or ‘neobanks’, the digital-only disruptors that have often attracted high valuations and investor interest.

A recent report from global consulting firm Simon-Kucher reveals that just 5% of these firms are breaking even with many earning less than US$30 dollars in annual revenues per customer.

Despite a collective client account total of nearly 1 billion, the estimated 400 neobanks around the world includes 94 that started in 2020, a record year for launches, fuelled by stay-at-home customers.

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