Statista data shows that neobanks will reach $1.61 trillion in net income and grow at an annual rate of 6.8% from 2025 to 2029. Digital banking or neobanks operate exclusively online, with more than 50% of users drawn from the middle class. The Mordor Intelligence report shows that 2.5 billion people owned a digital bank account in 2023.
68% of users, especially those in remote places, say they prefer these institutions because of convenience. These banks are more popular than ever, driving digital transformation in financial services. AI helps neobanks in offering fraud protection, budgeting, and 27/7 banking solutions.
What is digital banking?
Digital banking institutions are app-based platforms operating online-only. Customers perform all banking activities on their devices and never need to visit a physical bank. These platforms are the fastest growing, with the World Bank report showing that 76% of adults have accounts in them. People living in towns and villages love these banks and use them for deposits and paying almost anything. They cause digital transformation in finance, leading to online security, fraud prevention, and transaction decentralization.
Individuals and corporations seeking to start a digital bank should understand how to build a banking app. But, what is a digital bank exactly and what services does it offer? An electronic bank offers virtual digital banking and many security and privacy features. People use a digital bank to pay bills, make deposits, and make business transactions.
A digital banking development company specializes in planning, designing, and testing neobanks apps. Developers offer advanced expertise, tools, and experience drawn from different regions.
What features make digital banks popular across all demographics?
Finance digital transformation reduces banking costs and improves efficiency, leading to higher satisfaction. McKinsey reports that these platforms reduce costs by 30%. Neobanks drive digital transformation in financial services by offering advanced security and data analytics in real-time.
These platforms integrate many digital tools, leading to automation, AI customer help, and dynamic trends. PwC reports that 60% of top leaders say digital transformation in finance will affect the future of this sector. These features make neobanks popular across all demographics:
- Neobanks charge lower fees because they don’t need to pay huge rent or higher too many workers.
- They operate 100% online, making them accessible to anyone, everywhere.
- The banks provide faster services because users can open accounts, deposit, send money, or make payments in seconds.
- The apps have friendly features designed to provide a smooth banking experience for everyone.
- The platforms have analytics tools, allowing users to monitor spending, save money, and budget better.
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Why are neobanks driving the financial sector?
Financial digital transformation is necessary because technology is changing the world superfast. Tab Insights reports that 61% of the leading 100 neobanks are making profits all year round. Several things are helping the digital banking sector drive digital transformation in financial services.
Attractive to Gen Zs and younger generations
People born in the 1980s to 2000s are digital services-oriented and easily adopt online banking. These generations were raised understanding and interacting with technology in their daily lives.
Digital banking apps allow them to open accounts and transact in minutes, and they dislike visiting physical banks. Salesforce reports that 73% of Gen Zs and 67% of millennials prefer companies that simplify life through online services.
Advancement of mobile and internet technologies
Statista data shows that 85% or 6.9 billion people use mobile technology. The digital banking sector is capable of reaching more than half of the world’s population. Smart devices allow people to connect to neobanks through an extensively available internet. Users don’t need to leave their house to open an account, send and receive money, or make deposits. This has added the advantages of neobanks, leading to expedited digital transformation in finance.
Pandemic lockdowns
The pandemic lockdowns in 2020 have had many negative impacts on people, economies, and jobs. However, they were significant in boosting the popularity of digital banking. People could no longer visit traditional banks, and online banking became the most viable option.
McKinsey reports that 20% to 30% of neobank users first used online banking during the lockdowns. The report further says that people didn’t stop preferring digital banking after the restrictions were lifted. Limited movement was a catalyst to finance digital transformation and has not stopped since then.
Closing the gap in unbanked regions
Disparities between banked and unbanked regions exist to date, with urban populations highly banked while rural populations are sparsely banked. Some regions in the world rarely access traditional banks due to distance. The World Bank reports that 1.4 billion people were underbanked in 2021. Rural dwellers were the most affected, but digital banking is closing the gaps.
Large populations in Africa and Asia benefit from digital banks due to extensive access to services through mobile devices. According to Payments and Commerce Market Intelligence, M-PESA had more than 70 million users globally by March 2025. A report by GSMA shows that mobile money use growth surpassed 2 billion accounts in 2024. Today, more than 500 million people actively use mobile money monthly.
Convenience and security of mobile transactions
The fast digital transformation in financial services is happening due to the convenience and security of mobile transactions. Traditionally, physical banking services involve carrying hard cash and manual transactions. People often visit land-based branches to sign papers and authorize transactions. This exposes them to physical theft, delays, and vandalism.
Digital banking is secure and convenient, providing multi-factor authentication and advanced encryption. Deloitte reported on banking safety and said that 78% of users say mobile banking apps are safer. These transactions are convenient, allowing users to automate payments, offer real-time withdrawals, and instant access to services.
Conclusion
New digital banking trends are causing major shifts in the finance digital transformation. The platforms offer lower costs, undeniable convenience, and smart banking applications for everyone globally. Statista shows that outreach by neobanks will increase from 2.5 billion people in 2023 to 3.6 billion in 2027. These services provide access to all demographics – from students to business people, the elderly, and youth. Digital transformation in finance will continue to be felt by current and future generations.
