Neobanks, or digital-only banks, have been gaining popularity in North America in recent years. As more and more people are drawn to the convenience and accessibility of online banking, neobanks are becoming a popular alternative to traditional banks.
One of the biggest trends in North American neobanking is the growth of challenger banks. These are neobanks that are focused on disrupting the traditional banking industry by offering more modern and personalized banking experiences. Challenger banks are gaining popularity with consumers who are frustrated with the high fees and poor customer service of traditional banks, and are looking for alternatives that can offer a better banking experience.
Another trend in North American neobanking is the increasing use of artificial intelligence and machine learning. Neobanks are leveraging these technologies to improve the customer experience, by offering personalized financial advice and recommendations based on the customer's individual needs and preferences. This is making it easier for people to manage their finances and make informed financial decisions, without the need for face-to-face interactions with a bank representative. With COVID19, the world was forced to move to these technologies and the pandemic has worked in the favor of these banks as they no longer have to convince the customers to join them and adapt to new ways of functioning as it was the only way of functioning for the world.
In addition, there is a growing trend towards collaboration and partnerships between neobanks and traditional financial institutions. As neobanks become more prevalent, traditional banks and financial institutions are starting to take notice and are partnering with neobanks to offer their customers access to digital banking services. Some of the promising stats by the Statista website show that the sector is poised for high growth for the next 5 years.
Some of the key points in the report include:-
- Transaction value in the Neobanking segment is projected to reach US$1.16tn in 2022.
- Transaction value is expected to show an annual growth rate (CAGR 2022-2027) of 19.28% resulting in a projected total amount of US$2.79tn by 2027.
- The average transaction value per user in the Neobanking segment amounts to US$25.01k in 2022.
- From a global comparison perspective it is shown that the highest transaction value is reached in the United States (US$1,075.00bn in 2022).
- In the Neobanking segment, the number of users is expected to amount to 87.42m users by 2027.
- User penetration will be 9.2% in 2022 and is expected to hit 16.8% by 2027.
This surge in the activity and positive projections is driving neobanks to invest in the resources and get support they need to grow and expand their operations, while also giving traditional banks the opportunity to stay competitive in the increasingly digital world of banking.
There is a whole ecosystem of companies which have been established to help the neobanks jumpstart their operations, scale effortlessly and stay competitive in the market. These companies, which provide “Fintech as a Service'' work by setting up a stack or the foundation layer on which the neobanks can build their operations. These companies take care of the complicated process of developing partnerships with payment providers, getting customized cards, issuing them to the customers and more.
These ancillary companies are accelerating the growth of neobanks and one such name is Berkeley Payment. If you are a fintech company and want to test the neobanking space, you will find that Berkeley will do all your heavy lifting & the whole process of going live seamlessly for you. All you have to do is get in touch with us and then just sit back and relax. It's all smooth sailing from there.
Overall, the future looks bright for neobanks in North America. With the growth of challenger banks, the increasing use of artificial intelligence and machine learning, and the rise of partnerships and collaborations, we can expect to see neobanks continue to thrive and play a major role in the North American banking industry in the coming years. And we at Berkeley are sure that we will play a pivotal role in this growth story and make meaningful contributions to the industry.
