Over the past year, 43 new digital challenger banks have been launched around the world, bringing the total number of players to 291, data acquired by Finbold, a platform that covers news on finance, cryptocurrencies and fintech, show.
The figure represents a 17.11% increase from October 2021’s 248 digital challenger banks.
Looking at geographical trends, Europe witnessed the sharpest rise in absolute number, adding 21 new digital challenger banks between October 2021 and October 2022. The figure represents a growth of 27.6% from the 76 recorded the year prior. As of October 24, 2022, Europe had 97 active digital challenger banks, the highest number worldwide.
In Europe, digital banks have flourished on the back of friendly regulations in jurisdictions such as the UK and Lithuania, the report notes. The region has, overall, easier means of entry for banking startups, as evidenced by industry leaders like N26, Monzo and Revolut, which use full bank charters to operate. Passporting rules across the European Economic Area (EEA) have also made it easy for digital banks to expand into other jurisdictions.
After Europe, North America recorded the second biggest number in new digital challenger banks added during the period, with 10 players (+15.9%), Finbold data show. The number brought the total number of digital banks in North America to 73.
South America and Asia-Pacific (APAC) each added three new digital challenger banks, bringing their respective totals to 57 (+5.6%) and 47 (+11.9%) digital banks.
Finally, Africa and the Middle East added four new companies for a total of 17 (+30.8%).
Digital banking services gain traction in Southeast Asia
With a total of 47 digital challenger banks, APAC has the world’s fourth largest pool of digital banks.
In the region, Southeast Asian countries, in particular, have emerged into the flag-bearer economies of digital financial services, driven by jurisdictions including Singapore, Malaysia, the Philippines and Indonesia where regulators have opened up the banking market to new entrants by introducing favorable rules or by launching digital banking frameworks.
Thailand is expected to be next in line as the central bank finishes up drafting licensing guidelines. The Bank of Thailand said in October 2022 that the draft will be revealed at a public hearing in early 2023.
In Vietnam, though no defined legislation for digital banking has been introducing yet, neobanking offerings have risen in popularity over the past years.
Cake, a digital banking brand launched in 2021 from a partnership between ride-hailing startup Be Group and Vietnam Prosperity Joint-Stock Commercial Bank, has been one of the fastest growing neobanking offering in the country, amassing more than 2 million customers in just 20 months of operations. Cake offers a wide range of digital banking products and services, including checking and savings accounts, money transfers, investments and personal loans.
In the Indonesian market as well the digital banking market has risen significantly. Bank Jago, a technology-based bank backed by ride-hailing giant GoJek, reached profitability in Q3 2021 after six years of losses. The jump in profits was driven by an uptick in loans, the increase in the number of current account savings accounts it handles, and collaborations with several fintech lending, multi-finance and other digital financial institutions, which have helped it expand its reach.
Bank Jago offers digital banking services, such as money changer, pickup services, bank guarantees, and a payroll system. Its loan products include working capital loans, investment loans, consumer loans, and mortgages loan.
Bank Jago had 3.9 million customers as of end August 2022, up from 1.4 million at the end of 2021.
In Indonesia still, Bank Neo Commerce, a digital bank and subsidiary of local buy now, pay later (BNPL) player Akulaku, amassed nearly 13 million users and reached a total transaction value of US$2 billion in just ten months after the launch of its Neobank app.
And in the Philippines, Tonik Bank, on of the licensed digital banks secured a whopping US$100 million in consumer deposits within eight months of the bank’s launch of commercial operations.
Tonik provides loan, deposit, and payment products to consumers. It’s one of the most well-funded fintech companies in Southeast Asia, having raised a total of US$175 million in funding.
Featured image credit: Edited from Unsplash