Market Trends of Europe Neobanking Industry
Increasing user penetration of Neobanking Apps
User penetration of Neobanking is 7.3% in 2022 and is expected to hit 13.3% by 2027. The European regulation (Payment Services Directive Law) has allowed fintech firms to directly connect with customers' data, which till now was a privilege only of traditional banks.
Neobanking has a grip on young customers as they are the prime target audience. Neobanking penetration is highest among 18- to 24-year-old customers. The potential growth of neobanks is driven by their low-cost model for end consumers with no or very low monthly fees on banking services such as minimum balance maintenance, deposits, and withdrawals.
Increasing internet penetration is growing demand for neobanking
Digitalization is spreading across all industries, particularly financial transactions, and has expanded to the banking industry. Mobile payments or payments made through portable electronic devices, like a cell phone, a smartwatch, or a tablet, are an alternative to using cash, checks, or physical debit and credit cards.
To stay up with the technological transformation, there has been a tremendous need for adopting and deploying AI solutions, Big Data, and Cloud Computing, among other technologies. In addition, the neobanking model provides a low-cost framework, simple accessibility, and enhanced services. Low real estate and distribution expenses, less sophisticated IT systems, and simplified operational models enhance its cost-efficiency.
