Digital banking to hit $2.5T in 2021 - 70% jump in 24 months

Even before the pandemic, the global digital banking market had been growing rapidly, with millions of people choosing an app or web-based bank over a traditional high-street financial institution.

However, the COVID-19 had accelerated the shift to digital banking like never before, as customer expectations changed during the pandemic.

According to data presented by AksjeBloggen.com, the global digital banking market is expected to hit a $2.5trn transaction value in 2021, a massive 70% increase in a year.

The Number of Users Almost Tripled Amid the Pandemic

Digital banks, also known as neobanks or online banks, changed the way people handle and manage money. These app or web-based banks offer a line of mobile banking services that can be used entirely from smartphones, which especially became useful amid the COVID-19 lockdowns.

In 2019, the global digital banking market hit $836.5bn transaction value, revealed the Statista data. After the pandemic struck, the transaction value jumped by 81% YoY to over $1.5trn. However, the following years are set to witness even more impressive growth. Next year, digital banking is forecast to become a $4trn worth industry. By 2025, the transaction value of all digital banks worldwide is expected to double and hit nearly $8.3trn.

The number of people using online banking services has also surged. Statistics show the number of users almost tripled to 141 million since the pandemic struck. In the next four years, this figure is set to jump to 334 million globally.

The US to Generate One-Third of Total Transaction Value in 2021, UK Market to Grow by 70% YoY

In global comparison, the United States is the leader in digital banking services. Home to some of the world’s largest neobanks like Chime, SoFi, and Robinhood, the US market has multiplied over the years. In 2021, the transaction value of the US digital banking market is expected to jump by 62% and reach $820bn, or one-third of all transactions this year.

However, the United Kingdom, as the second-largest market globally, is expected to witness even more impressive growth in 2021, with transaction value growing by 70% to $430.7bn. The largest digital bank in Europe and the second-largest globally, UK`s Revolut, has also grown rapidly over the years. In February 2018, the London-based challenger with the highest number of customers of any European online bank announced that they had hit 1.5 million users. This figure grew to 10 million last year.

As the world’s third-largest digital banking market, Russia is expected to hit a $313.7bn transaction value this year. Brazil and Germany follow with $178.6bn and $138.1bn, respectively.