Digital Banks - MENA

MENA

Net Interest Income in the Digital Banks market is projected to reach US$34.13bn in 2024.
Net Interest Income is expected to show an annual growth rate (CAGR 2024-2028) of 3.56%, resulting in a market volume of US$39.25bn by 2028.
In global comparison, most Net Interest Income will be generated in China (US$463.0bn in 2024).

Key regions: Singapore, Germany, United Kingdom, South Korea, China

Definition:

Digital Banks refer to the emerging market for purely digital banks that offer financial services via online and mobile platforms. Unlike traditional banks, digital banks also known as neobanks, do not have store-based branches and instead rely on technology to deliver their services. But in contrast to digital-only direct banks, which focus on providing traditional banking services in an online format, the digital banks/neobanks covered in this analysis prioritize cutting-edge features and a modern user experience.
Digital Banks offer a wide range of financial products and services, including savings and checking accounts, credit cards, personal loans, and investment products, among others. They aim to provide a more convenient, accessible, and user-friendly banking experience by leveraging technology such as mobile apps and artificial intelligence. They also provide a digital identification and onboarding process, often via smartphone.
The Digital Banks market is growing rapidly as consumers increasingly demand more convenient, digitally focused financial services. Neobanks/Digital Banks are able to offer these services at a lower cost compared to traditional banks, as they have lower overhead costs and a more efficient operating model.
However, digital banks face challenges in building trust and establishing their reputation in the financial services industry. They must also navigate the complex regulatory landscape and comply with the same rules and standards as traditional banks.
Overall, the Digital Banks market represents a growing and exciting opportunity for financial services providers to deliver innovative and convenient solutions to consumers.

Structure:

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income as well as the number of ATMs.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Bunq, Tomorrow, and Revolut.

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Analyst Opinion

The Digital Banks market in MENA has been experiencing significant growth and development in recent years.

Customer preferences: Customers in the MENA region are increasingly turning to digital banks due to their convenience, accessibility, and innovative services. The younger population, in particular, is driving the demand for digital banking solutions as they seek seamless and user-friendly banking experiences.

Trends in the market: In Saudi Arabia, digital banks are gaining traction as the government pushes for digital transformation in the financial sector. The country's Vision 2030 initiative has created a conducive environment for digital banks to thrive, leading to increased competition and innovation in the market. Similarly, in the UAE, digital banks are capitalizing on the country's tech-savvy population and high smartphone penetration rates to offer personalized and efficient banking services.

Local special circumstances: One of the key factors driving the growth of digital banks in the MENA region is the relatively low penetration of traditional banking services in certain areas. Digital banks are filling the gap by providing banking services to underserved populations, including those in remote areas. Additionally, the regulatory environment in some countries in the region is becoming more favorable towards digital banks, enabling them to expand their operations and reach a larger customer base.

Underlying macroeconomic factors: The increasing smartphone penetration rates and internet connectivity in the MENA region are playing a crucial role in the growth of digital banks. As more people gain access to mobile devices and the internet, the demand for digital banking services is expected to rise further. Moreover, the region's young and tech-savvy population is driving the adoption of digital banking solutions, creating a conducive market environment for digital banks to thrive and expand their operations.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.