New data collected by Juniper Research has found that more than half (53%) of the world’s population could be digital banking by 2026.
Currently, digital banking services reach around 2.5 billion people worldwide. According to the research, however, this could be boosted to 4.2 billion within the next five years.
The reason for the usage boost has been attributed to increased digital transformation efforts which have helped banks to continue functioning effectively during the pandemic.
Juniper’s Digital Banking report revealed that the world’s largest digital banking market over the next five years will be in China; accounting for almost 25% of digital banking users in 2026.
The firm recommends that banks should “better integrate their many offerings” into a single, consistent digital experience, to better compete with diverse competition.
Commenting on the data, the report’s co-author Damla Sat said: “These banks have progressed with well-planned and executed digital transformation strategies, and other banks need to build similarly broad and revolutionary roadmaps, or they will be left behind by more agile competitors.”
The shift to an experience-based economy, and as tech adoption has grown and we change our habits during the pandemic, means demand for digital services have also increased, according to Juniper’s ‘Why Banking-as-a-Service is Driving Banking Innovation’ white paper.
Banks are now increasingly having to adopt digital services into their practices. Physical banks have traditionally provided banking information, payment, products related to lending, insurance, and money transfers.
Not only can these services be provided online, but they can also be “customised, bundled, and unbundled in several ways to serve the varied needs of different individual and business consumers instantly,” according to the paper.
Rajasekar Sukumar, European Vice President of Persistent Systems, said: “Ten years ago, the idea of electronic banking and taking a picture of a cheque to deposit your money was seen as revolutionary, whereas now it’s simply expected – and at the touch of a button.
“Customers want simplicity – it’s all about processes being modern, improved and more convenient. However, the architecture itself is not simple. A new provider may appear with a better offering, giving people the flexibility of swapping out blocks simply and quickly, sometimes within a few months.
“This means newer digital banks can offer these services and features to their customers in no time. In comparison, the costs and timescale for a larger bank rolling out something similar simply cannot compare.”
The report’s co-author, Nick Maynard, commented: “The increase in digital banking adoption is highly positive for the fintech sector, given that it reflects how banks are using new technologies to boost their digital services.
“Strategies such as digital identity verification for remote onboarding, remote account opening and AI-based personalisation have come to the fore in the new normal after the pandemic.
“Banks have been working on digital transformation for years, but the pandemic, plus changing customer attitudes to digital, meaning that it now has hit its full stride, and will grow strongly going forward.
Maynard added: “The increasing availability of banking as a service means that non-banks can enter the market and offer banking services alongside other products, and digital-only banks are continuing to grow.
“These factors create a highly competitive environment, where the only answer is to continue to improve the digital banking experience in an attempt to differentiate services.”
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The fintech sector in Scotland has already seen a major boost over the last few years, with Scottish firms like Modulr leading the way.
An independent review of the fintech sector was commissioned by HM Treasury in February to highlight the important role that fintech can play in driving economic recovery after the pandemic.
FinTech Scotland, along with fintech bodies across the UK, contributed to the Fintech Strategic Review (FSR) recommendations which set out a five-point plan to leverage innovation through a positive regulatory environment.
Commenting at the time, Stephen Ingledew, Executive Chair of Fintech Scotland said that fintech has the potential to “revolutionise how we live” such as paying for our shopping, managing our money or setting up a business.
In July, an analysis carried out by UK fintech body Innovate Finance revealed that Britain’s fintech sector has attracted a “record-breaking” investment of £4.1bn in the first half of 2021; a 34% increase on the total amount in 2020.
Join the Debate: Fintech 2021 Summit
The role of Fintech in driving innovation and improved customer outcomes will be a key theme at the upcoming Fintech 2021 Summit.
Now in its eighth year, the Summit has established itself as the largest annual gathering of financial technology leaders in the country and will serve as the launch event of the Scotland Fintech Festival.
For more information and details on how to register for your free place at the Summit, please visit: www.fintech-summit.co.uk