Digital Banks - Australia

Australia

In Australia, the Digital Banks market market is anticipated to witness a significant increase in Net Interest Income, projected to reach €4.96bn in 2024.
It is expected that the Net Interest Income will continue to grow at an annual rate of 11.95% (CAGR 2024-2028), resulting in a market volume of €7.79bn by 2028.
When compared to other countries worldwide, in China is predicted to generate the highest Net Interest Income, with a projected value of €898,800.0m in 2024.
Australia's digital banking sector is booming, with a surge in customer adoption and increased competition among established banks and fintech startups.

Key regions: United Kingdom, Japan, China, United States, Brazil

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 Australia has been experiencing significant growth and development in recent years.

Customer preferences: Customers in Australia are increasingly drawn to the convenience and flexibility offered by digital banks. The ability to perform banking activities anytime, anywhere through mobile apps and online platforms is especially appealing to the tech-savvy population in Australia.

Trends in the market: One of the key trends in the Australian digital banking market is the rising competition among digital banks and traditional banks. As more players enter the market and existing ones expand their digital offerings, customers have a wider range of options to choose from. This trend is driving innovation and pushing banks to enhance their digital capabilities to stay competitive.

Local special circumstances: Australia's relatively high smartphone penetration rate and tech-friendly population have created a favorable environment for the growth of digital banks. The country's vast geography also makes digital banking a more convenient option for customers, especially those in remote areas who may not have easy access to physical bank branches.

Underlying macroeconomic factors: The stable economy and strong regulatory environment in Australia have provided a solid foundation for the growth of digital banks. Additionally, the government's push for digital innovation in the financial sector has encouraged investment and development in digital banking technologies. As a result, the digital banking market in Australia is expected to continue its upward trajectory in the coming years.

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.