Allied Market Research

Neo and Challenger Bank Market Expected to Reach $471.0 Billion by 2027


Report Code : A01469

quote The business segment is expected to attain significant growth in the coming years, owing to services such as taxation, budgeting, accounting, and business analytics at fractional costs for multinational companies and small & medium enterprises in the market. quote

Pramod Borasi
Research Analyst, BFSI at Allied Market Research

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According to a recent report published by Allied Market Research, titled, “Neo and Challenger Bank Market by Service Type, and End User: Opportunity Analysis and Industry Forecast, 2020-2027,” the global Neo and challenger bank industry was valued at $20.4 billion in 2019, and the market size is projected to reach $471.0 billion by 2027, growing at a CAGR of 48.1% from 2020 to 2027.

Neo and challenger bank provide banking services to individuals and businesses. The products and services include opening & operating accounts, payments & transfers, remittance solutions, lending, mobile banking, and alternative methods for assessing credit worthiness. These services are largely provided to micro & small companies and underbanked or unbanked customers in the market. 

Government & regulatory support toward license approvals and higher interest rates offered to customers over traditional banks are the major factors that boost the neo and challenger bank market growth. Furthermore, immediate & personalized services provided via mobile applications and higher interest rates offered over traditional banks are some of the lucrative factors that boost the Neo and challenger bank market growth.

On the basis of service type, the loan segment dominated the neo and challenger bank industry in 2019, and is projected to maintain its dominance during the forecast period.Faster loan approval and funding compared to regular banks, with low or no banking fees via banking applications are driving the growth of loan segment in the market. Furthermore, the payment & money transfer segment is expected to grow at a significant CAGR during the forecast period.

On the basis ofend user, the business segment dominated the neo and challenger bank industry in 2019 and is projected to maintain its dominance during the forecast period. Rise in adoption of mobile & digital banking by large firms and small & medium-sized enterprises (SMEs) for executing payment methods is anticipated to boost the growth of the business segment during the forecast period.Furthermore, the personal segment is expected to grow at a significant CAGR during the forecast period. Convenience toward easy transfers, lower fees for banking, and personalized services major factor that lead to the growth of the neo and challenger banking market.

By region, the global neo and challenger bank market was dominated by Europe in 2019 and is expected to maintain this trend during the forecast period. Neo and challenger banks in the region offer services that are four times cheaper than traditional banks on average, targeting professionals, and minors looking for digitalized banking in the market. For instance, Revolut Ltd., a British financial technology company targets millennials or frequent travelers by offering a multicurrency payment card with low currency conversion fees. However, Asia-Pacific is expected to exhibit fastest growth rate in the future due to emerging economies in the region. Factors driving the growth of the market in this region include easy & convenient banking services andrise in digital-only banks across countries such as Australia, Japan, China, and India. Thus, becoming some of the major neo and challenger bank market trends in the region.

Key Findings Of The Study

  • By service type, the loan segment led the neo and challenger bank market size, in terms of revenue in 2019.

  • By end user, the business segment accounted for the highest neo and challenger bank market share in 2019.

  • By region, Europe generated the highest revenue in 2019.

The key players profiled in the global neo and challenger bank market analysis are Atom Bank plc, Fidor Solutions AG, Monzo Bank Limited, Movencorp, Inc., MYbank, Number26 GmbH, Simple Finance Technology Corporation, Tandem Bank, UBank limited, and WeBank. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.

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quote Neo and Challenger Bank Market by Service Type (Loans, Mobile Banking, Checking & Savings Account, Payment & Money Transfer, and Others) and End User (Business and Personal): Global Opportunity Analysis and Industry Forecast, 2020–2027 quote

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