A revolution in banking is well under way, with digital-only banks gaining market share from traditional banks by offering superior user experiences and tightly focused USPs.
That’s according to a new study from Juniper Research which predicts that the total number of digital banking users will exceed 3.6 billion by 2024, an increase of 54% from 2.4 billion in 2020. This growth will be driven by the rise of digital-only banks and the ongoing focus on digital transformation by established bank brands, the research firm said.
Digital Banking: Banking-as-a-Service, Open Banking & Digital Transformation 2020-2024 recommends that established banks use AI‑based personal financial management tools to personalise the app experience in order to compete with their digital rivals.
Evaluating the digital transformation efforts of major Tier 1 banks, Juniper Research found that Bank of America, BBVA and JPMorgan Chase are leading the way.
Bank of America’s extensive range of digital solutions includes the Erica chatbot, and the bank seen considerable growth in digital usage and engagement. BBVA has focused on capitalising on APIs in banking by offering the BBVA Open Platform, a Banking-as-a-Service platform. Meanwhile, JPMorgan Chase has experimented with blockchain and is rumoured to be planning a digital-only launch in the UK.
“These banks have executed highly effective digital transitions; however digital transformation is never complete,” commented research author Nick Maynard. “These banks must now refocus on the new strategies required to retain their digital leadership.”
Maynard went on to caution that digital-only brands launched by traditional banks must be differentiated from existing offerings and digital-only competition, in terms of providing a more personalised experience, or they will fail to gain momentum.
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