- A new research by Juniper points that digital-only banks are gaining market share from traditional banks;
- The study cautions that new brands by traditional lenders must be differentiated from existing offerings, or they will fail to gain momentum against digital-native competitors.
A new study from Juniper Research found that the total number of digital banking users will exceed 3.6 billion by 2024, up from 2.4 billion in 2020; a 54% increase. This growth will be driven by the rise of digital-only banks and the ongoing focus on digital transformation by established bank brands.
The new research, Digital Banking: Banking-as-a-Service, Open Banking & Digital Transformation 2020-2024, found that digital-only banks have gained market share from traditional banks by offering superior user experiences and tightly focused selling points. The research recommends that established banks must personalize the app experience, using AI‑based personal financial management tools to fight back against digital-only bank innovation.
Banks invested heavily in digital transformation and new offerings in 2019, although the extent of these activities varied considerably. Juniper Research analysed leading banks in the U.S., Europe and Asia, as well as Nigeria’s United Bank for Africa, to evaluate their digital transformation readiness and highlight their respective positioning in their digital innovation roadmaps. It identified three lenders as the leading group of banks for digital transformation: Bank of America, BBVA and JPMorgan Chase.
Bank of America offers extensive digital solutions, including the Erica chatbot, and has had noticeable upticks in digital usage and engagement. BBVA has focused on capitalising on offering the BBVA Open Platform, which is a Banking-as-a-Service platform. 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. These banks must now refocus on the new strategies required to retain their digital leadership”,Nick Maynard, research author.
The research also noted that traditional banks are launching digital-only brands. The research cautioned that these launches must be differentiated from existing offerings and digital-only competition, in terms of providing a more personalized experience, or they will fail to gain momentum.