Executive Summary

Digital-only banks—and neobanks in particular—have emerged as potent threats to incumbents, and many disruptors that could further shake up the US banking market loom large. But incumbents can still secure digital account holders by adopting digital best practices championed by challengers.

3 KEY QUESTIONS THIS REPORT WILL ANSWER

1. What are the strengths, weaknesses, and long-term risks for the most developed US neobanks?
2. What are the major disruptors that could rattle the market for consumer banking?
3. How can incumbents counter the neobank threat?

WHAT’S IN THIS REPORT? We explore what’s behind the growth of large neobanks and how they’re building new revenue streams. We then discuss what incumbents stand to lose from neobank growth and explore factors that could upend industry dynamics. Finally, we present a maturity model that lays out actionable steps incumbents can take to capture a slice of digital account holders.

KEY STAT: The ranks of digital-only bank account holders will swell to 53.7 million in 2025, up from 29.8 million this year, per Insider Intelligence forecasts. To put that figure in perspective, Bank of America and Citibank combined had only 45.3 million active mobile users in Q2 2021. For context, Citibank reported user numbers for North America, while Bank of America reported broadly.