Why Digital Banking Customers Are Expected to Exceed 3.6 Billion by 2028

Projected Growth of Digital Banking Customers

The global number of digital banking customers is projected to exceed 3.6 billion by 2028, a significant increase from approximately 2.5 billion in 2023. This growth reflects rapidly changing consumer behavior, with digital banking customers representing around 45% of the global population and more than half of all adults.

Smartphone adoption is a primary driver, with 6.4 billion smartphone connections reported globally in 2024, up from 5.3 billion in 2020. In many emerging markets, individuals often acquire smartphones before establishing bank accounts, leading to digital-first financial experiences.

Traditional banks are increasingly prioritizing mobile apps as their main customer interaction channel. Major banks like JPMorgan Chase, Bank of America, and Wells Fargo report over 70% of retail interactions occur through digital channels. Banks in the UK, such as HSBC and Barclays, report similar trends, investing heavily in digital platforms to compete with neobanks.

Branch closures also accelerate digital adoption. The UK has seen over 5,000 bank branch closures since 2015, while the US experienced over 3,000 closures in 2023. As physical branches diminish, customers transition to online banking.

Digital-only banks significantly contribute to the projected growth. For instance, Nubank, the largest neobank by customer count, surpassed 100 million customers in 2024. Revolut, Chime, Monzo, and KakaoBank also reported substantial user bases.

Neobanks benefit from lower acquisition costs and faster onboarding processes, with customer acquisition costs ranging from $5 to $30, compared to $200 to $350 for traditional banks. However, retention remains a challenge, as many customers currently use neobanks for secondary accounts.

Emerging markets are expected to drive a significant portion of the growth in digital banking customers. In markets like India and Indonesia, the potential for new digital banking users remains high due to relatively low penetration rates. Initiatives such as India's Jan Dhan Yojana and infrastructure like UPI support this growth.

Africa presents a long-term opportunity with a young population and low banking penetration rates. Mobile money services are prevalent, but full digital banking services are gaining traction, driven by companies like TymeBank and FairMoney.

The expansion of digital banking customers impacts the economics of banking. The viability of branch networks diminishes as digital engagement increases, leading to cost savings from branch closures. Data becomes a crucial competitive asset, with digital banking generating extensive customer data for service personalization and risk management.

The competition for deposits intensifies as digital banking facilitates easier account switching. Banks must actively compete on interest rates, fees, and user experience to retain deposits. Cross-selling becomes vital for revenue generation, as platforms aim to offer multiple products to each customer, enhancing profitability.

Based on reporting by TechBullion.