Based on the latest market analysis from SkyQuest, the emergence of high internet usage coupled with a growing consumer base could further foster the growth of neo-banks, which has since revolutionized the global financial services business.
With everything now being done digitally, neo-banking, which leverages emerging new technologies and innovative solutions, is touted to replace brick-and-mortar banks and could very well become the future of banking.
This data supports an analysis made by Kepios, a strategy consultancy firm that helps organizations make sense of people’s evolving digital behaviors and better understand what these changes mean for ongoing success, which said digital banking in the Philippines is now becoming the rule rather than the exception with internet users in the country steadily increasing by 2.1 million (+2.8%) between 2021 and 2022.
As of 2022, the internet penetration rate in the Philippines has already reached 68 per cent of the total population in the country, which is currently pegged at 115.559 million. The same market research noted that India now leads the technology adoption race with an adoption rate of 87%, which is significantly higher than the global average of 64%.
The global neo-bank market has already reached around USD 47.39 billion in 2021 and is projected to reach USD 927.12 billion by 2028. The same forecast sees the compound annual growth rate (CAGR) at a healthy clip of 52.93% during the period 2022 to 2028.
Finally, the neo-bank market is also anticipated to experience lucrative growth in the near future owing to rising demand from the user base for easy-to-access financial services.
As per the research data, there are over 23 million neo-bank consumers in the United States alone, and this is projected to expand to approximately 47 million to 50 million users by 2025.
Neo-banks changing the way people see financial institutions
In the Philippines, neo-banks are changing the way people see financial institutions by proving that it is possible for users to enjoy a seamless banking experience with higher interest rates and low transaction fees.
Here are some of the most popular neo-banks in the country according to experts:
- Tonik Bank — the first digital bank that received its license from the Bangko Sentral ng Pilipinas or BSP. All deposits made in Tonik are also insured by the Philippine Deposit Insurance Corporation.
- EON Bank — brought by UnionBank, it offers a 100% digital banking experience to Filipinos through its intuitive app that makes bills payment, top-ups, and deposits with only a few taps. Therefore, you can cover your financial needs without much effort.
- Maya Bank — formerly known as the e-wallet platform PayMaya, Maya has evolved into becoming a one-stop banking app that you can use for payments, credit, savings, and even crypto.
- Komo — a neo-bank service by EastWest that allows Filipinos to open and manage their accounts online and give them full control over their finances. Komo also offers high-interest rates of up to 2.5% per annum. It also offers Insurance.
- OFBank — formerly known as Philippine Postal Savings Bank, Overseas Filipino Bank (OFBank) is a neo-bank operated by LANDBANK.
- ING — is a global bank that operates in over 40 countries in Asia, Europe, and the Americas. It has pioneered direct banking in the Philippines.
- CIMB — despite launching only in 2018, CIMB has cemented its status as one of the most popular neo-banks in the Philippines. This digital bank started in Malaysia and aims to help Filipinos reach their financial goals by giving them the right tools and knowledge to make smart choices.
- UNObank — is a credit-led digital bank whose sole focus is offering loans to help meet the financial needs of Filipinos. This is helpful considering that only 10% of Filipinos borrow in organized sectors.
Unlike traditional banks, neo-banks are entirely digital banks with no physical locations.
Instead, these mobile-only fintech companies rely primarily on technology to provide tailored banking experiences that traditional banks cannot offer.
These fintech firms also do best in specializing in certain financial products such as time deposits, checking, bills payment, and savings accounts, among many others.
With neo-banks, you can enjoy paying bills, transferring funds, and adding money to your account without having to go to a physical location. In addition, better client experiences and specialized product expectations create opportunities for neo-banking models.
When it first became popular in the UK after the wake of the financial crisis, neo-banks were called “challenger banks.” This is extremely apt considering how it challenged and transformed the banking sector.