Automation and innovation is by far taking over the globe and this is not leaving the banking sector as well. Traditional banks must be headed to the ruins if they haven’t seen this wave.  With artificial intelligence (AI) at the core of these digital transformations, Increased consumer demand for digital banking services is now unrivaled. 

But what exactly is digital banking?  How did it evolve over time, and where is the future of digital banking headed?

What is about digital banking & digital banking services?

Simply put, digital banking is the digitization of every  bank level, from front- to back-end, of banking. This means that digital banks rely on artificial intelligence to automate back-end operations such as administrative tasks and data processing which in turn alleviates pressure put on employees to complete day-to-day tasks while also lessening on human errors, corruption, conflict of interest and other human behavioral related incidences. 

Digital banking is likely to be the next big thing.  Not only do digital banks allow users to make account deposits and transfers remotely; but they also provide them with the provisions to easily apply for loans of every kind and access personalized money management services, the system also creates a sense of data privacy since most banks can assess a borrower’s potential and collateral by capturing data on collateral and borrowing capacity digitally like bank statements, asset details, etc. 

Online banking subsequently inspired mobile banking – the two summarizes digital banking as of today.  From the convenience of one’s mobile device such as a tablet or smartphone banking is getting a huge disruption ever in history. 

While most legacy banks now offer online services, digital-only banks are developed entirely electronically. Digital-only banks don’t lean on the financial and customer support from an established physical location, instead they’re powered via digital platforms that appeal to the millennial and General populations while leveraging on AI and other block-chain related technologies. 

The digital banking space is rapidly moving forward and is constantly changing. You may want to take a look at some key biggest digital banks from different continents founded in the last 10 years, some thing that shows all the trend is growing tremendously.  Let’s look at a few dominating digital banks; 

Kuda 

Nigeria – Africa.  – 

Free Banking for Nigerians

Having started out as an online-only savings and lending platform, Kuda Bank is offering effective solutions for the common people.  It is  the first digital-only bank with a standalone license in Nigeria. 

Kuda has focused on customer service and introducing user-friendly money management services, allowing its approximately 300,000 customers to manage payments, use cards and make physical deposits..  The bank uses a machine learning algorithm to tailor its services to each customer, which forms an important element of its credit offering.

Nubank

• Founded in 2013, Based in Sao Paulo, Brazil

• 35 million customers

NUBANK is revered to be the largest fintech in Latin America Brazil and was founded in 2013.  This neobank rolled out its first credit card in 2014. It was the only financial product that they could launch at that time as they couldn’t acquire a banking license in Brazil because the law was barring foreign bank ownership.  Most digital banks have gone through the barriers of regulatory restrictions but have found their way out. 

The lucrative Brazilian banking market welcome their idea and product as credit card.  It was easy for them to lure in new customers with invite-only applications and by offering a credit card without any fees that you could apply for online and get in only two days.  In 2016, Nubank already had 1 million credit card customers with hardly any money spent on marketing. May 2017, Nubank received its full Brazilian banking license by presidential decree.  By 2021, Nubank had around 35 million customers and had raised a total of $1.5 billion in capital fund.

Chime

• Founded in 2013

• San Francisco, USA

• 12 million customers

Founded in 2013 and  launched publicly in 2014 by surprise on a media show with a Chime card.  With more than 12 million customers and a 50% growth through the pandemic.  Their focus is on Americans who earn between $30,000 and $75,000 a year that have recognized that they can save significant amounts of money with a digital bank that has no fees.

The digital banks future looks very bright as it is venturing into a stock market flotation that could make their valuation blow up to up to $ 50 Billions.  Experts predict. 

TINKOFF

• Founded in 2006

• Russia

• 13 million customers

Tinkoff Bank was founded in 2006 as Tinkoff Credit Systems.  It rolled out its first credit cards in 2007 and attracted attention from big-shot investing firms.  They are now the second-largest credit card issuer holding 14% of Russia’s credit card market.

In 2011, they launched a mobile banking platform and after raising $90 million in 2012, they were ready for IPO on the London Stock Exchange that brought in a further $1.1 billion.  In 2015, the company finally rebranded to Tinkoff Bank.   Now a fully fledged digital bank in Russia. 

Monzo

• Founded in 2015

• London, England

• 5 million customers

Monzo was founded in 2015 and was One of the earliest digital banks in the UK. 

The digital banking app  raised £1 million and in 2018, Monzo had reached one million customers with the total number of customers now reaching over 5 million.

Judo Bank

• Founded in 2018

•  Australia

• 10k customers

Based in Australia, Judo Bank, was founded in 2016 and got its banking license in 2019 and started out by focusing on Australia’s SMEs but is now also offering term deposits to regular Australians. Judo has the least amount of customers of around 10,000 estimate because they aren’t focusing on the retail segment for now.