Recently I stumbled upon a “A Guide to Profitability for Digital Banks”

Seriously? A Guide?

That seriousness made me scrap some data around and to my astonishment,

Out of 249 digital banks who are apparently stealing millions of customers from traditional banks,

Only 13 have been profitable (10 in Asia-Pacific, 2 in the UK, and 1 in Russia). That’s only 5.22%.  

But a distinctive thing to call out is that the eastern digital banks are years ahead of western ones in terms of profitability.

APAC is home to 50 challenger banks out of 249 globally.
Out of those 50, ten are profitable.

From the rest of the world and **the most valued ones** – only 3 profitable Neobanks at the moment.

• Tinkoff, Starling & OakNorth

What about the other mature digitals banks that have been on the market for more than four or five years – are they still focussing on growing their customer base rather than achieving profitability?

OR

Turning users into profitable customers is harder than anticipated?

• No monthly fees
• No minimum deposits
• No minimum balance
• Higher savings interest rates

But, hey there ain’t no such thing as a free lunch 😅 perhaps they don’t need to be profitable as long as they can find investors that will keep the bankrolling them?

Check out this #fincuts that depicts the highest valued independent digital banks in 2022.

Keen to hear your thoughts on how these #digitalbanks should turn to the path of profitability.

and thank you for being the learner in me to the learner in you!