The outlook: Digital account openings in the US will plummet 44.6% in 2022, driven by neobanks’ ongoing struggles, according to an Insider Intelligence forecast.
Neobanks’ troubles are catching up to them: According to our forecast, the drop in total digital account openings for the year is largely due to a 62% dip in neobank account openings. But just a few months ago, these banks were still proliferating. How did we end up here?
Our forecast estimates that the number of neobank account holders will continue to grow throughout the forecast period, but at a declining rate, making up less of the total number of digital account openings.
Traditional banks take the lead: While neobanks’ troubles are mounting, traditional banks have been dedicating their time and budgets to digital transformation. We forecast that digital account openings at these banks will continue to grow.
The bigger economic and regulatory climate: The economic downturn and looming recession will cause consumers to pay extra attention to their financial health and choose to pursue relationships with financial institutions that they trust.
Our take: Across the financial sector, digital accounts are here to stay. Incumbents are closing in on the formerly well-cushioned lead in digital transformation that neobanks once held. Both digital and traditional banks will need to navigate a bleak and potentially prolonged economic downturn, and our current outlook sees traditional banks in a much healthier financial position than neobanks. Rather than solely pushing for account growth, neobanks should work toward generating revenues and let new growth happen organically.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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