Key metrics tracked by digital banks
It is worth noting that downloads do not represent direct new customers, but the figures highlight the banks’ continual impact and growth on the industry. The banks mainly track active customers using metrics such as the number of accounts opened, customer deposits, and the number of banking products used; the download data still offers insights into which companies are reaching the largest audience.
On the other hand, Revolut has broken away from the general market in downloads, a factor that can be attributed to the bank’s continued expansion globally. Indeed, Revolut is tapping into the borderless economy’s potential as the bank becomes a super app. For instance, the bank is growing its product offering in the United States with plans to unveil a streamlined app under Revolut lite for specific markets.
Competition from traditional banks
While digital banks have played a crucial role in driving digital banking adoption among consumers, they still fall behind traditional banks regarding deposits, uptake, and profitability. Most mobile-only banks are still struggling with profitability.
The challenge to turn profits is highlighted by the fact that Revolut recorded its first full year’s profit for 2021 despite several years of existence.
Without profitability, mobile-only banks may struggle to survive and face consolidation by competitors or incumbent lenders. As the market for digital banks matures, they need to recognize that they are banks and that profitability is crucial for their continued existence. Looking ahead, it remains to be seen if the banks can sustain the download growth. Notably, the digital banking sector faces increasing competition from established banks entering the market with highly digitized offerings. As a result, the industry is experiencing significant changes, with traditional banks looking to leverage their resources and expertise to take on the neobanks.