January 28, 2019
Today’s story is about digital banking. There are many ways in which top honchos at banks think about embracing digital and using FinTech to their advantage. It could be buying FinTechs, accelerator/innovation programs or even digital transformation of the existing banks, amongst other options. One of the ways in which some of them have crafted their digital strategy is by building a separate digital bank of sorts. We analyzed online/virtual/digital banking initiatives/apps created by traditional banks all over the world. Our attempt here is to provide research-based insights and highlight digital banking initiatives.
Important note: We are not including challenger banks like Revolut, Monzo, Starling, N26, and others like them. That is for another day/article. This analysis is focused on fresh online or app-based offerings by traditional banks.
Firstly, digital/online banks aren’t a new trend. Since the 1990s, incumbent banks have launched online-only banks that offered banking services via internet/mobile/tele-network channels. ING is one of the banks that launched a direct banking service called ING Direct to customers with a branchless model. It was very successful in Canada and ING expanded its services to other countries including Australia, the United States, France, Spain, Germany, Italy, and the United Kingdom.
Here are some traditional banks & FIs that have launched their own digital banks:
Goldman Sachs launched a digital bank under the brand name of ‘Marcus by Goldman Sachs.’ It is an online platform which offers no-fee personal loans and high-yield savings accounts to consumers. It also recently launched its services in the UK and opened more than 50k accounts as of October 2018.
BNP Paribas launched Hello bank! in France in 2013. It is a mobile-first bank offering account services and other banking products. Currently, the bank operates in six countries: France, Germany, Italy, Belgium, Austria, and the Czech Republic. It has opened around 3 million accounts till date.
DBS Bank launched digibank which provides its banking services mainly on a smartphone app. digibank was first set up in India and currently serves 2 million+ accounts holders. DBS Bank has recently launched its operations in Indonesia.
Customers Bank launched BankMobile which offers no-fee savings and checking accounts for underbanked and middle-income households. Since its inception, it has opened around 2 million accounts from nearly 800 colleges and universities across the US. The bank claims that it opens about 300,000 new accounts each year.
Here is the region-wise breakdown of digital banks:
In North America, banks/FIs that have launched their own standalone digital banks are Wells Fargo (Greenhouse), JP Morgan & Chase (Finn), Customers Bank (BankMobile), Green Dot Bank (GoBank), Goldman Sachs (Marcus), CIBC (Simplii Financial), Capital One (Capital 360)*, Scotiabank (Tangerine)**, etc.
In Europe, the banks/FIs that have started their own digital banks are BNP Paribas (Hello bank!), Unicredit (buddybank), Banco Santander (Openbank), Clydesdale Bank & Yorkshire Bank (B), ABN Amro (Moneyou), CaixaBank (imaginBank), OTP Group (Touch Bank), etc.
In the Middle East, the top banks/FIs that have set up their own digital banks are Mashreq Bank (Mashreq Neo), Emirates NBD (Liv), Bank Leumi (Pepper), Gulf International Bank (meem), and Commercial Bank of Dubai (CBD Now).
In Asia & Africa, the banks/FIs that have launched their own digital banks are DBS (Digibank), State Bank of India (Yono), Kotak Bank (Kotak 811), CITIC Bank and Baidu (aiBank), WEMA Bank (ALAT), Halyk Bank (Altyn-i), and Standard Chartered Bank.
In Oceania, banks/FIs that have launched their digital banks are Bendigo and Adelaide Bank (Up), and NAB (Ubank).
**ING Direct’s US division was acquired by Capital One in 2012 and was rebranded as Capital 360.
***ING Direct’s Canada division was acquired by Scotiabank in 2012 and was rebranded as Tangerine.\ \ Update: We had previously missed out on including Hype, a digital bank which was launched by Banca Sella in Italy. A representative from the bank got in touch with us and we have now updated the infographics.
Note: If you are a bank and looking to do something similar, please write back to us and we would be happy to discuss over a cup of coffee.