Research Note

The battle for digital customers - a global perspective

By Chris Kapfer

Globally, commercial banks have demonstrated that they are not the underdogs when it comes to growing the number of digital users. They compete well in most markets under review against the best neo-banks and digital financial institutions (FIs). However, the dramatic rise in digital user base of neo-banks in recent months may erode this lead.

  • In nine of the 26 markets under review, neo-banks or digital-only FIs outperformed commercial banks in digital user growth per month
  • The top growth players in the respective categories are Wechat Pay (platform), ICBC China (domestic commercial bank) and Citibank (global commercial bank), Webank China (neo-bank) and ING Group (digital-only bank)
  • There has been a rapid increase in the growth in digital users per month among some neo-banks and payments platforms since the beginning of 2018

In a global survey which assessed 100 financial institutions across 26 key markets on how well they performed in regards to the growth of digital users per month .  Asian Banker Research compared top-tier commercial banks with three other categories of financial institutions, ecommerce/payments/marketplace platforms, neo-banks and digital-only banks set up by commercial banks.  

In  China, Vietnam, Korea , Japan, India, Brazil, Spain, Germany and  the UAE, neo-banks or digital-only FIs outperformed commercial banks in digital user growth per month. However, top tier commercial banks in six out of ten markets such as the US, Canada and Australia continue to outperform neo-banks or digital-only FIs in acquiring and retaining digital customers, with their high-touch high-tech distribution strategy.

Overall, Chinese financial institutions and banks, and global platforms achieved the highest five-star rating with growth of more than one million digital users per month.

Commercial banks’ digital users grew slower in 2018

For domestic commercial banks, 2015 to 2017, was a key period in digital user conversion and growth. We however observed that since 2018 many have seen decelerating digital user growth.

On the contrary, global or regional operating commercial banks inched further up in digital user growth since beginning of 2018 compared to the period between 2015 and 2017.

Santander and BBVA further increased their growth in digital users per month by 32% each in the first half of 2018 compared to the period January 2016 to December 2017. By contrast,   Citibank Global outgrew its peers with growth of at least 400,000 digital active retail customers per month between July 2016 and December 2017, it saw a dramatic drop in the first six months of 2018. It grew by only 150,000 new users per month.

Platforms dominate in the category of more than one million digital users per month

Graph 1:  Overview of global survey of financial institutions on growth of digital users

Global_Survey

Note:
(1) Represents mainly global or large multi-regional banks.
(2) We observed that most first tier commercial banks from smaller countries such as UAE grew their digital user base between 5,000 and 10,000 per month for the period 2016 to 2017. In city-states such as Singapore and Hong Kong commercial banks grew their digital user base between 10,000 and 19,999 per month for the same period. Those were not included. Hence, 4% and 6% present an underestimated figure for this category.
Source: Asian Banker Research

The growth of payments and money transfer platforms

The largest jump in 2018 in digital user growth was Transferwise. It was able to grow its digital user base from January to September 2018 by 167,000 per months as compared to 24,000 users per month in period from January to December 2017. It took Transferwise seven years to reach two million digital users, while it took only nine months in 2018 to double this number.

International payments and money transfer companies such as Transferwise and WorldRemit have breached the ceiling of acquiring more than 100,000 users per month in 2018.  According to WorldRemit, over 100,000 digital sign-ups per month were added in September 2018, with a maximum growth of 125,000 in May this year. It crossed the 70,000 users/months in July 2017.  Between July 2016 and July 2018 digital sign-ups grew by 124%.

Based on industry data, Apple Pay grew its global customer base from January 2015 to December 2017 by 3.5 million users per month. Between January 2018 to August 2018 it added 15.6 million new digital users per month.

38% of commercial banks achieved a four-star rating

In our survey, 41% of commercial banks grew their digital user base by between 20,000 and 99,999 per month, while 38% of them, mainly representing global or large regional banks achieved a four-star rating by growing between 100,000 and 999,999 digital users per month. Among them are Citibank, Santander, BBVA and a series of commercial banks in large markets such as India, Brazil, US some African countries, Thailand and South Korea. JP Morgan Chase is currently the fastest growing commercial bank in the US and Kasikornbank Thailand outperformed all of its peers based on country population. The survey also found that HSBC and Standard Chartered are no longer the global digital powerhouses they once were in the first decade of the 21st century with HSBC only achieving a two-star rating.

Neo-banks struggle to scale but some shine

Sluggish growth appears to be affecting neo-banks. The large majority of them in mature markets are struggling to achieve scale, and they are often those with a single market focus. In our listing, 21% of all neo-banks obtained a zero-star rating which is defined by a digital user growth of less than 10,000 per month, making them vulnerable to potential acquisition or merger by commercial banks. 48% of neo-banks achieved a one- or two-star rating growing between 10,000 and 49,999 users per month. A few neo-banks in Europe and the US have seen a dramatic rise in digital users since the beginning of 2018 in particular Revolut, N26 and Monzo in Europe and Chime in the US. Revolut has seen the most significant rise in digital user growth per month. From July 2015 to October 2017 it added on average 34,000 digital users per month. This increased in line with their global expansion to 157,700 digital users per month for the period from November 2017 to November 2018. Revolut is the only neo-bank, together with Marcus in the US, which achieved a three-star rating.

Digital-only banks saw mixed results in digital user growth per month

Only two digital-only banks run by commercial banks, Digibank India by DBS (Asia) and BankMobile, a division of Customers Bank (US), achieved a three-star rating, while ING Group (Global) was the only digital-only bank that achieved a four-star rating. 53% of financial institutions in this category grew by less than 19,999 users per month. However, if we standardise digital user growth per month based on country population, Liv by Emirates NBD in the UAE is the best performing digital-only bank followed by ING Direct in Australia.

Platform players dominate list of top digital financial institutions

Table 1 Growth in digital users per month  (#)

FI CategoryCountryOne Million and aboveGrowth in digital
users per month
‰ of total
population
Period of ObservationStar
Platform China WeChat Pay 18,548,000³ 13.38 Jan 2015- Jun 2018  
Platform China Alipay 9,200,000³ 6.64 Jan 2015- Dec 2017  
Platform Global Apple Pay 5,705,000¹ n/a Jan 2015- Aug 2018  
Platform India Paytm Payments Bank 5,600,000³ 4.18 Jan 2014- May 2018  
Commercial Bank China ICBC 3,750,000³ 2.70 Jan 2016- Dec 2017  
Commercial Bank China China Construction Bank 3,458,000² 2.49 Jan 2016- Dec 2017  
Commercial Bank China Agricultural Bank of China 2,750,000³ 1.98 Jan 2016- Dec 2017  
Platform Global PayPal 2,044,000¹ n/a Jan 2015- Sept 2018  
Platform India Google Pay (formerly Tez) 2,000,000¹ 1.49 Sept 2017-Apr 2018  
Neo-Bank China Webank 1,670,000 1.20 Jan 2015- Dec 2017  
Platform Global Samsung Pay 1,292,000² n/a Jan 2016- Dec 2017  
Commercial Bank China China Merchants Bank 1,175,000³ 0.85 Jan 2016- Dec 2017  
Commercial Bank China Ping An Bank 1,167,000² 0.84 Jan 2016- Dec 2017  
Platform Multi
Regional
LINE Pay 1,048,000 2.17 Jan 2015- Jun 2018  
Platform China/
Hong Kong
Welab 1,044,000 0.75 July 2016- July 2018  


FI CategoryCountry100,000-999,999Growth in digital
users per month
‰ of total
population
Period of ObservationStar
Commercial Bank India State Bank of India 870,000³ 0.65 Jan 2016- Dec 2017  
Commercial Bank China China CITIC Bank 583,300² 0.42 Jan 2016- Dec 2017  
Neo-Bank Korea Kakao Bank 523,300 10.17 July 2017- July 2018  
Platform China Lufax 467,500 0.34 July 2017- Jun 2018  
Commercial Bank Global Citibank 397,000⁴ n/a July 2016- Jun 2018  
Commercial Bank Multi
Regional
Santander 390,000 0.46 Jan 2016- Jun 2018  
Commercial Bank Multi
Regional
BBVA 383,300 0.56 Jan 2017- Jun 2018  
Commercial Bank US JP Morgan Chase 290,300¹ 0.89 Jan 2016- Jun 2018  
Platform Vietnam MoMo 270,600³ 2.83 Jan 2016- Oct 2018  
Platform Multi
Regional
M-PESA 222,200³ 0.14 Jun 2015- May 2018  
Commercial Bank Nigeria First Bank of Nigeria 210,600 1.10 Jan 2016- Dec 2017  
Neo-Bank Brazil NU Bank 208,300 1.00 Oct 2017- Sept 2018  
Commercial Bank Thailand Kasikornbank 203,300³ 2.94 Jan 2016- Jun 2018  
Commercial Bank India ICICI 194,400 1.45 Jan 2015- Dec 2017  
Neo-Bank China Mybank 190,300 0.14 Jan 2015- Oct 2017  
Commercial Bank Brazil Banco Bradesco 173,300¹ 0.83 Jan 2016- Jun 2018  
Commercial Bank Brazil Santander 170,000 0.81 Jan 2016- Jun 2018  
Commercial Bank US Bank of America 148,100¹ 0.45 Mar 2016- Jun 2018  
Commercial Bank Africa Ecobank 135,100³ 0.10 Jan 2016- Apr 2018  
Commercial Bank Global Standard Chartered 110,000-
140,000²
n/a Mar 2014- Mar 2017  
Commercial Bank US/Canada Citibank 128,600¹ 0.35 Oct 2017- Jun 2018  
Digital-only Bank Global ING Group 123,300 n/a Jan 2016- July 2018  
Commercial Bank Korea Hana KEB 116,700³ 2.27 Jan 2016- Dec 2017  
Commercial Bank Korea Shinhan Bank 113,800³ 2.21 Jan 2016- Dec 2017  
Commercial Bank UK Barclays 106,300 1.61 Jan 2016- Aug 2018  


FI CategoryCountry50,000-99,999Growth in digital
users per month
‰ of total
population
Period of ObservationStar
Platform Multi
Regional
Transferwise 95,000³ n/a Jan 2017- Sept 2018  
Commercial Bank Nigeria Diamond Bank 94,400³ 0.49 Oct 2016- Mar 2018  
Platform China Yirendai (CreditEase) 91,700 0.07 Jan 2017- Dec 2017  
Commercial Bank UK RBS 82,300¹³ 1.25 Jan 2016- July 2018  
Commercial Bank US Wells Fargo 81,250¹ 0.25 Aug 2016- Feb 2018  
Digital-only Bank India Digibank by DBS 80,000 0.60 Apr 2016- Apr 2018  
Neo-Bank US Marcus by Goldman Sachs 76,900 0.24 Oct 2016- Nov 2018  
Commercial Bank Turkey Garanti Bank 78,800 0.98 Jan 2016- Sept 2018  
Platform Multi
Regional
WorldRemit 77,000 n/a July 2016- July 2018  
Commercial Bank Italy Intesa Sanpaolo 73,500² 1.21 Sept 2015-Jun 2018  
Neo-Bank Multi
Regional
Revolut 73,200 n/a July 2015- Nov 2018  
Commercial Bank Malaysia Maybank 70,800 2.24 Sept2014-Sept 2018  
Commercial Bank South
Africa
First National Bank 69,600²³ 1.23 Apr 2016- Jun 2018  
Commercial Bank UK Loyds Banking Group 62,500 0.95 Apr 2016- Mar 2018  
Commercial Bank Nigeria Guaranty Trust Bank 60,000² 0.31 Jan 2017- Dec 2017  
Commercial Bank Spain Caixa 56,700² 1.22 Jan 2015- Jun 2018  
Commercial Bank Taiwan CTBC 52,000² 2.19 Dec 2016- Dec 2017  
Digital-only Bank US BankMobile 50,000 0.15 Jan 2015- Dec 2017  
Commercial Bank UK Santander 50,000 0.76 Jan 2016- July 2018  


FI CategoryCountry20,000-49,999Growth in digital
users per month
‰ of total
population
Period of ObservationStar
Commercial Bank Global HSBC 41,700 0.01 Apr 2015- Apr 2018  
Commercial Bank South
Africa
Capitec Bank 39,100³ 0.69 Nov 2015- Sept 2018  
Commercial Bank Canada Royal Bank of Canada 37,000¹ 1.00 Jun 2016- Jun 2018  
Neo-Bank Japan Rakuten Bank 34,700 0.27 Jan 2015- Dec 2017  
Neo-Bank UK Monzo 32,300 0.49 Mar 2016- Sept 2018  
Digital-only Bank Indonesia Jenius 32,000 0.12 Aug 2016- Aug 2018  
Commercial Bank Australia/NZ CBA 31,200¹ 1.06 July 2014- Jun 2018  
Digital-only Bank Germany ING DIBA 31,000² 0.37 Jan 2016- Dec 2017  
Neo-Bank Brazil Banco Inter Brazil 30,300 0.14 Jan 2016- Sept 2018  
Neo-Bank Brazil Banco Original 25,800 0.12 Apr 2016- Dec 2017  
Neo-Bank France Nickel 25,500 0.38 Jun 2016- May 2018  
Commercial Bank Australia Westpac 25,300 1.03 Apr 2016- Sept 2018  
Commercial Bank ASEAN/
North Asia
DBS Group 25,000 0.01 Dec 2016- Dec2017  
Digital-only Bank Japan Jibun Bank 24,700 0.19 Jan 2015- Dec 2017  
Digital-only Bank France Boursorama by Societe General 24,700 0.37 Jan 2016- July 2018  
Neo-Bank UK/Europe N26 23,800 0.03 Jan 2015- Jun 2018  
Digital-only Bank Spain imaginBank by CaixaBank 21,700 0.47 Jan 2016- Dec 2017  
Neo-Bank US Chime 21,300 0.07 Jun 2014- Apr 2018  
Digital-only Bank Japan SBI Sumishin Net Bank 20,800 0.16 Jun 2014- Dec 2017  
Commercial Bank Japan MUFJ 20,000² 0.16 Jan 2014- Dec 2017  


FI CategoryCountry10,000-19,999Growth in digital
users per month
‰ of total
population
Period of ObservationStar
Digital-only Bank Australia ING Direct 19,200¹ 0.78 Jan 2016- Dec 2017  
Commercial Bank UK Metro Bank 16,000-
18,000²
0.26 Jan 2016- Apr 2018  
Commercial Bank Spain Santander 16,700 0.36 Jan 2016- July 2018  
Digital-only Bank Nigeria ALAT by Wema 16,500 0.09 May 2017- Sept 2018  
Digital-only Bank Indonesia Digibank by DBS 14,600 0.06 Aug 2017- July 2018  
Neo-Bank UK/Europe Monese 14,300 0.02 Sept 2015- Aug 2018  
Digital-only Bank US Ally Bank 14,100 0.04 Jan 2015- Dec 2017  
Digital-only Bank Eurozone Hello Bank! by PNB Paribas 14,000 0.21 Mar 2016- Jun 2018  
Neo-Bank UK Starling Bank 13,100 0.20 May 2017- Aug 2018  
Digital-only Bank Taiwan Richart by Taishin International 13,000 0.55 Apr 2016- July 2018  
Commercial Bank Poland mbank 10,100 0.27 Jan 2016- Jun 2018  
Digital-only Bank UAE Liv by Emirates NBD 10,000 1.06 May 2017- May 2018  


FI CategoryCountry<10,000Growth in digital
users per month
‰ of total
population
Period of ObservationStar
Commercial Bank Baltics SwedBank 8,300 0.52 Jan 2017- Dec 2017  
Commercial Bank Spain BBVA 6,900 0.15 Oct 2015- Feb 2018  
Neo-Bank Israel Pepper by LEUMI 6000-
8000²
0.80 Jun 2017- Jun 2018  
Digital-only Bank Germany Fidor Bank by BPCE France 5,000 0.06 Jan 2016- Aug 2017  
Digital-only Bank France Hello Bank! by PNB Paribas 4,000 0.06 Mar 2016- Jun 2018  
Neo-Bank US Simple 3,800 0.01 2012- July 2013  
Neo-Bank Canada KOHO 2,900 0.08 Mar 2017- Aug 2018  
Neo-Bank UK Atom Bank 2,100 0.03 Apr 2016- Mar 2018  
Digital-only Bank Canada EQ Bank by Equitable Bank 2,100 0.06 Jan 2016- Dec 2017  

Notes:

(1) active digital users as defined by the FI
(2) estimated based on indirect data such as active ratios, total customer, growth, or retail digital user base
(3) mobile banking users only
(4) According to Citibank reports active digital consumer banking users grew by 337,500 per month between July 2016 and June 2018. Asian Banker Research applied an 85% digital active rate to determine total registered digital consumer banking base.
(5) ‰ of total population is defined as the growth of digital users per month divided by total country population and measured in per mille = 1/1000
(6) To determine ‰ for multi-regional FIs we aggregated the number of population by country.

Global survey of digital financial institutions: Methodology

  • The overall objective of this listing is to rank the top-tier digital FIs according to their ability to attract digital users (across all business segments).
  • The survey covers key global markets such as the US, South America, Canada, Europe, Africa and the Asia Pacific. 
  • The survey took into consideration mainly the period from 2015 to 2018.
  • The time period for each institution varies slightly but overlap with the core period between 2016 and 2017.
  • The listing is not exhaustive. The focus was on the top tier players in key market and region and for those where data were publicly available.
  • For the sake of simplicity, the survey defines all digital banks set up by non-bank FIs as neo-banks. For digital banks set up by commercial banks we refer to digital-only banks.
  • Data reflect gross onboarding and acquisition figures, not net growth which discounts for attrition.
  • Digital users per month are based on the growth of registered digital users which includes internet and mobile only, regardless whether they were directly digitally acquired, in the case of neo banks, platforms or digital banks, or digitally onboarded into mobile and internet banking which often is the case for commercial banks. 
  • The findings of the survey do not make assumptions about the quality of those accounts in regards to active accounts measured through a certain period or by measuring attrition. 
  • As for digital-only banks, the data do not tell how many of those onboarded were from the parent bank.
  • At times, the reason for the differences in client acquisition per months between digital FIs in the same market is not performance but different market positioning such as in the case of WeBank and MyBank in China. WeBank focuses on individual clients and consumer financing, while Mybank’s target segment is serving Micro and Small Enterprise (MSEs), hence the smaller numbers.
  • Star Rating 2018: Based on average growth of digital users per month 

Star Rating 2018 Based on average growth of digital users per month(1)



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