BANKING
48 of electronic channels instead of physical branches .” Because of reduced overheads , virtual banks often offer lower fees on things like currency conversion , ATM withdrawals and overdrafts . Also , by dint of the fact that their digital interfaces are their only point of contact with customers , they tend to have more powerful applications , with services like Monzo ’ s money saving vaults , or have the ability to buy and trade cryptocurrencies baked in . The possibilities of virtual banking are growing almost as fast as the industry ’ s customer base .
However , the financial industry being the traditional and risk-averse place that it is , adoption was a slow process . Back in 2014 , consulting firm McKinsey found that “ across Europe , retail banks have digitised only 20-40 % of their processes ; 90 % of European banks invest less than 0.5 % of their total spending on digital .” The relatively slow adoption of virtual banking services by legacy banks has led to a rise of digitally focused “ challenger banks ” that focus primarily ( or entirely ) on financial services through online applications and other digital mediums .
As the increasingly lucrative opportunities behind digital banking have become apparent , the industry has experienced significant growth . In 2018 , the global digital banking market was worth US $ 5.1bn and it is expected to reach $ 16.2bn by the end of 2025 , representing a CAGR of 15.3 % during 2019-2025 . A large portion of that expansion is expected to come from high-growth markets like APAC , where digital banking services are only just starting to achieve adoption .
APRIL 2020