Neobanking Index: The State of Neobanks in 2023

The neobank industry has grown immensely in recent years matching the rising demand for digital financial services. The convenience, 24-hour customer support, and paths to credit make neobanks appealing and accessible to an untapped market.

According to the World Bank Group, around 1.4 billion people are unbanked worldwide, so there are substantial growth opportunities for new and existing neobanks alike.

A 2023 report from Statista Market Insights predicts the total transaction value of neobanking will reach $2.60 trillion by 2027. It also predicts that 2023 will see a user adoption rate of 15.5%, rising to 22.8% over the next five years.

In this article, we explore which markets have seen the biggest adoption of neobanking, which represents the biggest growth opportunities, and the qualities that will set you apart as the neobank of choice.

Which Countries Exhibit the Greatest Neobank Adoption per Capita?

To map the adoption and growth opportunities for neobanks globally, we’ve listed both the countries with the greatest adoption of digital banking and those countries with the strongest predicted growth.

As of Q3, 2023, the following information provides country-specific data on the number of individuals with a neobank account (sourced from Finder). This has also been expressed as a percentage of each country’s population (based on the statistics of Our World in Data via Visual Capitalist).

Let’s look deeper at the top three in this list.

1. Brazil: 43% of the population

Accelerated by COVID restrictions, Brazil has pushed forward the digitization of its economy, and, as a result, popular neobanks have seen their client base grow dramatically. As of 2023, around 43% of Brazilians had a neobank account, making it the country with the largest neobanking community.

Brazil is home to Latin America’s biggest neobank, NuBank, which has over 48 million users and has the second largest capital investment with $4.1 billion secured since its launch in 2012. This is topped only by the US neobank, Robinhood, which secured $6.2 billion in capital investment since its launch in the same year.

2. India: 26% of the population

In second place (by population percentage) is India with approximately 26% of its inhabitants using a digital-only bank in 2023. This means India had the most neobank users by volume with around 371.2 million account holders at the time of analysis.

The success of India’s neobanks lies in serving the unbanked and underbanked, as well as its employment of alternative credit scoring. It’s also known for customer convenience, 24-hour support, and reduced costs.

2. Ireland: 22% of the population

Ireland is in third place for neobanking usage by country, with around 22% of Irish people using digital-only banks in 2023. This equates to 1.1 million people, a considerable drop from India’s 371.2 million.

Which Countries Are Predicted to Have the Greatest Rises in Neobank Adoption Rates?

To determine key growth areas for neobanks we looked at estimated adoption across countries over the next few years. The following table provides data from Finder, which has been cross-referenced with the above data on the country’s neobank adoption per capita.

The table provides a country-specific percentual rate of neobank adoption based on the gap between observed neobank users of 2023 and predicted neobank users by 2027.

Let’s now have a closer look at the top three entries in the table above.

1. Philippines: Predicted 161% increase from 2023

In the Philippines, around 13% of the population were using neobanks in 2023, but Finder predicts that by 2027 that figure will rise to around 32% (about 39.8 million people) – a 161% increase from the neobank adoption rate observed in 2023.

2. Mexico: Predicted 148% increase from 2023

Finder predicts that by 2027, 54.1 million Mexican residents (41% of its population) will use neobanking. That figure represents a 148% increase from the 17% of people who held a digital-only bank account in 2023.

3. Portugal: Predicted 133% increase from 2023

Around 14% of the Portuguese population used a neobank in 2023, and this has been predicted to rise to approximately 33% by 2027, equal to 3.35 million people. This indicates a 133% increase in Portuguese neobanking adoption from 2023 to 2027.

What Will Set the Top Neobanks Apart?

Partnering for Success

Although the convenience and accessibility of digital-first banking set neobanks apart, competition among themselves and traditional banks is high. So, what will give ambitious neobanks the edge?

While neobanks offer valuable tools such as bill splitting and instant money transfers, some neobanks lack the credit services, such as loans and overdrafts, that are offered by traditional banks.

On top of this, neobanks don’t tend to be fully chartered and independently licensed. Most of them have to partner with traditional banks to insure their products and to enable certain services. Success will rely on strategic partnerships and the competitive advantage these agreements give over other digital-first banks.

Building Customer Loyalty

Although online customer support can be offered around the clock, few offer the face-to-face support some customers expect. This lack of human interaction teamed with a limited company history can make it hard to build brand trust. The best strategies focus on seamless onboarding, ease of use, and low-risk transactions.

Lowering Exposure to Fraud

Innovation in neobanking can create new opportunities for fraudsters, such as the need for swift onboarding as mentioned above. Given how high fraud rates are in all areas of banking, neobanks must understand their exposure to fraud and use under-the-hood banking fraud prevention software so that their transactions are seamless, quick, and safe.

How SEON Helps Protect Your Neobank from Identity Theft

As neobanking is an online industry, it’s important to protect your organization from suspicious online activity with the most advanced tools available.

SEON’s end-to-end fraud detection systems combat identity theft through methods that include digital profiling, machine learning, and activity monitoring.

For more info on neobanks, read our article on the 5 Common Types of Fraud that Threaten Neobanks. You’ll learn: 

• The most common types of fraud putting neobanks at risk
• How to protect your neobank from fraudsters
• How to support your customers with our fraud awareness tips

Methodology

This index was written in Q3, 2023, and it was sourced by our research into two areas relating to 2022:

1. Which parts of the world people use neobanks the most
2. Which countries are adopting neobanks the fastest

For point 1: We used the latest data from Finder to determine the number of people internationally who have adopted a neobank account. We then calculated what percentage they amount to in relation to the international population statistics sourced from 2023 data provided by Visual Capitalist. This website provides an interactive population graph (for both past and predicted international statistics) from Our World in Data.

For point 2: We used the aforementioned source from Finder as it also covers predictions for neobank adoption for the year 2027. We then showed how those predicted 2027 statistics translate as a percentual increase in relation to their neobank adoption rates observed in 2023.

In addition to these quantitative data sources (also referenced below), we have provided more information on how we determined the nature of neobanks, such as their legal statuses and fraud risks, in our Qualitative Data Sources list at the bottom of this article.

Quantitative Data Sources

• Statista: Neobanking – United States
• Unit 21: Fraud Prevention for Neobanks: 4 Best Practices to Follow
• Crunchbase: Robinhood
• Finder: Online bank adoption 2022
• Visual Capitalist: Visualizing the Changing World Population, by Country
• Our World in Data: Population Growth
• CFTE: The World’s Top 5 Unbanked Countries Have More Than 60% Of Their Population Without Bank Accounts

Qualitative Data Sources

• PCBB: Partnering with Neobanks — Yes or No?
• Innotech: NEOBANK: THE PROS & CONS EXPLAINED
• Wise: What is a Neobank? Examples, pros & cons + an alternative!
• Bureau: Keeping Up With Fraud: How Neobanks Can Identify and Prevent them
• The World Bank Group: COVID-19 Boosted the Adoption of Digital Financial Services