While the coronavirus pandemic severely damaged businesses and economies world over it brought major positive change in the banking sector.
Over the past year and few months under the pandemic and lockdowns, physical use of banks dipped rapidly. People however found alternative ways to manage their finances through online banking.
The banking sector is one rare sectors that picked up during the pandemic. Digital activity picked up almost 2.4 times more than usual globally.
The finance market is expected to grow at an annual growth rate 11.6% between 2021 to 2026. It is expected to reach a revenue of $1.6 trillion by 2027.
The digital payment segment is the biggest segment when it comes to digital banking and it is estimated to reach $402.5 billion by 2027.
North American is said to dominate the digital banking market valued at $721.3 billion and Asia-Pacific region $153 billion by 2027.
Mobile wallets usage increased to a historic high of 46% that amounts to 102.7 billion transactions in 2020. It is projected to hit 2.58 trillion by 2025.
The global digital transaction value is stood at $5.44 trillion in 2020 and by 2026 this value is expected to grow to $11.29 trillion.
Globally 70.3 billion transactions took place during the pandemic year, that’s a jump of 41% compared to previous year levels. It was India that took the lead when it came to highest global real time transaction standing at 25.5 billion transactions, closely followed by China with 15.7 billion transactions and South Korea with 6 billion.
One of the advantages of going digital is cost cuts. Banks worldwide by 2023 will save roughly $7.3 billion on operational costs solely if they all shift to using chat bots.
But going digital also means they are more vulnerable to cyber attacks and scams. Not to forget establishing a strong digital infrastructure burns a lot of money.
The pandemic has shifted the priority and needs of customers and accelerated the use of digital finance services thus forcing banks to meet those new consumer expectations in order to gain.
The demand for cashless payments increased rapidly due to its convenience, speed, change in consumer behavior and encouraging government policies.
Governments are using digital banking to try and reduce the supply of currency notes to curb black money and fake currency.