What if banks were not just intermediaries managing financial transactions but full-service platforms for all of a client’s financial needs? From traditional banking to investment portfolios, insurance, credit, and crypto trading, having all of these services in one platform would be beneficial.
Thankfully, that’s the vision of Fintech. Digital banks offering such comprehensive platforms have been growing swiftly recently.
One Portal, Many Systems
Part of what has been driving the rise of Fintech is the growth of open finance. Open finance allows financial information to be shared securely between different institutions so that customers can access varied financial opportunities and expertise from one point of contact. Open Fintech can feel like holding winning poker hands for customers who didn’t start from a position of affluence.
What digital banking, open finance, and Fintech have made possible is a more democratic access to resources, financial knowledge and expertise, and financial tools that previously were available only to those “in the know” – those raised in a particular social class or formally educated about financial management. A McKinsey report found that nearly half of consumers in the US now use Fintech (either for peer-to-peer payment or for money transfers), demonstrating that digital banks are extending financial services to previously unbanked and underbanked citizens.
Understanding Digital Banking
Digital banks operate without local, brick-and-mortar branches, providing services through online portals and mobile apps. USAA, the bank established to serve military members and their families, only has four physical locations; nearly all of its services are handled online. Newer digital banks are often entirely online.
Because digital banks don’t need to spend funds on maintaining facilities, they can spend their funds on tech, such as AI to automate customer service and fraud detection, and cloud computing to scale transaction processing. End-to-end encryption, multifactor authentication, Know Your Customer (KYC) validation, and other cybersecurity tech provide digital banks with data security. Meanwhile, multiple blockchain platforms, like Ethereum and Solana, now offer support for decentralized finance apps and smart contracts, allowing for secure and transparent transactions without needing a third-party banking organization.
A Global Shift
While the U.S. is currently leading investment in Fintech, it is followed closely by Europe and then by Asia. Some international Fintech platforms are reaching into the U.S. The North American division of Spain’s Santander Bank saw $2 billion in deposits from U.S. customers in its Openbank digital banking platform in the final quarter of 2024. Even the Australian Fintech market is growing, with ANZ Plus recently reaching 1 million customers and nearly $20 billion (Australian) in deposits. By surveying its customers, ANZ Plus found that more than half (55%) of its customers used the digital platform as their only bank.
Globally, the Fintech market was valued at over $340 billion (USD) last year and is predicted to reach $394.88 billion this year, and $1,126.64 billion by 2032.
Empowering Consumers Through Digital Innovations
What is driving this growth around the world? Most Fintech experts simply point to ease of use. Digital bank accounts are quickly opened and usually with fewer fees. They package multiple financial services under one platform so customers can bank, purchase, upgrade insurance, access credit, and make investments in one online portal. Many digital banks also provide learning resource centers or even video tutorials in financial literacy, allowing people who previously never had the opportunity to learn about financial services to quickly get up to speed on the basics of banking, investments, credits, and even real estate.
Looking ahead, as technology advances and digital banks continue to refine their offerings, the possibilities are endless. Consumers can expect greater financial transparency, smarter financial management tools, and more equitable access to wealth-building opportunities. The digital banking revolution is far from over, promising a future where financial well-being is within reach for all.
