AnalyticsNeo/Challenger Banks to Add 435 Million New Accounts Worldwide by 2026

Growing demand for customer convenience, flexibility, 24/7 accessibility, and instantaneous service demand has led to the rise in transformative neobanks and challenger banks looking to disrupt the current status quo. By fully embracing a digital first approach, neo/challenger banks have used innovation to streamline processes and scale new added value service launches, enabling new levels of convenience and flexibility. According to global tech market advisory firm ABI Research, neo and challenger banks will continue on an impressive grow trajectory, with the user base for the top 57 neo and challenger banks expanding their number of accounts from 155 million in 2020 to 590.6 million in 2026.

“The global push in digital acceleration across a number of market verticals also applies to the financial services sector. Throughout the global pandemic, as banks and building societies closed branches and migrated their in-person staff to already burdened telephony services, the reliance on flexible banking and payments has been pushed to the fore,” said Sam Gazeley, Digital Security Analyst at ABI Research. “Traditional banks are feeling the pressure from their customer base to deploy digital solutions for financial services, competing with other traditional banks as well as neo/challenger banks. Rather than stifling the neobanks’ march to innovation, the increased demand for digital solutions during the pandemic has stimulated investors interest in them, and increased their visibility to target markets, onboarding new customers looking for compelling digital offerings.”

Europe has long been a fostering ground for the neo and challenger bank market, with the top 19 neobanks (e.g., Revolut, N26, and Monzo) in the region sporting a combined 49.8 million accounts in 2021, forecast to rise to 165.8 million in 2026. North America has somewhat emulated Europe and has seen several neobanks rise in popularity among customers looking for innovative banking solutions. The top 15 neobanks in the region (e.g., Chime, Upgrade, SoFi) will see their number of accounts increase from 56.9 million in 2021 to 162.8 million in 2026. Asia-Pacific will sport the highest growth rate over the forecast period at a CAGR of 28.2% between 2021 and 2026. This will see the top 9 neo/challenger banks (e.g., Kakao Bank and K Bank) in the region grow their number of accounts from 22.1 million to 76.6 million over the period. With a significant portion of the population unbanked or underbanked, the Middle East and Africa are seeing neo and challenger banking very much in its infancy. The top 4 neo and challenger banks (e.g., Nubank and Banco Inter) in the region will consequently see their number of accounts increase from 0.7 million in 2021 to 1.4 million in 2026.

“However, neo and challenger banks will not have it all their own way, with a number of traditional banks launching their own digital banks as an entrance to new markets or to fend off neobanks from their patch. These offshoots will have a benefit as it relates to the trust stemming from brand association and a considerable war chest of capital for innovation. Trust being a critical issue when start-up neo and challenger banks look to onboard as many customers as possible and pivot them toward premium accounts and subscriptions. The future of financial services is trending toward a shift in strategy from physical-to-digital to a digital-to-physical approach,” Gazeley concludes.

These findings are from ABI Research’s Digital First Neo and Challenger Banks Driving Technology Innovation technology analysis report. This report is part of the company’s Digital Security research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Technology Analysis reports present in-depth analysis on key market trends and factors for a specific technology.


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