Europe Digital Banking Market value was USD 1.3 billion in 2019 and is set to register a lucrative growth between 2020 and 2026 at a CAGR of over 5%. The digital payment transaction volume across Europe exceeded 170 billion in 2019 with transaction value accounting for over USD 1.3 trillion.
Digital Banking Market, By Service
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The Europe digital banking market is witnessing a dynamic transition in customer behavior, an increase in expectations, the adoption of new technologies, and the digitization of businesses. Over a third of the millennials (population aged between 16 to 34) are inclining toward a digital-only experience. European banking customers are changing, especially the younger population who are digitally savvy, hyper-connected, and choice conscious, thus driving the demand for digital banking services in the region.
Amid the COVID-19 crisis, European customer preferences for remote & digital capabilities have been growing and lockdowns due to the pandemic have accelerated these trends. Between December 2019 and May 2020, it was estimated that mobile customer engagement with European banks grew faster than the pre-COVID-19 phase.
The retail banking segment is set to attain a CAGR of over 5% by 2026. The major factor contributing to the stability of retail banking is that it serves a large number of small customers. The granular nature of the retail lending portfolio, which contains a large number of small & collateralized loans, means that the lending income may be less volatile over time owing to diversification across customers.
The transactional services segment accounted for over 90% of the market share in 2019, which is attributed to the European fintech industry’s efforts to innovate daily consumer transactions while addressing consumer pain points. Businesses and consumers are interested in faster, safer, and more convenient payment methods as cash is becoming obsolete and credit cards are being phased out. Digital transactional services enable faster payments and provide a strong value proposition for any consumer.
In transactional services, online fund transfers are the most widely used transactional services, accounting for over 35% of the total market share in 2019. Digital fund transfers are set to witness a customer-led revolution as the rising penetration of smartphones and increasing use of mobile payment apps have triggered the growth of the segment. The ongoing COVID-19 pandemic has also significantly accelerated the shift toward a digital economy with a strong focus being imparted on digital fund transfers.
The European market has witnessed several banks undertaking various initiatives to accelerate the fintech landscape growth and boost their competitive advantage in the region. For instance, BBVA has established a USD 250 million fintech fund and acquired financial technology companies such as Simple, an American online-only bank for USD 117 million and Holvi, a digital bank from Finland, for an undisclosed amount. Traditional banks across the region are trying to gain access to the technology of fintech start-ups as a part of their market expansion strategy. The Germany digital banking industry is driven by the rise of various digital-only banking establishments. Banking institutions are focusing on customer experience and co-operation as a part of their digitalization strategy.
Some of the leading companies operating in the market include Appway AG, Bank of New York Mellon Corporation, CREALOGIX AG, ebankIT, Etronika, Fidor Solutions AG, Finastra, Halcom.com, ieDigital, Infosys Limited, Intellect Design Arena Limited, Kony, NETinfo Plc, NF Innova, Oracle Corporation, SAB, SAP SE, Sopra Steria, Tata Consultancy Services Limited, Technisys S.A., Temenos AG, and Worldline.