Over the last five years, the digital banking sector has experienced significant growth and transformation, driven by technological advances and changes in consumer behavior. Many Europeans already have a digital bank or banking product in their pocket, and this trend is making inroads into emerging markets.

The COVID-19 pandemic accelerated the uptake of digital banking services as consumers and businesses sought contactless, remote banking solutions. The digital banking market size exceeded USD 9.4 trillion in 2022 and is projected to demonstrate around 4% annual growth over the next decade.

This growth will be driven by the increasing demand for advanced financial services, especially in North America, and the rise in the use of electronic and mobile payment services such as NFC, POS terminals, mobile wallet and online banking, as well as emerging markets.

Nearly two billion untapped opportunities

In Asia Pacific, the use of digital banking has grown significantly, particularly in emerging markets where adoption rates increased from 54% to 88% between 2017 and 2021.

The International Monetary Fund highlights the potential of digital money to improve the economies of developing and lower-income countries. Widespread and affordable access to digital cash and mobile transactions could open the door to financial services for the 1.7 billion people who do not have traditional bank accounts. This shift to digital financial services has the potential to promote greater market integration and facilitate trade.

Even the United Nations is actively exploring the link between the fintech sector and sustainability. From poverty alleviation to increasing access to services, from direct conservation of nature to green financial engineering, it has been identified as one of the technology sectors with the most significant potential for positive impact.

The IMF’s new Digital Financial Inclusion Index, based on payment data from 52 developing countries, confirms the importance of fintech in promoting financial inclusion. Due to rapid technological adaptation and the high demand for financial inclusion in emerging markets, digital banking has quickly moved into a dominant role where consumers do not even consider opening an account with a traditional bank. This choice is understandable – fintech products tend to cost less. Many companies in this sector operate online and have lower operating costs than conventional financial institutions, offering customers lower fees and interest rates.

Digital banking is available to anyone with an internet connection, regardless of where they live. Smart services are also extremely fast, with authentication already carried out by artificial intelligence in many apps. Transactions ranging from loans to investments can be completed in minutes.

All this is driving up the number of users and has revolutionised the financial sector.

From voice payments to virtual reality shopping

Digital banking is expected to undergo significant changes over the next decade as technology advances rapidly.

The Internet of Things (IoT) is a technology that connects the physical and virtual worlds, offering innovative solutions. Statista reports that there are currently over 15 billion IoT devices. For example, one of the new household electricity metering devices automatically generates a bill, saving you time declaring energy usage. In the near future, the Internet of Things and digital banking will simplify people's lives further.  For instance, your car will pay for fuel at the petrol station, and your fridge will order and pay for food products.

Recently, leading technology companies such as Meta and Apple have been investing heavily in augmented and virtual reality. New platforms such  Metaverse and VR devices are being developed rapidly to offer new experiences and possibilities. Over 171 million people worldwide are currently using augmented and virtual reality technology. Precedence research predicts that this market will grow to USD 142.5 billion by 2032 from USD 6.78 billion in 2022.  As interest in these technologies grows, banks are predicted to enter this market. Banks may provide virtual branches. Customers will interact with the bank wearing VR devices, present their company's financial performance or pay for services in a virtual environment.

Many of you have probably used a voice command on your smartphone to call a friend, to find out what the temperature is now, or how to get from A to B, etc. Nowadays, things with "voice control" are becoming very popular. It is becoming common for people to find that some things can be done more easily. It is therefore not surprising that more and more online businesses are introducing voice-based payment options. For example, a shopper can choose to use the 'pay by voice' function. This method is increasingly proving to be successful as it does not require entering credit card details or registering on additional websites and apps. According to the Straits research portal, the global voice payments market was valued at USD 5.92 billion in 2021. It is hoped that the amount will grow to USD 13.62 billion by 2030.

I believe that in the near future, artificial intelligence will also play an important role in the way banks provide their services. Banks will soon use artificial intelligence to offer personalised banking services based on customers' financial behaviour. Polaris Market Research predicts that the global AI banking market will grow from USD 19.84 billion in 2023 to USD 236.70 billion by 2032.