Digital banking surge predicted by 2024

Digital banking is expected to see a surge in the next few years. Juniper Research is forecasting a 54% increase between now and 2024, as millennials and other younger consumers abandon traditional banking. 

The growth will be driven by the increasing appeal of digital-only banks as well as efforts by the incumbent banking industry to move their customer base onto digital banking apps, which provide a more cost-effective way to conduct business than branches and live tellers. 

"One major factor that has been highlighted by many is a generational shift, with millennials increasingly becoming targets for financial products," Nick Maynard, lead analyst at Juniper said via email. "However while this is a factor, it is not responsible for this shift alone.”

He said an increasing number of bank customers have grown up around e-commerce and digital media, and the banking experience has evolved over the years to match this same experience. 

"Digital-only banks that have entered the market have reinforced this change in expectations, by focusing on disruptive features and carrying out large market campaigns, he said.

The report found that certain Tier 1 banks — Bank of America, JPMorgan Chase and BBVA — have taken the lead in changing their business models to adapt to the new consumer preferences. Bank of America has shown a great deal of recent success with its Erica chatbots, which have grown to more than 10 million customers and moved a number of tasks out of the branch and onto phone and digital platforms. 

BBVA has focused on developing API's by offering BBA Open Banking, which is a Banking-as-a-Service platform, and JPMorgan Chase has experimented with incorporating blockchain into its banking business and is working on a digital banking launch later this year in the U.K. market. 

Maynard also said BBVA was working on a digital banking brand called Simple in the U.S. and Natwest has developed a digital brand called Bo in the U.K.