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Challenger Banks in Asia-Pacific - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 150 Pages
  • June 2022
  • Region: Asia Pacific
  • Mordor Intelligence
  • ID: 5530225
The COVID -19 had a neutral impact on the challengers banks . This is due to the reason that some sectors like Aviation and Hospitality were affected due to the restrictions imposed , whereas some sectors like pharmacy, health , e-commerce and food delivery witnessed better growth oppurtunities Although some customers were already using digital mediums to transact, purchase and process services, a majority of new customers were onboarded due to the limits imposed on mobility and unavailability of other channels. Such customers have now been introduced to more convenient online digital channels and companies offering such services are aiming to create a pattern to help during the transition and engage continuously with them.

The onset of the pandemic enhanced the need for rapid tech-led transformation for the banks and financial services players. Digital banks, also known as neobanks, challenger banks, or virtual banks, all have in common are they often started with no physical branches and leveraged technology to differentiate their offerings in the banking sphere.The virtual banks have helped a lot of people in the Asia - Pacific region to have a smooth banking experience without visiting the bank. Asia’s digital banking scene has seen rapid growth in recent years and is set to continue its growth in the months to come.

63% of banking customers in Asia-Pacific (APAC) are likely to use digital banking services offered by neobanks and challenger banks by 2025, highlighting the urgency for banks to innovate. Also many commercial places such as restauarants are now looking towards Challengers Banks as they are flexible enough, without having a need to visit any physical bank. More than 35 neobanks or challengers across APAC are built on agile innovative best practices - way ahead of incumbents in terms of flexibility, self-service capabilities, customer needs, and personalization. Consequently, with the emergence of new players and further digital disruption in the industry, 38% of traditional banks’ revenues are at risk by 2025.

Key Market Trends

High mobile penetration and High Unbanked adults in the region

Emerging markets in the region present a large opportunity for challenger banks due to three major factors: Large unbanked population; high mobile penetration and growing middle class. 250 Million adults in Southeast Asian countries are unbanked, which sums up to a mere 27% of adults having a bank account. Most countries in the region have mobile penetration of well over 100%, ahead of the penetration levels in the United States and on par with the European market. Only 48% of Indonesians aged 15 years or older have a bank account. Over 2 million unbanked adults in Malaysia. Only 30% of Vietnamese aged 15 years or older have a bank account. Only 32% of Filipinos aged 15 years or older have a bank account.

Financing Activity on Rise into Challengers in Asia-Pacific

Challenger banks are becoming attractive and are able to convince investors that their business models and valuations seem to work out for real. This resulting in a spree of equity financing or M&A activities in this market. For example, Kakao, a Korean communications company launched KaKao Bank, Korea’s internet-only bank in 2017. It amassed 300,000 customers in 24 hours, USD 930 million in deposit in one week, and has more than 6.5 million accounts in 1 year. The number of new accounts opened with Kakao in 24 hours exceeded what some incumbent and challenger banks have managed in a year. Similarly, many challengers seem to build confidence in the investors to put their money in the firms and attached below is an infographic presenting the financing activities in the challengers over the past 6 years (2013-2019).

Competitive Landscape

The report includes an overview of challenger banks operating across the region. Currently, some of the major players dominating the market are listed below. The market is moderately fragmented with the major players occupying approximately 42 % of the market share but the other players also occupied a signifacnt percentage of the market share.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

This product will be delivered within 2 business days.

Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Insights on impact of Technology and Innovation in Operation in Challengers Banking System
4.5 Industry Attractiveness - Porters 5 Force Analysis
4.5.1 Threat of New Entrants
4.5.2 Bargaining Power of Buyers/Consumers
4.5.3 Bargaining Power of Suppliers
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
4.6 Impact of COVID-19 on the Market
5.1 By Service Type
5.1.1 Payments
5.1.2 Savings Products
5.1.3 Current Account
5.1.4 Consumer Credit
5.1.5 Loans
5.1.6 Others
5.2 By End-User Type
5.2.1 Business Segment
5.2.2 Personal Segment
5.3 By Country
5.3.1 China
5.3.2 South Korea
5.3.3 Australia
5.3.4 Hong Kong
5.3.5 India
5.3.6 Indonesia
5.3.7 Philippines
5.3.8 Malaysia
5.3.9 Singapore
5.3.10 Rest of Asia-Pacific
6.1 Market Competition Overview
6.2 Company Profiles
6.2.1 WE Bank
6.2.2 MY Bank
6.2.3 Eon
6.2.4 Paytm Payments Bank
6.2.5 Digi bank
6.2.6 Jenius
6.2.7 SBI Sumishin Net Bank
6.2.8 Kakao Bank
6.2.9 K Plus
6.2.10 Timo
6.2.11 Volt
6.2.12 Xinja
6.2.13 BigPay
6.2.14 Neat*

Companies Mentioned

A selection of companies mentioned in this report includes:

  • WE Bank
  • MY Bank
  • Eon
  • Paytm Payments Bank
  • Digi bank
  • Jenius
  • SBI Sumishin Net Bank
  • Kakao Bank
  • K Plus
  • Timo
  • Volt
  • Xinja
  • BigPay
  • Neat*