Digital Transformation in Banking Statistics 2024: Growth, Challenges, and Opportunities
Updated · Nov 22, 2024
Imagine walking into a bank where there are no physical branches, no paper forms to fill out, and no waiting lines. Instead, all the services you need are available at your fingertips. That’s the reality we are rapidly moving toward as digital transformation reshapes the banking industry. As we approach 2024, traditional banking models are evolving, driven by technology innovations and the growing demands of digital-first customers. This shift has sparked a wave of innovations, leading to the creation of more accessible, efficient, and customer-centric services.
In this part of the article, we will explore the major trends shaping digital banking in 2024 the rapid growth of digital platforms, mobile banking, and the significant role of Artificial Intelligence (AI) and Machine Learning (ML) in revolutionizing customer experiences.
Editor’s Choice: Key Trends in Digital Banking
As we head into 2024, several trends are setting the stage for the next wave of digital transformation in banking. Here are the top statistics that highlight the current state and future trajectory of the industry:
- Mobile banking continues to dominate, with nearly 80% of US adults using their smartphones for banking services in 2023, expected to rise to 85% by the end of 2024.
- The global digital banking platform market is projected to reach $9 billion by 2024, growing at a CAGR of 13.6% from 2020.
- AI-powered chatbots are expected to handle 90% of customer interactions in digital banking by 2024, leading to a reduction in response times and enhanced customer satisfaction.
- By the end of 2024, over 60% of banks worldwide will have integrated AI and ML technologies into their operations.
- Blockchain technology is poised to disrupt traditional banking infrastructures, with 30% of major banks planning to adopt blockchain for transaction processing by 2025.
- The rise of neobanks is accelerating, with 20 million new users expected to adopt fully digital banking solutions by the end of 2024.
- Digital banking is driving financial inclusion, with over 500 million individuals in emerging markets gaining access to financial services through digital platforms.
| Trend | 2023 Value | 2024 Projection |
| Mobile banking usage by US adults | 80% | 85% |
| AI-powered customer interactions | 90% | 90% |
| AI & ML integration in banks | 60% | 60% |
Growth of Digital Banking Platforms
Digital banking platforms are reshaping the financial landscape by providing a seamless, unified experience for customers. This trend is not just a convenience but a necessity as more users demand quick, reliable access to financial services from anywhere.
- The digital banking platform market is expected to grow at a CAGR of 11.4% from 2021 to 2027, reaching $10.8 billion by the end of 2027.
- 84% of millennials reported in 2023 that they prefer to bank digitally, with nearly half stating they would switch banks if a digital platform is not robust enough.
- The US alone saw 45% of bank transactions happen through digital platforms in 2023, a figure predicted to climb to 55% by mid-2024.
- Digital-only banks are projected to service 50 million US customers by the end of 2024, marking a significant increase from 35 million in 2022.
- The adoption of open banking platforms has seen exponential growth, with 87% of European banks expected to implement open banking by the close of 2024.
- The customer acquisition cost for digital banks is 60% lower than that of traditional banks, thanks to streamlined online processes and better-targeted marketing.
- Cloud-based banking platforms are gaining traction, with 68% of global banks planning to increase investments in cloud infrastructure over the next year.
Increase in Mobile Banking Users
Mobile banking has become a fundamental part of the digital transformation in the banking sector. As smartphone usage skyrockets, so does the number of mobile banking users, who are drawn to the convenience of managing their finances on the go.
- Mobile banking usage surged during the pandemic and has since grown by 10% annually, with 3.5 billion people expected to be using mobile banking by the end of 2024.
- In 2023, 90% of Gen Z users stated they prefer mobile banking apps over visiting branches, a trend likely to solidify in 2024.
- The average user spends 10 minutes per week on their mobile banking app, performing tasks like bill payments and money transfers.
- By the end of 2024, 60% of global transactions are expected to be conducted via mobile, reflecting the shift away from cash and in-person services.
- In the US, 25% of digital-only bank accounts were opened via mobile banking apps in 2023, demonstrating the growing dominance of mobile-first banking experiences.
- The rise of mobile wallets has also fueled growth, with digital wallet payments expected to reach $10 trillion globally by 2024.
- Security remains a key focus, with 80% of banks introducing biometric authentication in their mobile apps by 2024 to enhance user trust and security.
Role of Artificial Intelligence and Machine Learning
Artificial Intelligence (AI) and Machine Learning (ML) are no longer just buzzwords in the financial sector—they are driving real transformation. Banks are leveraging these technologies to improve customer experience, optimize back-office operations, and bolster security measures.
- AI in banking is forecasted to be worth $64 billion by 2025, with a 21% annual growth rate.
- In 2023, 60% of leading banks globally used AI-powered tools to automate customer service and fraud detection, and this figure is expected to rise to 80% by 2024.
- Machine learning models are improving risk assessment, reducing default rates by 30% for banks that have adopted predictive algorithms.
- Fraud detection powered by AI saved banks an estimated $217 billion globally in 2023, and this amount is set to grow in 2024.
- AI chatbots reduced the need for human intervention in 80% of routine queries in 2023, freeing up bank personnel for more complex tasks.
- The integration of AI for personalized banking services is expected to increase customer retention rates by 15% in 2024, as banks become better equipped to meet individual needs.
- AI-powered decision-making systems are projected to enhance credit approval processes, improving loan issuance times by up to 40% by the end of 2024.
| Metric | 2024 Projection |
| Leading banks using AI for automation | 80% |
| Risk reduction via ML models | 30% |
| Customer retention boost via personalized AI | 15% |
| Loan issuance time improvement via AI | 40% |
Generative AI: Challenges and Opportunities
Generative AI, while still in its relative infancy in banking, presents both significant opportunities and notable challenges. As this technology matures, banks are exploring its potential to enhance everything from customer experience to fraud detection.
- By 2024, 40% of banks globally are expected to incorporate generative AI into their operations, particularly in customer service and automated report generation.
- $7.3 billion in banking revenue is forecasted to be influenced by generative AI innovations by the end of 2025.
- The challenge of data privacy remains significant, with 75% of banks expressing concerns over how generative AI could inadvertently expose sensitive customer data.
- Generative AI chatbots are projected to handle 65% of customer interactions by 2025, particularly in the fields of loan inquiries and account setup.
- Banks could save up to $450 billion annually by utilizing generative AI to automate processes such as fraud detection, report creation, and customer service.
- However, 40% of banking executives report concerns over the lack of regulation governing AI systems, with the potential for significant ethical and operational risks.
- Despite challenges, AI-driven innovation labs are expected to expand within 60% of the world’s top 100 banks by 2024, focused on exploring new AI-driven banking solutions.
| Metric | Projection |
| Banks using generative AI | 40% |
| Concerns over data privacy in generative AI | 75% |
| Customer interactions handled by AI chatbots | 65% |
| Banks with AI-driven innovation labs | 60% |
Fintech Partnerships and Payment Innovations
Fintech partnerships are increasingly critical for banks looking to keep pace with digital transformation and deliver cutting-edge payment innovations to their customers. Collaboration is key, with fintech companies bringing agility and innovation, while banks provide scale and compliance.
- In 2023, 63% of banks reported working with fintech companies to enhance their digital services, a number expected to reach 75% by 2024.
- The global fintech market is expected to grow from $179 billion in 2023 to $230 billion by 2024, highlighting the importance of these collaborations.
- Digital payment systems like Apple Pay and Google Pay saw 30% growth in 2023, with 43% of US banks now offering these payment methods through partnerships.
- Cross-border payments, facilitated by fintech solutions, are expected to reach a volume of $250 billion in 2024, driven by the growing e-commerce sector.
- Embedded finance, where financial services are integrated into non-financial platforms, will reach $7 trillion in revenue globally by 2030, according to projections.
- Fintech-driven loan services have shortened approval times by 50%, making loans more accessible to consumers and small businesses alike.
- By 2024, 40% of all global financial transactions will be processed via fintech platforms, marking a fundamental shift in how payments are made and received.
Bank’s Digital Spending Trends
The rise of digital banking has led to a substantial increase in the digital transformation budgets of banks worldwide. Financial institutions are now heavily investing in technology to remain competitive, meet customer demands, and enhance their security frameworks.
- In 2024, global banks are expected to spend $1.3 trillion on digital transformation, up from $1.1 trillion in 2023.
- The average US bank allocates 30% of its total budget to digital initiatives, a significant increase from 25% in 2022.
- Cloud computing remains a major area of investment, with 55% of banks planning to migrate core banking systems to the cloud by 2025.
- Spending on cybersecurity is also on the rise, with $125 billion expected to be invested by banks worldwide in 2024 to combat growing cyber threats.
- Banks’ investment in AI solutions has grown by 20% annually, with predictions of $150 billion being allocated to AI projects by 2025.
- Mobile banking app development continues to be a key focus, with 85% of banks planning to launch upgraded or entirely new mobile apps by the end of 2024.
- Blockchain technology investments are projected to hit $8 billion in 2024, with many banks experimenting with blockchain for cross-border payments and secure transaction processing.
Cybersecurity Challenges and Solutions
With the growth of digital banking comes an increased risk of cyberattacks, making cybersecurity a top priority for financial institutions. The complexity of cyber threats is evolving, and banks are responding by increasing investments and adopting more sophisticated defenses.
- In 2023, 70% of global financial institutions reported being targeted by cyberattacks, and this is expected to rise in 2024.
- Ransomware attacks cost the financial industry $265 million in 2023, with an estimated 25% increase in such attacks expected by the end of 2024.
- Biometric security, such as fingerprint and facial recognition, is becoming the standard for 40% of banks worldwide, and 60% of banks plan to adopt these measures by 2025.
- The rise of quantum computing poses a potential threat to existing encryption methods, with 30% of banks investing in quantum-resistant encryption by 2024.
- Cybersecurity spending by banks is projected to reach $190 billion globally by 2025, as institutions look to safeguard customer data and prevent financial fraud.
- Zero-trust architecture is expected to be implemented by 65% of US banks by 2024, reducing the risk of internal threats and ensuring tighter access controls.
- AI-driven cybersecurity solutions are on the rise, with 50% of banks using AI to predict and mitigate cyber risks by 2024.
| Metric | Projection |
| Ransomware costs | 25% |
| Banks adopting biometric security | 60% |
| Banks investing in quantum-resistant encryption | 30% |
| Banks adopting zero-trust architecture | 65% |
| Banks using AI for cybersecurity | 50% |
Traditional Banking vs. Digital Banking: A Comparative Analysis
The rise of digital banking has led to a growing divide between traditional banking models and fully digital solutions. While traditional banks are adapting to new technologies, digital banks offer speed, convenience, and lower operational costs.
- In 2024, 50% of bank customers globally are expected to switch to digital-only banks, leaving traditional banking services behind.
- Digital banks typically offer 20% lower fees compared to traditional banks due to their more streamlined operations and lack of physical branches.
- Customer satisfaction rates for digital banks were 15% higher than those for traditional banks in 2023, driven by faster service and greater accessibility.
- The number of physical bank branches in the US is projected to decline by 10% by 2024, as more customers opt for digital alternatives.
- 80% of millennials report preferring digital banks, citing 24/7 accessibility and mobile-first services as primary reasons for switching.
- Traditional banks still hold the majority of assets, with $170 trillion in global assets compared to $2 trillion for digital-only banks.
- Digital banks can process customer requests 70% faster than traditional banks, thanks to their automated processes and use of AI.
Digital Banking Usage and Key Statistics
As digital banking continues to rise in popularity, the way customers interact with banks is changing rapidly. Traditional methods are being replaced by more convenient digital alternatives, and key statistics reflect this shift.
- By 2024, over 3.6 billion people worldwide will be using digital banking services, marking a 10% increase from 2023.
- In the US, 87% of banking customers use online banking regularly, and 80% use mobile banking apps for daily transactions.
- Digital banking revenue is projected to grow to $1.3 trillion by 2025, representing a significant jump from $970 billion in 2022.
- The global market for neobanks is expected to reach $67 billion by the end of 2024, with growth fueled by increased customer demand for fully digital services.
- 70% of all banking interactions in 2023 were conducted digitally, and this is expected to rise to 77% by the end of 2024.
- Customer retention is higher with digital banks, with 60% of digital bank customers reporting satisfaction levels higher than with traditional banks.
- Voice-activated banking, powered by virtual assistants like Alexa and Google Assistant, will reach 10 million users globally by 2024, growing at a rate of 30% annually.
Rise of Cloud-Based Banking Infrastructure
Cloud technology has become integral to the transformation of banking infrastructures, offering scalability, security, and reduced operational costs. Banks are increasingly moving to cloud-based systems to stay competitive and secure.
- By 2025, 60% of global banks will have migrated the majority of their systems to cloud platforms, up from 40% in 2022.
- The cloud computing market in banking is projected to reach $20 billion by the end of 2024, growing at a CAGR of 15%.
- 70% of financial institutions now use cloud services for data storage and analytics, which helps improve efficiency and customer service.
- Hybrid cloud solutions are expected to be adopted by 50% of banks by 2024, allowing them to balance security with flexibility.
- The use of cloud-native technologies has reduced operational costs by 25% for the banks that have fully implemented them.
- Cloud technology has also been a boon for disaster recovery, with 80% of cloud-using banks reporting faster recovery times after incidents compared to those relying on traditional systems.
- Security concerns remain, but 75% of banks have already implemented enhanced cloud security protocols such as multi-factor authentication and encryption to mitigate these risks.
Financial Inclusion Through Digital Transformation
Digital banking is a powerful tool for promoting financial inclusion, particularly in underserved and emerging markets. By leveraging technology, banks can offer services to people who previously had little or no access to traditional banking.
- 1.4 billion people globally remain unbanked, but digital banking initiatives have brought over 500 million people into the financial system since 2020.
- In 2023, mobile banking services helped 90 million people in Africa and Asia gain access to financial products, with a projected 50 million more by 2024.
- Digital lending has increased access to credit for 20 million small businesses globally, many of which were previously underserved by traditional banks.
- Microfinance powered by digital platforms grew by 15% in 2023, reaching a total market size of $150 billion, as it enabled low-income individuals to access essential loans.
- 65% of financial inclusion initiatives in developing markets now rely on mobile platforms to reach rural and isolated populations.
- Blockchain-based banking is driving financial inclusion in countries like India and Nigeria, where it helps people without formal IDs to establish credit and financial identities.
- Digital remittances are another area of growth, with $680 billion in cross-border payments made through digital channels in 2023, helping families in low-income countries.
Recent Developments
2024 promises to be a pivotal year for the banking industry as new technologies and innovations continue to emerge. These developments are expected to further drive digital transformation and enhance customer experiences.
- Real-time payment systems are expanding globally, with 90% of global banks expected to offer instant payments by 2025, allowing faster and more seamless transactions.
- Open banking adoption will continue to rise, with 85% of European banks fully adopting open banking standards by 2024, allowing for greater interoperability between financial services.
- Digital identity verification is expected to become mandatory in 30% of countries by 2024, ensuring a more secure onboarding process for digital banking customers.
- Central Bank Digital Currencies (CBDCs) are gaining traction, with over 60 central banks worldwide exploring or piloting CBDCs by 2024.
- 5G technology is set to revolutionize banking services, enabling faster transaction speeds and enhanced mobile banking experiences for users.
- Green banking initiatives are on the rise, with 40% of banks incorporating sustainability metrics into their digital transformation strategies by the end of 2024.
- Augmented reality (AR) banking will see early adoption, with 5% of global banks expected to pilot AR-driven customer engagement platforms by 2025.
Conclusion
As we approach 2024, the digital transformation in banking shows no signs of slowing down. The shift from traditional to digital banking is not just a trend but a fundamental reshaping of how financial services are delivered and consumed. Artificial intelligence, cloud technology, and fintech partnerships are driving innovation, while mobile and digital banking platforms continue to expand, bringing more people into the financial system.
At the same time, banks must navigate significant challenges, particularly in the areas of cybersecurity, data privacy, and regulatory compliance. Those who can successfully integrate cutting-edge technologies while maintaining trust and security will be well-positioned to thrive in the rapidly evolving digital landscape.
Barry Elad is a dedicated tech and finance enthusiast, passionate about making technology and fintech concepts accessible to everyone. He specializes in collecting key statistics and breaking down complex information, focusing on the benefits that software and financial tools bring to everyday life. Figuring out how software works and sharing its value with users is his favorite pastime. When he's not analyzing apps or programs, Barry enjoys creating healthy recipes, practicing yoga, meditating, and spending time in nature with his child. His mission is to simplify finance and tech insights to help people make informed decisions.
