Eternity Law International News Digital Banks

Digital Banks

February 3, 2020

Digital banks: source of profit or cause of loss?

In the era of innovative technologies, the so-called “digital banks” have become very widespread in the world. These are platforms that do not have their own branches in the traditional sense – offices with employees, cash desks, ATMs and terminals.

The emergence and development of such banks is primarily due to unsatisfactory assessments of the traditional banking system.

A large number of investors, employees of companies specializing in the creation of digital products, artificial intelligence, analysis and storage of personal data became interested in these developments. We can say that these are new generation projects.

As an example, consider the famous financial corporations like Revolut, Nubank and N26. The management decided to change the system and move on to the introduction of other products: bank accounts, lending and insurance.

Europe and the USA are gradually introducing new technologies, and Asian states are already launching alternative digital banks.

How to hold on to physical banks? What tools should be used for successful operation?

The popularity of banks, high ratings are not the main indicators. So far, new generation banks are not considered a stable source of income and huge amounts of profit. The activities of such products are investment dependent.

For the first quarter of 2019, investors transferred one and a half million dollars, which is approximately 78% (higher than in 2018). But still, modern digital banks cannot yet be called profitable: for example, Metro Bank, established in 2010, received significant profit only in 2017.

All this is commonplace for similar organizations creating new technologies. Increasing the number of customers has more priority than income. In innovative banks of a new generation, you do not need to pay a commission for services.

If it is, then much less than in ordinary institutions. There are also no requirements for the balance and payment for transactions in foreign currency.

How and when do similar business models become profitable?

The market of innovative technologies is replenished with various developments. The southeastern company “Gojek and Grab” offers customers a wide range of functions: replenishment of a mobile account, payment for the delivery of goods, registration of loans.

Razer, from Singapore, famous for gaming devices, introduced a new electronic wallet.

There are other interesting companies:

  • Chinese WeChat;
  • South Korean Kakao;
  • Japanese-Taiwanese Line.

All of these organizations have developed platforms on the basis of which they create payment services.


Hong Kong has granted eight licensing permits this year, and Singapore (only planning) five. Taiwan also does not lag behind, here they allowed to provide banking services to several platforms – Line, Next and Rakuten. In Malaysia, too, almost completed the system of Internet banking.

Google provided a detailed report, which indicated a high level of purchases on the Internet. According to the document, by 2025, growth is projected to $ 240 billion. That is, fertile ground will appear for the full prosperity of mobile banking.

Specialists of Eternity Law International will be happy prоvide you with assistance and advice in the financial sector, which is rapidly developing.

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