Posted: 30 Sep. 2019 05 min. read

Digital banks of the future

The challenges and choices

The future of digital banking is not about banking, it’s about helping customers meet their needs and desires - easily and seamlessly.

Incumbent banks face a disrupted landscape. Customer expectations are at an all-time high. The barriers to entry are dramatically reduced. New entrants are poised to disrupt and reshape the future of digital banking IF they can overcome the challenges of customer awareness, trust and cost of capital. And there’s an increasingly customer-focused regulatory environment.

The challenges

Our research shows that 53% of customers believe that their digital experience with their financial providers still needs improvements and the gap between a customer’s favourite brands and their primary bank is at least 12%.

New entrants, including neobanks, tech giants and fintechs are changing the game by leveraging customer data, using the latest technology and lean business models to offer targeted services in a B2Me model. 58% of Australians are already actively engaging with fintechs[3] and 14% of customers have, or are in the process of, switching their main financial institution.

A newly customer focused regulatory landscape shaped by the 76 recommendations from the Hayne Royal Commission and with legislation including the Consumer Data Right, will continue to remove barriers for incumbents and new entrants to explore innovative new propositions.

As expectations continue to evolve, it will be harder to be all things to all customers.

The choices

New entrants do benefit from lean business models, unencumbered by legacy systems and processes, and so able to rapidly iterate their offerings. However, they will need to quickly establish their customer base through a genuinely disruptive customer value proposition if they are to survive the inevitable competitive response from incumbents.

As for incumbent banks, our experience and research indicates that they will have to make a choice between either launching their own digital banking offshoot, or embracing the broader ecosystem. As the focus shifts from providing banking products to targeted customer outcomes, we predict a move away from mass market and vertical integration. 

To think through the digital banking models we identified four key choices:

What's next

Digital and neobanks are focused on removing pain points in banking - such as approval times and fee levels - and providing new services, including spend management.

Although at a nascent stage in Australia - Volt and Xinja have full ADI licences, graduating from their restricted Authorised Deposit-Taking Institution (RADI) licence status this year.

Judo started as a lender to small business and received its full ADI licence in April 2019.  Neobank 86400, backed by payments company Cuscal, received its full ADI licence in July 2019. US neobank Douugh partnered with mutual Regional Australia Bank, UK neobank Revolut started a beta version of its app in June 2019, and Chinese digital-only bank WeBank is reported to have plans to launch in Australia.

Incumbent banks have also developed digital bank offerings: UBank (NAB), Up (Bendigo & Adelaide Bank), ING and ME Bank all offer digital stand alones services.  However unlike digital-only neobanks, digital bank offerings rely on existing bank infrastructure to deliver their services.

What’s Next?

What's next?

2. Build in agility

Be digital at the core, not just in the channel. Build a modern agile digital architecture with open source technologies that allows full participation in the ecosystem in order to rapidly innovate. Adopt agile implementation techniques and real-time DevOps to accelerate delivery, improve quality and constantly test propositions with the customer. The launch to market will be critical to their success.

3. Embrace the ecosystem

We are seeing some incumbent banks beginning to partner with neos to leverage their superior technology offerings to enhance the experience of their own customers.  This most often occurs when the neo and incumbent are based in different geographies and aren’t an immediate competitive threat to each other.


  1. Deloitte Digital report: Restoring trust in financial services in the digital era- Salesforce (2018)
  2. Deloitte Report: Accelerating Digital transformation in banking, (2018)
  3. Deloitte Digital report: Restoring trust in financial services in the digital era- Salesforce (2018)

Meet our author

Angela Robinson

Angela Robinson

Partner, Deloitte Digital

Angela Robinson leads the national digital experience and technology teams for Deloitte Digital. As a Deloitte Partner specialising in Financial Services for the last 18 years she covers the end-to-end customer experience for the consumer, business and institutional bank.  With a strong delivery focus she spans operating model design and implementation, digital transformation, core banking transformation and risk system replacement. Angela is also at the forefront of Deloitte’s thinking on the impact of Open Data in Australia.