How To Monetize Your Digital Bank

March 23, 2021

COVID-19 is fundamentally altering the banking landscape, pressuring banks to reinvent themselves and accelerate their digital transformation journeys. Customers across age groups and income brackets are more willing to sign up for digital banking products and services since the pandemic. Now, more than ever, digital transformation is essential as a means to improve efficiency and optimize costs.

Shaping attractive digital offerings with sustainable economics and monetization strategies has been challenging for large national and regional banks. How can banks shape digital banking business models to be attractive to customers and profitable in the long term? Deloitte embarked on a mission to answer this question by exploring the business models of successful digital banking challengers, as well as customers’ digital banking needs.

Based on market research involving more than 1,000 consumers during the COVID-19 pandemic, deep industry expertise, and learning from designing and launching several digital banking propositions, our study outlines three major insights:

1. How Are Challengers Winning in the Digital Space?

Challengers apply several tactics to monetize digital banking business models, along their stages of evolution. Below are some key tactics we observed in the marketplace.

2. What Do Customers Really Desire from Digital Banking Products and Services?

We conducted a survey with more than 1,000 consumers across ages (18-45+) and income ranges ($50-150K) to identify attractive digital banking products and services. Our research yields six overarching insights:

  • Older and wealthier customers are more willing to digitally engage.
  • COVID-19 has created new opportunities to invest and actively manage wealth.
  • Younger customers look to pay even more for banking services.
  • Subscription-based services must offer transparency and cancellation flexibility.
  • Complementary loyalty benefits and reward programs are expected.
  • Younger customers value social impact and environmental causes with their digital banking experience.

3. How Viable Are Digital Banking Business Models?

As customers become more engaged and sign up for additional products, revenue-per-customer can increase exponentially. By following a similar path, incumbents can expect higher revenues and margins per customer, given their ability to capitalize on existing brand recognition, trust, and primary bank status.

The graph below shows potential revenue and margin ranges for digital banking propositions across stages.

The digital banking landscape remains competitive, with a variety of challengers able to differentiate with attractive and profitable propositions. To win in the digital banking space, we recommend considering five key principles.

Download our full report here “How To Monetize Your Digital Bank” to learn more.


Authored by: Shalina VadivaleMenes KumDavid OrtizKyle DriscollDivya Saha, and Olivia Mikkelsen, all with Deloitte Consulting LLP. We’d like to acknowledge Deloitte Consulting LLP leaders Jeff WordhamGys HymanDeron WestonGopi BillaTim O’Connor, and Joseph Cody for their leadership, commitment and contribution.

View the original article at Graphs and images courtesy of Doblin, a Deloitte business. 

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