Digital Banks Are Reaching Populations That Traditional Banks Cannot
Approximately 1.4 billion adults worldwide remain unbanked, according to the World Bank’s 2024 Global Findex Database. That number has dropped from 1.7 billion in 2017, and digital banking is the primary reason. Mobile-based financial services have made it possible to open accounts, send money, and access credit without visiting a physical branch — removing the geographic, cost, and documentation barriers that kept billions of people outside the formal financial system.
In sub-Saharan Africa, mobile money accounts outnumber traditional bank accounts by a ratio of nearly 3 to 1. M-Pesa alone serves 51 million active customers across seven African countries. In India, the Jan Dhan Yojana program — backed by digital identity through Aadhaar and real-time payments through UPI — has opened more than 500 million bank accounts since 2014. Digital banking customers are expected to exceed 3.6 billion by 2028, with the fastest growth in markets with the lowest traditional banking penetration.
Lower Costs Make Banking Viable for More People
Traditional bank branches cost $1 million to $3 million to build and $500,000 to $1 million per year to operate, according to Accenture. That cost structure makes it economically impractical to serve low-income customers or rural communities where transaction volumes are small. Digital banks eliminate most of these costs. The marginal cost of adding a new customer on a cloud-based banking platform is close to zero.
This cost advantage allows digital banks to offer services that traditional banks consider unprofitable. TymeBank in South Africa offers fee-free transaction accounts with no minimum balance. GCash in the Philippines provides micro-savings accounts with no fees. Fintech revenue growing at 23% annually includes significant contributions from platforms serving previously unbanked populations in emerging markets.
Digital Identity Removes Documentation Barriers
One of the biggest barriers to financial access has been identity verification. Traditional banks require government-issued photo ID, proof of address, and sometimes proof of income — documents that many people in developing countries do not have. Digital identity systems are solving this problem at scale.
India’s Aadhaar system, which covers 1.4 billion people, allows account opening with a single biometric verification. Brazil’s digital CPF (tax ID) system enables remote identity verification for financial services. In East Africa, mobile money providers use SIM card registration data — which is more widely available than formal ID — to verify customer identity. McKinsey estimates that digital identity systems could provide access to financial services for an additional 1.7 billion people globally by 2030.
Credit Access Through Alternative Data
Traditional credit scoring relies on repayment history from formal financial products. People who have never had a bank account or credit card — approximately 3 billion adults globally — have no credit score and cannot access formal lending. Digital banking platforms are changing this by using alternative data for credit decisions.
Companies like Tala, Branch, and M-Shwari use mobile phone data — call patterns, app usage, mobile money transaction history — to assess creditworthiness. Tala has disbursed more than $4 billion in loans across Kenya, the Philippines, Mexico, and India, with an average loan size of $50 to $500. These micro-loans are too small for traditional banks to process profitably but are viable on digital platforms with automated underwriting.
Government Programs Are Accelerating Access
Governments are using digital banking infrastructure to distribute social payments and subsidies. India’s Direct Benefit Transfer program deposited $330 billion into Jan Dhan accounts between 2014 and 2024, reaching beneficiaries who previously received cash through intermediaries who took a cut. Brazil’s Auxilio Brasil program uses digital payment channels to reach 21 million families. Nigeria’s National Social Investment Program distributes cash transfers through mobile wallets.
These government programs create a flywheel effect. Once people have a digital account for receiving government payments, they begin using it for other financial services — savings, bill payments, transfers, and eventually credit. The growth in fintech investment is funding the infrastructure that makes this progression possible. Digital banking has already brought 300 million previously unbanked adults into the financial system since 2017, and the pace of inclusion is accelerating as smartphone costs continue to fall and mobile networks expand into rural areas.
