| The banking industry’s digital transformation initiatives are primarily divided into digitization drives undertaken by incumbents and new digital-only banking models, such as challenger banks and neobanks. In the latter, instead of going for a banking license, some digital banks elect to take a more direct route of entering the banking business by partnering with traditional banks (over-the-top), thereby creating a symbiotic relationship, beneficial to both parties. For example, Chime, Aspiration, and Tide have partnered with traditional banks. Some pure-play challengers have opted to obtain virtual banking licenses that allow them to run banks without the need for branches, offering services through digital-only channels. |
