The number of consumers who use only digital channels for banking surpassed 2 billion in 2025, according to a Capgemini World Retail Banking Report. That figure includes both customers of digital-only neobanks and traditional bank customers who have fully stopped visiting branches. In developed markets, between 35% and 55% of banking customers are now digital-only users. The transition to a digital-first world has implications for every aspect of banking: how products are designed, how services are delivered, how risks are managed, and how competitive advantage is built.
What Digital-First Banking Means in Practice
Digital-first banking means that the mobile app, not the branch, is the primary channel for customer interaction. It means products are designed for self-service rather than face-to-face consultation. It means customer onboarding happens through digital identity verification rather than paper forms. And it means customer support increasingly happens through chatbots and in-app messaging rather than phone calls and branch visits.
According to a McKinsey analysis of digital-first banking models, financial institutions that have fully committed to digital-first strategies have reduced their cost-to-serve by 40% to 60% compared with branch-centric models. They have also improved customer satisfaction scores by an average of 18 percentage points, primarily through faster service delivery and 24/7 availability.
Fintech platforms are growing faster than traditional banks, and the growth differential is largest in markets where digital-first adoption is most advanced.
Branch Closures and the Redistribution of Banking Access
The shift to digital-first banking is driving rapid branch closures. In the United States, more than 4,000 bank branches closed in 2025, according to S&P Global Market Intelligence. The UK has lost more than 6,000 branches since 2015, reducing the total network by more than half. Europe, Australia, and parts of Asia are experiencing similar trends.
According to Statista’s data on global bank branch closures, the worldwide number of bank branches declined from 530,000 in 2018 to 410,000 in 2025, a reduction of 23% in seven years. The pace of closure is accelerating as digital adoption increases and the economics of maintaining physical locations become harder to justify.
Branch closures raise concerns about financial access for elderly populations, rural communities, and people with disabilities who may rely on in-person services. Several countries, including the UK and France, have introduced legislation requiring banks to maintain minimum service levels in underserved areas. Fintech is expanding financial access for over 1.7 billion unbanked adults, but the access gap created by branch closures in developed markets is a separate challenge that technology alone may not fully address.
Technology Infrastructure for Digital-First Banking
Operating a digital-first bank requires different technology infrastructure than operating a branch-centric bank. Cloud computing, API-based architecture, real-time data processing, and AI-powered automation are the core technology components. According to a 2025 Accenture study on digital-first banking technology, banks that have adopted cloud-native core banking systems can launch new products 5 times faster than those running legacy mainframe systems.
Financial APIs are powering the next generation of fintech platforms, and they are equally important for traditional banks making the transition to digital-first models. APIs allow banks to integrate with fintech partners, connect to third-party data sources, and offer their services through non-banking platforms via embedded finance arrangements.
Competitive Implications
In a digital-first world, the sources of competitive advantage in banking are shifting. Branch networks and local market presence, which were primary competitive moats for decades, are declining in value. Technology capability, data analytics, and digital customer experience are rising in importance.
A BCG study on competitive advantage in digital banking found that the top five factors driving customer choice in digital-first banking are: app quality and reliability (cited by 72% of consumers), fee transparency (68%), speed of transactions (65%), personalized recommendations (48%), and breadth of integrated services (44%).
Digital banking customers are expected to exceed 3.6 billion by 2028. The institutions that compete most effectively for those customers will be those that have invested in the technology, design, and data capabilities needed to deliver a consistently excellent digital experience.
Capgemini’s data on 2 billion digital-only banking users represents a tipping point. In most developed markets, digital-first is now the majority model, not the alternative. Banks that have not committed to digital-first strategies are operating against the grain of consumer preference.
