Digital technology has greatly expanded within financial services over the past decade. Yet even today, the range and quality of services available to low-income customers remain limited because of constraints in the business models, management culture, and operating procedures of traditional banks. A new generation of fully digital retail banks has emerged and promises to offer more and better services through branch-lite distribution channels that reach underserved areas. This Working Paper tells the stories of three of these banks: TymeBank in South Africa, Kotak 811 in India, and UnionBank in the Philippines.
Impact / Outcome
Customer acquisition costs for digital banks can fall to around 5–15 percent of the costs incurred by traditional retail banks.
Digital banks can operate alternative distribution channels at just 1–5 percent of the cost traditional retail banks pay to operate a branch.
Cost-to-income can be more than 20 percent lower for banks serving customers through digital channels than for banks relying on traditional channels.
Digital banks can effectively target underserved segments. Such segments make up 50–60 percent of the studied banks’ customer bases, on average.
Key Metrics
Digital in banking
Operating model
Fully privateYear published
01 October 2021 
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