Digital banking is booming due to Covid but remains unprofitable. Here’s why fintech executives and investors believe ‘rebundling’ is key for fast growing challenger banks in 2021.

• Challenger banks are likely to continue growing in importance in 2021 as digital finance options surge. 
• The coronavirus pandemic pushed digital banking to new adoption highs, and this is likely to be a major theme of 2021. 
• Neo-banks are increasingly “rebundling” banking services to offer more and more options to consumers in a more user-friendly way than existing institutions. 

The coronavirus pandemic has boosted adoption of challenger banks on both sides of the Atlantic. 

That momentum is expected to continue into 2021 as users and businesses become increasingly comfortable with managing their finances through an app, and expect improved levels of customer service and usability.

“As we head into 2021 and beyond the pandemic, we see a wide open market with plenty of opportunity for not just challenger banks but for financial technology as an industry to set themselves apart from incumbents to gain market share,” Marwan Forzley, CEO of Kleiner Perkins- and GV-backed payments platform Veem, told Business Insider.