Digital banking has spent the last decade proving it can scale. Across user acquisition, rapid onboarding, feature expansion, and funding rounds, the sector has demonstrated considerable capability. What it has been slower to prove is that it can convert that growth into durable profitability. According to TABInsights’ 2025 ranking, fewer than 25% of the 400-plus digital banks worldwide are currently profitable. Why is that?

What the growth story conceals

During a digital bank’s early phase, metrics such as monthly active users, account openings, and onboarding speed attract capital and media attention, but they measure traction, not sustainability. Several factors are often systematically underweighted during this phase: the quality of the underlying data, the scalability of the operating model, and the extent to which controls were built into the product or added after launch.

Revenue leakage is one of the clearest symptoms of this gap. Ernst & Young estimates that leakage ranges from 1% to 7% of gross revenue depending on the maturity of a bank’s processes and controls. It tends to spread gradually, described by practitioners as operating “like rust”, and short-term fixes frequently mask a problem that resurfaces within approximately two years. For a digital bank with $500 million in annual revenue, even a 3% leakage rate represents $15 million walking out of the door undetected.

The root causes are structural: pricing opacity, legacy or poorly integrated systems that fail to capture missing transactions, and manual reconciliation processes that do not scale. When transaction volumes increase five- or tenfold, the question becomes whether the underlying operating model scales at the same time.  

The cost of dormant relationships

Customer acquisition is expensive. Retaining a customer costs five to twenty-five times less than acquiring a new one (McKinsey, 2022), and the average cost to acquire a new retail banking customer reached $482 in the United States in 2023. Against that backdrop, a dormant account is not a neutral outcome, but an active cost. Core processing fees, statement delivery, compliance tracking and escheatment obligations all continue regardless of whether the customer transacts.

More significantly, dormant accounts distort the metrics that inform strategic decisions. Inflated relationship counts and overstated balance averages create a misleading picture of engagement and profitability. Institutions making investment decisions on the basis of those numbers are working from a flawed foundation.

The more durable commercial question is not how many accounts a digital bank has opened; it is what share of those accounts have become genuinely active and profitable relationships. PwC data indicates that initiatives targeting existing customers can generate a 70% return, compared with 10% for new customer acquisition. Banks offering bundled products, such as a current account, savings, and a credit card, see a 33% higher adoption rate than those presenting products individually (Gartner, 2023). The revenue opportunity within an existing customer base is consistently larger than the one being chased through acquisition.

The governance and controls gap

Fast onboarding creates serious downstream problems when it prioritises customer experience over complete information. A three-click journey that fails to collect sufficient data for AML checks, screening and ongoing compliance obligations does not eliminate compliance costs; it defers them, with interest. Controls retrofitted after a product has been built are structurally weaker and more expensive than those integrated from the outset.

This matters commercially as well as operationally. A digital bank that can demonstrate genuine rigour on data security, product suitability, and financial literacy has a commercial argument that becomes more valuable as the institution matures. Compliance helps rebuild trust in markets where fraud and data misuse have damaged customer confidence. That trust translates directly into the depth of customer relationships and, in turn, into the cross-sell opportunity that determines long-term profitability.

Revenue recovery starts with purpose

The cross-sell conversation requires a reframe. Customers do not want the financial product itself, but want what the product enables. A mortgage borrower wants a home. A business seeking working capital may be planning international expansion. When a bank understands the underlying intention, cross-selling becomes relevant rather than promotional and relevant cross-selling converts. Cutting customer churn by just 5% can increase bank profits by 25% to 95% (Harvard Business Review, 2022).

Architecture and data quality for identifying those intentions at scale are the missing piece in most digital banking models. Systematic segmentation, supported by reliable and consistent data, can surface commercial opportunities within the existing customer base. But it requires the operational foundation to have been built correctly during the scaling phase, not after the growth metrics have already flattened.

The question leadership should ask

The transition from growth to profitability requires institutions to examine what they have systematically underestimated during the scaling phase. Revenue leakage seeps in quietly. It is the cumulative effect of dormant accounts never reactivated, cross-sell opportunities never surfaced, and customer trust never built deeply enough to convert into a broader relationship.

These failures don't show up on a KPI, but the gap appears between what the institution’s data suggests and what its architecture can deliver. Closing that gap is not an innovation problem, but an execution and governance issue that starts with an honest assessment of what lies beneath the surface.

Is your organisation also facing revenue leakage and operates under a weak cross sale effort? Ora et Labora Advisory is here to fix exactly these kinds of issues.

References

Ernst & Young. (n.d.). Revenue leakage in banking: Causes and controls. https://www.ey.com
TABInsights. (2025). Digital banks maintain growth momentum with 61 of the top 100 reporting full-year profitability. https://decentralisedfinance.tabinsights.com
McKinsey & Company. (2022). Customer lifecycle management. https://www.mckinsey.com
PwC. (n.d.). Cross-selling and customer retention in retail banking. https://www.pwc.com
Gartner. (2023). Bundled product adoption rates in retail banking. https://www.gartner.com
Harvard Business Review. (2022). The value of customer retention. https://www.hbr.org
The Financial Brand. (n.d.). Four ways banks can improve cross-selling in the digital age. https://thefinancialbrand.com
Finextra. (n.d.). Where are the leaks? Plumbing tips for a banker. https://www.finextra.com
PCBB. (2025). The hidden cost of dormant accounts. https://www.pcbb.com

Some references are based on industry reports and illustrative examples rather than peer-reviewed academic sources, reflecting the limited public disclosure of revenue leakage data across financial institutions.