Core Viewpoint - Direct banks, once seen as pioneers in the banking industry's embrace of the internet, are now facing significant challenges due to overlapping functionalities with mobile banking and a lack of differentiated competitive strategies, leading to a decline in their numbers and relevance [1][4][9]. Group 1: Development and Decline of Direct Banks - Direct banks were initially launched in 2013 by Beijing Bank and ING Group, becoming a popular innovation in the banking sector, with over 100 banks offering such services at their peak [1][4]. - The decline began around 2019, with many banks, including Minsheng Bank and Guangfa Bank, migrating their direct banking services to mobile banking apps, resulting in a significant reduction in the number of operational direct bank apps [4][9]. - Currently, only about 13 direct bank apps remain available, primarily from small local banks, indicating a drastic reduction from their peak [6][9]. Group 2: Operational Challenges - Direct banks initially thrived due to their online, low-cost operational model but struggled with overlapping functionalities with mobile banking, leading to increased user switching costs and competitive disadvantages [9][10]. - The operational model of many direct banks relies on their parent banks, limiting their decision-making autonomy and slowing product iteration, which further hampers their competitiveness [9][10]. - Only two independent direct banks exist, with both facing significant challenges in their financial performance, indicating the difficulties of sustaining such models in the current market [9][10]. Group 3: Future Prospects - Analysts suggest that the future of direct banks may involve either becoming specialized modules within mobile banking, focusing on high-yield deposits and customized financial products, or transforming into open banking platforms that integrate financial services into everyday life through API connections [10][11]. - The integration of advanced technologies such as AI and the metaverse could provide opportunities for direct banks to innovate and enhance their service offerings, potentially reviving their earlier success [11].