Banking - Central Asia

Central Asia

In 2024, the projected Net Interest Income in the Banking market of Central Asia is expected to reach US$23.57bn.
Traditional Banks are the dominant players in this market segment, with a projected market volume of US$23.16bn in the same year.
Looking ahead, the Net Interest Income is expected to demonstrate a Compound Annual Growth Rate (CAGR 2024-2029) of -10.45%, resulting in a market volume of US$13.57bn by 2029.
When it comes to global comparison, China is expected to generate the highest Net Interest Income, reaching US$4,332.0bn in 2024.
In Central Asia, the banking market is experiencing a shift towards digital banking solutions, with an increasing number of customers opting for online and mobile banking services.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in Central Asia is experiencing a significant transformation driven by changing customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Central Asia are increasingly demanding digital banking solutions that offer convenience, efficiency, and security. The younger population, in particular, is more inclined towards mobile and online banking services, leading to a rise in digital banking adoption across the region. Moreover, customers are seeking personalized services and products that cater to their specific financial needs and goals.

Trends in the market: One prominent trend in the Central Asian banking market is the expansion of Islamic banking services to cater to the growing Muslim population in the region. Islamic banking follows the principles of Sharia law and prohibits the payment or receipt of interest, making it an attractive alternative for customers seeking ethical and interest-free banking solutions. Additionally, there is a growing trend of consolidation and partnerships among banks in Central Asia to enhance their market presence, improve efficiency, and offer a wider range of financial products and services to customers.

Local special circumstances: Central Asia is a diverse region with varying levels of economic development and financial inclusion. Countries like Kazakhstan and Uzbekistan have been actively implementing financial reforms to modernize their banking sectors and attract foreign investments. On the other hand, countries like Tajikistan and Kyrgyzstan are facing challenges related to political instability, limited access to financing, and underdeveloped banking infrastructure. These local circumstances influence the pace and direction of banking market development in each country.

Underlying macroeconomic factors: The banking market in Central Asia is also influenced by macroeconomic factors such as GDP growth, inflation rates, exchange rate fluctuations, and government policies. Stable economic growth and low inflation rates generally create a favorable environment for banking activities, including lending, investment, and risk management. Government initiatives to promote financial inclusion, strengthen regulatory frameworks, and enhance cybersecurity measures also play a crucial role in shaping the banking landscape in Central Asia.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.