Banking - Eastern Africa

Eastern Africa

In Eastern Africa, the projected Net Interest Income in the Banking market is estimated to reach US$53.53bn in 2024.
Traditional Banks dominate this market segment, with a projected market volume of US$53.04bn in 2024.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of 4.78%, resulting in a market volume of US$67.60bn by 2029.
It is worth noting that when compared globally, China is expected to generate the highest Net Interest Income, reaching US$4,332.0bn in 2024.
In Eastern Africa, the banking sector is experiencing a shift towards digital banking solutions, with mobile banking becoming increasingly popular among consumers.

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 Eastern Africa is experiencing a shift in customer preferences, leading to notable trends and developments in the industry.

Customer preferences: Customers in Eastern Africa are increasingly gravitating towards digital banking solutions, driven by the convenience and accessibility they offer. Mobile banking and digital payment platforms are gaining popularity among the tech-savvy population, leading to a surge in demand for innovative fintech services. Additionally, there is a growing preference for personalized banking experiences and sustainable banking practices in the region.

Trends in the market: In Kenya, the banking sector is witnessing a rise in strategic partnerships between traditional banks and fintech companies to enhance service delivery and reach a wider customer base. This trend is fueled by the need to stay competitive in a rapidly evolving market landscape. Moreover, there is a growing emphasis on financial inclusion initiatives to cater to the unbanked population in countries like Tanzania and Uganda, leading to the expansion of banking services in rural areas.

Local special circumstances: Ethiopia stands out in the Eastern African banking market due to its state-controlled financial sector, which has limited foreign investment and hindered the growth of private banks. However, recent government reforms aimed at liberalizing the economy are expected to open up opportunities for foreign banks to enter the market and drive competition. In contrast, countries like Rwanda have made significant strides in promoting a cashless economy through initiatives like the use of mobile money for transactions, reflecting a unique approach to financial innovation in the region.

Underlying macroeconomic factors: The economic stability and regulatory environment in Eastern Africa play a crucial role in shaping the banking market. Countries with sound macroeconomic policies and political stability, such as Mauritius and Seychelles, are witnessing steady growth in their banking sectors. On the other hand, countries facing economic challenges and regulatory uncertainties, like South Sudan and Somalia, are struggling to attract investments and foster a conducive banking environment. Overall, the diverse macroeconomic landscape in Eastern Africa influences the growth trajectory of the banking market in the region.

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.