Banking - Iceland

Iceland

In 2024, the projected Net Interest Income in the Banking market in Iceland is expected to reach US$5.10bn.
Traditional Banks are set to dominate this market segment, with a projected market volume of US$4.12bn in the same year.
Looking ahead, the Net Interest Income is expected to experience a compound annual growth rate (CAGR 2024-2029) of 5.83%, resulting in a market volume of US$6.77bn by 2029.
When compared globally, China is expected to generate the highest Net Interest Income, with an estimated amount of US$4,332.0bn in 2024.
Iceland's banking market is experiencing a surge in digital banking services, with a growing number of customers opting for online banking platforms over traditional brick-and-mortar branches.

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

Amidst the unique landscape of Iceland, the Banking market has been witnessing interesting developments and trends.

Customer preferences: Customers in Iceland are increasingly leaning towards digital banking solutions, driven by the convenience and accessibility they offer. The preference for online banking services has been steadily rising as customers seek more efficient ways to manage their finances. Additionally, there is a growing demand for personalized banking experiences tailored to individual needs and preferences.

Trends in the market: One notable trend in the Icelandic Banking market is the emphasis on sustainability and ethical banking practices. With a strong focus on environmental consciousness in the country, banks are incorporating ESG (Environmental, Social, and Governance) criteria into their operations and investment decisions. This trend aligns with global movements towards responsible banking and reflects Iceland's commitment to sustainable development.

Local special circumstances: Iceland's small population size and isolated location present unique challenges and opportunities for the Banking market. The limited domestic market size encourages banks to explore international expansion and diversification strategies to sustain growth. Moreover, the country's economic reliance on industries such as tourism and fishing influences the banking sector's risk management practices and lending activities.

Underlying macroeconomic factors: The stability of Iceland's economy, characterized by low unemployment rates and steady GDP growth, provides a favorable environment for the Banking market to thrive. The country's strong regulatory framework and emphasis on financial stability contribute to the overall resilience of its banking sector. Additionally, Iceland's position as a global leader in renewable energy presents opportunities for banks to finance sustainable projects and support the country's transition towards a greener economy.

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.