Banking - Southern Africa

Southern Africa

In Southern Africa, the Banking market is expected to witness a significant increase in Net Interest Income, projected to reach US$8.96bn by 2024.
Traditional Banks hold the dominant position in this market segment, with a projected market volume of US$8.10bn in 2024.
Looking ahead, the Net Interest Income is anticipated to exhibit a steady annual growth rate (CAGR 2024-2029) of -6.92%, resulting in a market volume of US$6.26bn by 2029.
When compared globally, it is noteworthy that China is expected to generate the highest Net Interest Income, reaching US$4,332.0bn in 2024.
Southern Africa is experiencing a surge in digital banking adoption, with more consumers opting for online 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 Southern Africa is experiencing a significant transformation driven by various factors.

Customer preferences: Customers in Southern Africa are increasingly looking for more convenient and accessible banking services. With the rise of digitalization, there is a growing demand for online and mobile banking options that offer flexibility and efficiency. Additionally, customers are seeking personalized services that cater to their specific financial needs and goals.

Trends in the market: In South Africa, one of the largest economies in the region, traditional brick-and-mortar banks are facing competition from digital-only banks and fintech companies. These new entrants are disrupting the market with innovative products and services that appeal to tech-savvy consumers. As a result, traditional banks are investing in digital transformation to stay competitive and meet changing customer expectations.

Local special circumstances: Countries in Southern Africa face unique challenges such as regulatory hurdles, political instability, and economic uncertainty. These factors can impact the banking sector by affecting consumer confidence, investment decisions, and overall market stability. In addition, the region's diverse population with varying levels of financial literacy and access to banking services presents both opportunities and challenges for industry players.

Underlying macroeconomic factors: The banking market in Southern Africa is influenced by macroeconomic factors such as GDP growth, inflation rates, and interest rates. Economic stability and growth are essential for the banking sector to thrive as it impacts lending practices, investment opportunities, and overall business performance. External factors like global economic trends and commodity prices also play a role in shaping the market dynamics 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.