Traditional Banks - Africa

Africa

In 2024, the projected Net Interest Income in the Traditional Banks market market of Africa is estimated to reach US$225.10bn.
Traditional Retail Banking dominates this market segment, with a projected market volume of US$126.20bn in the same year.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of 1.20%, leading to a market volume of US$238.90bn by 2029.
It is worth noting that in terms of global comparison, China is expected to generate the highest Net Interest Income, reaching US$3,869.0bn in 2024.
In Nigeria, traditional banks are facing increased competition from mobile money services, as more people opt for convenient and accessible financial solutions.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, 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 and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Market

Region

Region comparison

Currency

Analyst Opinion

Traditional banks in Africa are experiencing a period of dynamic growth and evolution, driven by various factors shaping the market landscape across the continent.

Customer preferences: Customers in Africa are increasingly seeking convenient and efficient banking services, prompting traditional banks to enhance their digital offerings. Mobile banking and online platforms have become crucial for reaching a wider customer base and meeting the evolving needs of tech-savvy consumers.

Trends in the market: In Nigeria, the largest economy in Africa, traditional banks are facing competition from fintech companies offering innovative financial solutions. To stay competitive, banks are investing in digital transformation, improving customer service, and expanding their product portfolios to cater to diverse customer segments.

Local special circumstances: South Africa stands out as a hub for traditional banking in Africa, with a well-established banking sector and a strong regulatory framework. However, the market is also witnessing a rise in digital banking services, leading traditional banks to adapt their strategies to maintain their market share and relevance.

Underlying macroeconomic factors: Across Africa, rapid urbanization, a growing middle class, and increasing access to technology are driving the demand for banking services. Traditional banks are capitalizing on these opportunities by expanding their branch networks, investing in technology infrastructure, and forging strategic partnerships to enhance their market position. Additionally, regulatory reforms and government initiatives aimed at promoting financial inclusion are creating a conducive environment for the growth of traditional banks 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.