Traditional Banks - Azerbaijan

Azerbaijan

In 2024, the projected Net Interest Income in the Traditional Banks market market of Azerbaijan is expected to reach US$2.78bn.
Traditional Retail Banking dominates the market with a projected market volume of US$1.60bn in the same year.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of 3.55%, resulting in a market volume of US$3.31bn by 2029.
When compared globally, it is worth noting that the majority of Net Interest Income will be generated China, amounting to US$3,869.0bn in 2024.
Azerbaijan's traditional banks are facing increasing competition from digital banking platforms, leading to a shift in customer preferences.

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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Analyst Opinion

Over the past few years, the Traditional Banks market in Azerbaijan has shown steady growth and development, reflecting the evolving financial landscape in the country.

Customer preferences: Customers in Azerbaijan are increasingly looking for personalized banking services that cater to their individual needs and preferences. This shift towards more tailored services has pushed traditional banks to innovate and offer a wider range of products and digital solutions to meet customer demands.

Trends in the market: One notable trend in the Traditional Banks market in Azerbaijan is the increasing adoption of digital banking services. As more customers seek convenience and efficiency in their banking transactions, traditional banks are investing in digital platforms to provide seamless online and mobile banking experiences. This trend is reshaping the way banks interact with customers and is driving competition in the market.

Local special circumstances: Azerbaijan's banking sector is influenced by its strategic geographical location as a gateway between Europe and Asia. This unique position has attracted foreign investments and partnerships, leading to increased competition and innovation in the Traditional Banks market. Additionally, the government's efforts to promote financial inclusion and stability have created a conducive environment for the growth of traditional banks in the country.

Underlying macroeconomic factors: The macroeconomic stability and steady economic growth in Azerbaijan have contributed to the positive performance of the Traditional Banks market. As the economy continues to diversify and expand, traditional banks are presented with opportunities to expand their services and reach a broader customer base. Moreover, regulatory reforms and initiatives aimed at enhancing transparency and governance in the banking sector are further supporting the growth of traditional banks in Azerbaijan.

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.