Traditional Banks - Eastern Africa

Eastern Africa

In 2024, the projected Net Interest Income in the Traditional Banks market market in Eastern Africa is estimated to reach US$53.04bn.
Traditional Commercial Banking is the dominant segment within this market, with a projected market volume of US$34.31bn in 2024.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of 4.77%, leading to a market volume of US$66.94bn by 2029.
It is worth noting that, in a global comparison, China is projected to generate the highest Net Interest Income of US$3,869.0bn in 2024.
Traditional banks in Eastern Africa are adapting to the rise of mobile banking by offering digital services to meet customer demands.

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

Traditional banking in Eastern Africa has been experiencing significant growth and development in recent years, driven by various factors shaping the market in the region.

Customer preferences: Customers in Eastern Africa have shown a growing preference for traditional banking services despite the rise of digital banking options. Many still value the personalized service and face-to-face interactions offered by brick-and-mortar banks. Additionally, a large segment of the population, particularly in rural areas, still relies on traditional banks due to limited access to internet services and digital infrastructure.

Trends in the market: In countries like Kenya and Tanzania, traditional banks have been expanding their reach by opening more branches in both urban and rural areas. This strategy is aimed at tapping into underserved markets and increasing financial inclusion. Moreover, partnerships between traditional banks and fintech companies have been on the rise, leading to the development of innovative products and services that cater to a wider customer base.

Local special circumstances: One of the key factors influencing the traditional banking market in Eastern Africa is the regulatory environment. Each country in the region has its own set of regulations governing the banking sector, which impacts the operations and expansion strategies of traditional banks. For example, some countries have imposed limits on foreign ownership of banks, leading to a more localized banking landscape.

Underlying macroeconomic factors: The economic growth and stability in Eastern Africa have also played a significant role in the development of the traditional banking sector. As the region experiences steady economic growth, there is an increasing demand for banking services to support business activities and personal financial needs. Additionally, government initiatives promoting financial literacy and inclusion have further boosted 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.