Traditional Banks - Eastern Europe

Eastern Europe

In 2024, the Net Interest Income in the Traditional Banks market market in Eastern Europe is projected to reach US$90.35bn.
The market is predominantly dominated by Traditional Retail Banking, which is expected to have a market volume of US$51.11bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of 2.48%, leading to a market volume of US$102.10bn by 2029.
When compared globally, China is expected to generate the highest Net Interest Income, with a projected amount of US$3,869.0bn in 2024.
In Eastern Europe, traditional banks are facing increasing competition from digital banking solutions, forcing them to adapt and innovate in order to remain relevant in the market.

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

In Eastern Europe, the Traditional Banks market is experiencing notable developments and trends driven by various factors.

Customer preferences: Customers in Eastern Europe are increasingly seeking personalized banking services and digital solutions. They are looking for convenient ways to manage their finances, such as online banking, mobile apps, and contactless payment options. This shift in preferences is pushing traditional banks in the region to innovate and enhance their digital offerings to stay competitive and meet customer expectations.

Trends in the market: One notable trend in the Traditional Banks market in Eastern Europe is the consolidation of smaller banks. Larger banks are acquiring smaller ones to expand their market presence, increase their customer base, and achieve economies of scale. This trend is reshaping the competitive landscape in the region and leading to the emergence of stronger, more resilient banking institutions.

Local special circumstances: Eastern Europe has a diverse banking market with varying levels of economic development and regulatory environments across countries. For instance, countries like Poland and Czech Republic have well-developed banking sectors with a high level of competition, while others are still in the process of modernizing their banking infrastructure. These differences create unique challenges and opportunities for traditional banks operating in the region.

Underlying macroeconomic factors: The macroeconomic environment in Eastern Europe plays a significant role in shaping the Traditional Banks market. Factors such as GDP growth, inflation rates, interest rates, and regulatory policies impact the profitability and stability of banks in the region. Economic stability and growth contribute to increased demand for banking services, while economic downturns can lead to challenges such as loan defaults and reduced lending activity. Traditional banks in Eastern Europe must navigate these macroeconomic factors to sustain their growth and profitability in a dynamic market environment.

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.