Traditional Banks - Iceland

Iceland

In 2024, the projected Net Interest Income in the Traditional Banks market market of Iceland is expected to reach US$4.12bn.
Traditional Commercial Banking dominates the market, with a projected market volume of US$2.19bn in 2024.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of 5.56%, resulting in a market volume of US$5.40bn by 2029.
In global comparison, China is expected to generate the highest Net Interest Income, amounting to US$3,869.0bn in 2024.
Icelandic traditional banks are embracing digital transformation to stay competitive in the rapidly evolving banking 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

The Traditional Banks market in Iceland has been experiencing a shift in customer preferences, trends, and local special circumstances that are shaping its development.

Customer preferences: Customers in Iceland are increasingly seeking personalized banking services that cater to their individual needs and preferences. With the rise of digital banking solutions, customers are looking for seamless online and mobile banking experiences that offer convenience and efficiency. Moreover, there is a growing demand for sustainable banking practices, with customers showing interest in banks that prioritize environmental and social responsibility in their operations.

Trends in the market: One prominent trend in the Traditional Banks market in Iceland is the consolidation of smaller banks to improve competitiveness and efficiency in the face of changing customer demands and regulatory requirements. This trend is driven by the need for banks to streamline their operations and invest in technology to remain relevant in a rapidly evolving market. Additionally, there is a growing focus on innovation, with banks exploring new technologies such as artificial intelligence and blockchain to enhance their service offerings and improve customer experience.

Local special circumstances: Iceland's unique economic and regulatory environment plays a significant role in shaping the Traditional Banks market. The country's small population and isolated geographical location present challenges for banks in terms of reaching a broad customer base and managing operational costs. Additionally, Iceland's strict regulatory framework, aimed at maintaining financial stability and consumer protection, influences the way banks operate and innovate in the market.

Underlying macroeconomic factors: The Traditional Banks market in Iceland is also influenced by broader macroeconomic factors such as economic growth, inflation, and interest rates. As the Icelandic economy continues to recover from the 2008 financial crisis, banks are faced with the challenge of supporting lending activities while managing risks effectively. Moreover, fluctuations in global economic conditions and geopolitical events can impact Iceland's economy and financial sector, requiring banks to remain vigilant and adaptable in their strategies.

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.