Traditional Banks - Israel

Israel

In 2024, the projected Net Interest Income in the Traditional Banks market market of Israel is expected to reach US$18.12bn.
Traditional Retail Banking is the dominant segment in this market, with a projected market volume of US$9.99bn in the same year.
Looking ahead, the Net Interest Income is expected to show an annual growth rate (CAGR 2024-2029) of -2.79%, resulting in a market volume of US$15.73bn by 2029.
It is worth noting that, in comparison to other countries globally, in China is anticipated to generate the highest Net Interest Income, reaching US$3,869.0bn in 2024.
Traditional banks in Israel have been slow to adopt digital banking services, resulting in a growing demand for fintech alternatives.

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

Amidst the dynamic landscape of the Israeli banking sector, the Traditional Banks market in Israel is experiencing notable trends and developments.

Customer preferences: Israeli customers exhibit a strong preference for traditional banking services offered by established banks. They value the stability, reliability, and extensive branch networks that traditional banks provide. Additionally, there is a trust factor associated with these long-standing institutions, which further solidifies customer loyalty.

Trends in the market: In Israel, the Traditional Banks market is witnessing a shift towards digitalization and innovation to stay competitive in the face of emerging fintech companies. Traditional banks are investing heavily in technology to enhance customer experience, streamline operations, and offer a wider range of digital services. This trend is driven by changing customer expectations for convenient and efficient banking solutions.

Local special circumstances: One of the unique characteristics of the Israeli banking market is the strong regulatory environment that traditional banks operate within. The regulatory framework in Israel is designed to ensure financial stability, consumer protection, and compliance with international standards. This environment influences the strategies and operations of traditional banks in the country, shaping the market dynamics.

Underlying macroeconomic factors: The development of the Traditional Banks market in Israel is also influenced by macroeconomic factors such as economic growth, interest rates, and government policies. Economic stability and growth contribute to the overall performance of traditional banks, while fluctuations in interest rates impact their lending and investment activities. Government policies related to banking regulations and market competition play a crucial role in shaping the future trajectory of the Traditional Banks market in Israel.

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.