Traditional Banks - Latvia

Latvia

The projected Net Interest Income in the Traditional Banks market market in Latvia is expected to reach US$149.00m in 2024.
Traditional Retail Banking dominates the market in Latvia, with a projected market volume of US$81.51m in 2024.
The Net Interest Income is expected to show an annual growth rate (CAGR 2024-2029) of -25.56%, resulting in a market volume of US$34.05m by 2029.
In global comparison, China is expected to generate the highest Net Interest Income, reaching US$3,869.0bn in 2024.
Despite the rise of fintech and digital banking, traditional banks in Latvia continue to dominate the market due to a strong emphasis on personal relationships and trust.

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 Latvia has been experiencing notable changes and developments in recent years.

Customer preferences: Customers in Latvia are increasingly looking for personalized and convenient banking services. They prefer banks that offer digital solutions, such as online banking platforms and mobile applications, allowing them to manage their finances efficiently. Moreover, there is a growing demand for banks that provide a wide range of financial products and services, including loans, savings accounts, and investment opportunities.

Trends in the market: One of the prominent trends in the Traditional Banks market in Latvia is the shift towards digitalization. Traditional banks are investing in technology to enhance customer experience and streamline their operations. This includes the implementation of artificial intelligence, machine learning, and data analytics to offer personalized services and improve decision-making processes. Additionally, there is a trend towards collaboration between traditional banks and fintech companies to leverage each other's strengths and offer innovative solutions to customers.

Local special circumstances: Latvia's banking sector has been undergoing significant regulatory changes to strengthen transparency and combat money laundering and financial crime. This has led traditional banks to enhance their compliance measures and risk management practices to ensure regulatory compliance and maintain trust among customers. Moreover, the competitive landscape in the Latvian banking market is evolving, with new players entering the market and traditional banks adapting their strategies to stay competitive.

Underlying macroeconomic factors: The development of the Traditional Banks market in Latvia is also influenced by macroeconomic factors such as economic growth, interest rates, and regulatory environment. A stable economic environment and low-interest rates have encouraged borrowing and investment activities, driving the demand for banking services. Furthermore, regulatory reforms aimed at enhancing financial stability and consumer protection have reshaped the operating environment for traditional banks, requiring them to adapt to new regulatory requirements and standards.

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.