Traditional Banks - Malaysia

Malaysia

In Malaysia, the projected Net Interest Income in the Traditional Banks market market for 2024 is expected to reach US$16.41bn.
Traditional Commercial Banking dominates the market with a projected market volume of US$10.34bn in 2024.
Looking ahead, the Net Interest Income is anticipated to display an annual growth rate of 2.04% (CAGR 2024-2029), resulting in a market volume of US$18.15bn by 2029.
When compared globally, in China is expected to generate the highest Net Interest Income, reaching US$3,869.0bn in 2024.
Traditional banks in Malaysia are facing increased competition from digital banking solutions, forcing them to innovate and offer more convenient services to stay relevant.

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 Malaysia has been experiencing significant growth and development in recent years.

Customer preferences: Customers in Malaysia are increasingly valuing personalized services and digital banking solutions from traditional banks. The convenience of online and mobile banking platforms has become a key factor for customers when choosing their banking provider. Additionally, there is a growing demand for sustainable and socially responsible banking practices among Malaysian consumers.

Trends in the market: One notable trend in the Traditional Banks market in Malaysia is the expansion of Islamic banking services. With Malaysia being a predominantly Muslim country, the demand for Shariah-compliant financial products and services has been on the rise. Traditional banks in Malaysia have been actively offering Islamic banking solutions to cater to this specific customer segment. Another trend is the collaboration between traditional banks and fintech companies to enhance customer experience and offer innovative financial products.

Local special circumstances: In Malaysia, the government plays a significant role in shaping the banking sector through regulations and policies. The central bank, Bank Negara Malaysia, closely monitors the operations of traditional banks to ensure financial stability and consumer protection. Moreover, the diverse cultural landscape of Malaysia influences the preferences and behaviors of customers towards traditional banking services.

Underlying macroeconomic factors: The steady economic growth and increasing disposable income in Malaysia have contributed to the expansion of the Traditional Banks market. As the middle-class population continues to grow, there is a higher demand for banking products such as loans, mortgages, and investment services. Furthermore, the low interest rate environment set by the central bank has encouraged borrowing and investment activities, driving the overall growth of the banking sector in Malaysia.

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.