Traditional Banks - Philippines

Philippines

In 2024, the projected Net Interest Income in the Traditional Banks market market in the Philippines is expected to reach US$7.48bn.
Traditional Retail Banking dominates this market segment, with a projected market volume of US$4.32bn in 2024.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of 25.87%, leading to a market volume of US$23.63bn by 2029.
When considering global comparison, it is noteworthy that China is expected to generate the highest Net Interest Income of US$3,869.0bn in 2024.
Traditional banks in the Philippines are facing increased competition from digital banking platforms, leading to a shift in customer preferences and the need for technological innovation.

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 Philippines is experiencing a shift in customer preferences, trends, and local special circumstances, driven by underlying macroeconomic factors.

Customer preferences: Customers in the Philippines are increasingly seeking digital banking solutions, leading traditional banks to invest in online and mobile banking platforms to cater to this demand. Convenience, efficiency, and 24/7 accessibility are becoming paramount for customers in their banking experiences.

Trends in the market: One trend shaping the Traditional Banks market in Philippines is the rising competition from digital banks and fintech companies. These new entrants are offering innovative products and services, forcing traditional banks to enhance their digital offerings and customer experience to stay competitive. Moreover, there is a growing focus on financial inclusion, with banks expanding their reach to unbanked and underserved populations through digital channels.

Local special circumstances: The geographical landscape of Philippines, with its widespread archipelago and diverse population, presents unique challenges for traditional banks in terms of expanding their branch networks and reaching remote areas. This has led to an increased emphasis on digital and mobile banking solutions to overcome geographical barriers and serve customers across the country.

Underlying macroeconomic factors: The growing middle class, increasing internet penetration, and rising smartphone adoption rates in Philippines are driving the demand for digital banking services. Moreover, the government's initiatives to promote financial literacy and inclusion are creating a conducive environment for the development of the Traditional Banks market in the country.

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.