Traditional Banks - Saudi Arabia

Saudi Arabia

In Saudi Arabia, the projected Net Interest Income in the Traditional Banks market market is expected to reach US$44.33bn in the year 2024.
It is worth noting that Traditional Commercial Banking dominates this market segment with a projected market volume of US$26.42bn in the same year.
Looking ahead, the Net Interest Income is anticipated to experience an annual growth rate (CAGR 2024-2029) of 4.26%, resulting in a market volume of US$54.61bn by the year 2029.
When comparing globally, it is interesting to highlight that the highest Net Interest Income is expected to be generated China, reaching US$3,869.0bn in 2024.
Traditional banks in Saudi Arabia are adapting to the rising demand for digital banking services to cater to tech-savvy customers.

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 Saudi Arabia is experiencing significant growth and development in recent years.

Customer preferences: Customers in Saudi Arabia are increasingly opting for traditional banking services due to the trust and reliability associated with established brick-and-mortar banks. The preference for face-to-face interactions and personalized services offered by traditional banks remains strong in the country.

Trends in the market: One of the key trends in the Traditional Banks market in Saudi Arabia is the expansion of services to cater to the growing population and increasing demand for financial products. Traditional banks are investing in digital transformation to enhance customer experience and improve operational efficiency. Additionally, there is a trend towards offering Sharia-compliant banking services to meet the needs of the predominantly Muslim population in the country.

Local special circumstances: Saudi Arabia has a unique regulatory environment that influences the operations of traditional banks in the country. The strict adherence to Islamic banking principles and regulations set by the Saudi Arabian Monetary Authority (SAMA) shapes the way traditional banks conduct their business in the country. This regulatory framework also drives innovation in Sharia-compliant financial products and services.

Underlying macroeconomic factors: The growth of the Traditional Banks market in Saudi Arabia is also influenced by macroeconomic factors such as the overall economic stability of the country, government initiatives to promote financial inclusion, and the increasing disposable income of the population. As the economy diversifies and expands, traditional banks are well-positioned to capitalize on the opportunities presented in the market.

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.