Traditional Banks - Southeast Asia

Southeast Asia

In 2024, the projected Net Interest Income in the Traditional Banks market market in Southeast Asia is expected to reach a substantial amount of US$133.50bn.
Traditional Retail Banking is the dominant segment within this market, with a projected market volume of US$76.74bn in 2024.
Looking ahead, the Net Interest Income is anticipated to display a steady annual growth rate (CAGR 2024-2029) of 2.96%, resulting in a market volume of US$154.50bn by 2029.
It is worth noting that in terms of global comparison, in China is expected to generate the highest Net Interest Income, reaching US$3,869.0bn in 2024.
In Singapore, traditional banks are facing stiff competition from digital banking players, forcing them to embrace technology and innovate their services to stay relevant in the market.

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 Southeast Asia is experiencing significant growth and development.

Customer preferences: Customers in Southeast Asia are increasingly valuing the convenience and accessibility offered by traditional banks. They appreciate the wide network of branches and ATMs, as well as the personalized service provided by traditional banks. Additionally, many customers still prefer face-to-face interactions when it comes to complex financial transactions or advice.

Trends in the market: In Indonesia, there is a growing trend of traditional banks expanding their digital offerings to compete with digital-only banks. This includes enhancing mobile banking apps, introducing online account opening processes, and investing in digital payment solutions. These efforts are aimed at capturing the tech-savvy younger population while retaining existing customers who value traditional banking services.

Local special circumstances: In the Philippines, the regulatory environment plays a significant role in shaping the traditional banking market. The central bank's initiatives to promote financial inclusion and improve cybersecurity have pushed traditional banks to innovate and enhance their services. Additionally, the archipelagic nature of the Philippines presents unique challenges for traditional banks in terms of expanding their physical presence and reaching customers in remote areas.

Underlying macroeconomic factors: In Malaysia, the stability of the economy and the government's support for the banking sector have contributed to the growth of traditional banks. The country's robust regulatory framework and infrastructure development have created a conducive environment for traditional banks to thrive. Moreover, Malaysia's position as a financial hub in the region has attracted investments and fostered competition among traditional banks, leading to better services for customers.

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.