Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Eastern Africa

Eastern Africa

In Eastern Africa, the Traditional Retail Banking market market is set to witness a significant rise in Net Interest Income.
By 2024, it is projected to reach US$18.74bn.
Looking ahead, the market is expected to show a steady annual growth rate (CAGR 2024-2029) of 2.30%, resulting in a substantial increase in market volume to US$21.00bn by 2029.
When compared globally, it is worth noting that China will lead in generating the highest Net Interest Income.
In 2024 alone, China is expected to generate a staggering US$2,426.0bn in Net Interest Income.
The traditional retail banking market in Eastern Africa is experiencing a shift towards digital banking solutions, with mobile banking becoming increasingly popular among consumers in countries like Kenya.

Key regions: France, Brazil, Germany, United Kingdom, United States

Definition:
Traditional retail banking refers to the financial services sector that provides a range of financial products and services to individual consumers through store-based branches and other traditional channels. These services include personal loans, savings and checking accounts, credit cards, mortgages, and other financial products designed specifically for individual consumers.
Traditional retail 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.
Despite facing increased competition and changing customer preferences, traditional retail banks continue to play a vital role in the financial landscape. They are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services.
Overall, traditional retail banking provides a wide range of financial services to individual consumers through established, trusted channels and continues to be an important part of the financial landscape.

Structure:
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., Bank of America Corp., and BNP Paribas.

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Analyst Opinion

The Traditional Retail Banking market in Eastern Africa is experiencing significant growth and transformation driven by various factors.

Customer preferences: Customers in Eastern Africa are increasingly demanding convenient and accessible banking services. They prefer seamless digital banking solutions that offer flexibility and ease of use. With the rise of smartphone penetration in the region, there is a growing preference for mobile banking and online transactions among customers.

Trends in the market: In Kenya, for example, there is a notable trend towards agent banking and mobile money services, with a large unbanked population being targeted through innovative financial inclusion initiatives. In Tanzania, the market is seeing a shift towards Islamic banking products to cater to the Muslim population's specific banking needs. Ethiopia, on the other hand, is experiencing a trend of liberalization in its banking sector, opening up opportunities for foreign investment and competition.

Local special circumstances: Each country in Eastern Africa presents unique circumstances shaping its retail banking market. In Rwanda, the government's focus on promoting a cashless economy has led to the rapid adoption of digital payment solutions. Uganda, with its diverse population spread across urban and rural areas, is seeing a push for branchless banking to reach customers in remote locations effectively. Burundi is working towards rebuilding its banking sector after years of political instability, with a focus on enhancing financial stability and expanding access to banking services.

Underlying macroeconomic factors: The overall economic growth in Eastern Africa, driven by factors such as population growth, urbanization, and increasing disposable income, is fueling the expansion of the retail banking sector. Regulatory reforms and efforts to improve financial infrastructure are also playing a crucial role in shaping the market dynamics. Additionally, the region's strong emphasis on financial inclusion and literacy is driving banks to develop products and services that cater to a diverse customer base, further propelling the growth of the traditional retail banking market in Eastern Africa.

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.