Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Iceland

Iceland

In Iceland, the Traditional Retail Banking market market is anticipated to witness a significant increase in Net Interest Income, which is projected to reach US$1.93bn in 2024.
Looking ahead, the market is expected to maintain a steady growth rate, with an annual CAGR of 5.31% between 2024 and 2029.
By the end of 2029, the Net Interest Income is estimated to reach a market volume of US$2.50bn.
When compared to other countries globally, it is worth noting that China is expected to generate the highest Net Interest Income, amounting to US$2,426.0bn in 2024.
In Iceland, traditional retail banking has seen a decline in branch utilization as digital banking becomes increasingly popular among consumers.

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 Iceland is experiencing a shift in customer preferences, trends, and local special circumstances that are shaping its development.

Customer preferences: Customers in Iceland are increasingly seeking convenience and efficiency in their banking services. This has led to a growing demand for digital banking solutions that offer 24/7 access to accounts, quick transactions, and personalized services tailored to individual needs. As a result, traditional brick-and-mortar bank branches are facing challenges in retaining customers who prefer the flexibility and accessibility of online and mobile banking.

Trends in the market: One prominent trend in the Icelandic Traditional Retail Banking market is the rise of neobanks and fintech companies. These digital-first financial institutions are gaining popularity among tech-savvy customers who value innovation, simplicity, and competitive pricing. Neobanks are able to offer lower fees, higher interest rates on savings accounts, and intuitive mobile apps that appeal to a younger demographic. As a result, traditional banks in Iceland are facing increased competition and are being pushed to enhance their digital offerings to stay relevant in the market.

Local special circumstances: Iceland's small population and geographically dispersed communities present unique challenges for traditional retail banks. The cost of operating physical branches in remote areas with low population density can be prohibitive, leading some banks to consolidate their branch networks and invest more heavily in digital channels. Additionally, Iceland's strong emphasis on financial security and stability, especially in the aftermath of the 2008 financial crisis, has made customers more cautious and selective in their choice of banking providers. Trust and reliability are key factors influencing customer loyalty in the Icelandic banking sector.

Underlying macroeconomic factors: The Icelandic Traditional Retail Banking market is also influenced by broader macroeconomic factors such as interest rates, inflation, and economic growth. Fluctuations in the global economy, changes in regulatory environment, and shifts in consumer behavior can impact the profitability and competitiveness of banks operating in Iceland. As the country continues to recover from the effects of past financial crises and adapts to new market dynamics, traditional retail banks will need to innovate and evolve to meet the evolving needs and expectations of Icelandic 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.