Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Southern Africa

Southern Africa

In Southern Africa, the Traditional Retail Banking market market is expected to witness a significant increase in Net Interest Income.
According to projections, by 2024, the Net Interest Income is estimated to reach US$4.34bn.
Moreover, it is anticipated that the market will continue to grow at a compound annual growth rate (CAGR 2024-2029) of -4.88%, resulting in a market volume of US$3.38bn by 2029.
When compared to global figures, it is noteworthy that China is expected to generate the highest Net Interest Income.
In 2024, the projected Net Interest Income China is a staggering US$2,426.0bn.
In Southern Africa, traditional retail banking is facing increased competition from digital banking platforms, forcing banks to innovate and enhance their digital offerings to stay relevant in the market.

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 Southern Africa is experiencing significant developments and trends driven by changing customer preferences, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Southern Africa are increasingly demanding more convenient and accessible banking services. With the rise of digitalization and mobile technology, there is a growing preference for online and mobile banking solutions. Customers are seeking seamless and efficient banking experiences that allow them to conduct transactions anytime, anywhere. Additionally, there is a shift towards personalized services and products that cater to the specific needs of individual customers.

Trends in the market: In South Africa, one of the key countries in the Southern African region, there is a noticeable trend towards banks investing in digital transformation. Traditional banks are expanding their online and mobile banking offerings to meet the evolving needs of customers. Moreover, there is a rise in the adoption of fintech solutions and partnerships between traditional banks and fintech companies to enhance service delivery and customer experience. This trend is driven by the increasing competition in the market and the need to differentiate offerings in a crowded landscape.

Local special circumstances: In countries like Zimbabwe and Zambia, factors such as regulatory environments, political stability, and infrastructure development play a significant role in shaping the traditional retail banking market. These countries face unique challenges that impact the operations and growth of banks. For example, in Zimbabwe, the currency volatility and economic instability have led to a shift towards alternative banking solutions and a greater emphasis on financial inclusion initiatives. In Zambia, the government's efforts to improve financial literacy and expand banking services to rural areas are driving changes in the traditional retail banking sector.

Underlying macroeconomic factors: The traditional retail banking market in Southern Africa is also influenced by broader macroeconomic factors such as GDP growth, inflation rates, and interest rates. Economic stability and growth contribute to the overall performance of the banking sector, as they impact factors like loan demand, interest income, and investment opportunities. In countries where there is economic uncertainty or volatility, traditional banks may face challenges in terms of credit quality, profitability, and expansion opportunities. Therefore, macroeconomic conditions play a crucial role in shaping the landscape of the traditional retail banking market in Southern 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.