Traditional Banks - Western Africa

Western Africa

In 2024, the projected Net Interest Income in the Traditional Banks market market of Western Africa is estimated to reach US$77.90bn.
Traditional Retail Banking is expected to dominate this market segment, with a projected market volume of US$54.01bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of -6.86%, resulting in a market volume of US$54.60bn by 2029.
In comparison to other countries, China is expected to generate the highest Net Interest Income, with a projected amount of US$3,869.0bn in 2024.
Traditional banks in Western Africa are facing increasing competition from digital financial services providers.

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

Traditional banking in Western Africa is experiencing significant changes in response to evolving customer preferences and local special circumstances.

Customer preferences: Customers in Western Africa are increasingly seeking more convenient and efficient banking services. This shift in preferences is driving traditional banks in the region to adopt digital technologies to improve customer experience and reach a wider audience. Mobile banking and online services are becoming more popular among tech-savvy consumers, leading traditional banks to invest in digital infrastructure to meet these changing demands.

Trends in the market: In countries like Nigeria and Ghana, traditional banks are facing growing competition from fintech companies offering innovative financial solutions. To stay competitive, traditional banks are expanding their digital offerings and partnering with fintech firms to enhance their service delivery. Additionally, there is a trend towards financial inclusion in the region, with traditional banks developing products and services tailored to the needs of unbanked populations in rural areas.

Local special circumstances: Political and economic stability play a crucial role in shaping the traditional banking sector in Western Africa. Countries with stable governments and growing economies tend to attract more foreign investment, leading to increased competition among traditional banks. Additionally, cultural factors influence banking preferences, with some populations preferring face-to-face interactions with bank staff over digital channels. Traditional banks must navigate these local dynamics to effectively serve their diverse customer base.

Underlying macroeconomic factors: The economic growth and demographic trends in Western Africa are driving the expansion of the traditional banking sector. A young and growing population with increasing disposable income presents opportunities for traditional banks to offer a wide range of financial products and services. Moreover, regulatory reforms aimed at strengthening the banking sector and promoting financial stability are shaping the operating environment for traditional banks in the region.

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.