Banking - Africa

Africa

In Africa, the Banking market is expected to witness a substantial increase in its Net Interest Income, with a projected value of US$282.60bn in 2024.
The market is primarily dominated by Traditional Banks, forecasted to achieve a market volume of US$279.00bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit a steady growth rate, with a compound annual growth rate (CAGR) of 4.79% between 2024 and 2028, resulting in a market volume of US$340.70bn by 2028.
When compared globally, in China is expected to generate the highest Net Interest Income, projected to reach US$5,659.0bn in 2024.
In Nigeria, the banking sector is experiencing a shift towards digitalization, with mobile banking and fintech solutions gaining popularity among consumers.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. 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.

Structure:

The market consists of two segments:
- The Traditional Banking 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.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises 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.

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 & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in Africa is experiencing significant growth and development, driven by various factors unique to the region.

Customer preferences: Customers in Africa are increasingly embracing digital banking solutions due to the convenience and accessibility they offer. Mobile banking is especially popular, allowing customers to conduct transactions and access financial services easily through their smartphones. This shift towards digital banking is reshaping the industry and driving traditional banks to innovate and adapt to changing customer preferences.

Trends in the market: In Nigeria, one of the largest banking markets in Africa, there is a trend towards consolidation and increased competition among banks. Mergers and acquisitions are becoming more common as banks seek to expand their market share and enhance their capabilities to meet the growing demand for financial services. Additionally, there is a focus on financial inclusion, with banks developing products and services tailored to the needs of unbanked populations in rural areas.

Local special circumstances: South Africa, as a more developed banking market in Africa, is seeing a rise in demand for sustainable banking practices. Customers are increasingly looking for banks that prioritize environmental and social responsibility, leading to the introduction of green banking products and initiatives. This trend is driven by a growing awareness of climate change and sustainability issues among the population.

Underlying macroeconomic factors: The economic growth and stability in countries like Kenya are contributing to the expansion of the banking market. A growing middle class and increasing urbanization are driving demand for banking services, creating opportunities for banks to diversify their offerings and reach new customer segments. Additionally, regulatory reforms aimed at strengthening the financial sector are boosting investor confidence and attracting foreign investment into the market.

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.