Banking - Europe

Europe

In 2024, the projected Net Interest Income in the Banking market in Europe is estimated to reach US$1.37tn.
Traditional Banks are expected to dominate this market segment with a projected market volume of US$0.94tn in the same year.
Looking ahead, the Net Interest Income is anticipated to demonstrate an annual growth rate (CAGR 2024-2028) of 2.63%, resulting in a market volume of US$1.52tn by 2028.
When compared globally, it is noteworthy that in China is expected to generate the highest Net Interest Income, amounting to US$5,659.0bn in 2024.
In the banking market in Europe, Switzerland continues to be a global leader in private banking services.

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

Over the past decade, the Banking market in Europe has seen significant transformations and developments.

Customer preferences: Customers in Europe are increasingly seeking digital banking solutions, leading to a rise in online and mobile banking services. This shift is driven by the convenience and accessibility offered by digital platforms, allowing customers to perform transactions and manage their finances anytime, anywhere.

Trends in the market: In countries like Germany and the Netherlands, traditional brick-and-mortar banks are facing competition from digital challenger banks that are gaining popularity among tech-savvy consumers. These challenger banks often offer lower fees, higher interest rates, and innovative features that appeal to a younger demographic. As a result, traditional banks are investing in their digital capabilities to stay competitive in the market.

Local special circumstances: In the United Kingdom, Brexit has had a significant impact on the Banking market. Many financial institutions have relocated their operations from London to other European cities, leading to changes in the competitive landscape. Additionally, regulatory changes post-Brexit have influenced how banks operate and serve customers in the region.

Underlying macroeconomic factors: The low interest rate environment in Europe has put pressure on banks' profitability. With the European Central Bank maintaining historically low interest rates, banks are exploring alternative revenue streams and cost-cutting measures to maintain their financial performance. Additionally, economic uncertainty and geopolitical events have influenced consumer confidence and investment decisions, impacting the overall banking sector in Europe.

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.