Banking - Indonesia

Indonesia

In Indonesia, the projected Net Interest Income in the Banking market for 2024 is estimated to reach US$46.78bn.
Traditional Banks are expected to dominate the market with a projected market volume of US$43.22bn by 2024.
Looking ahead, the Net Interest Income is anticipated to demonstrate an annual growth rate (CAGR 2024-2028) of -7.16%, resulting in a market volume of US$34.76bn by 2028.
When comparing globally, it is noteworthy that in China is expected to generate the highest Net Interest Income, reaching US$5,659.0bn in 2024.
Indonesia's banking market is experiencing a surge in digital banking services, transforming the way consumers manage their finances.

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

Indonesia's Banking market is experiencing significant growth and development, driven by various factors that shape the industry landscape in the country.

Customer preferences: Customers in Indonesia are increasingly demanding more convenient and efficient banking services, leading to a rise in digital banking adoption. This shift is fueled by the growing tech-savvy population and the convenience offered by online and mobile banking platforms.

Trends in the market: One prominent trend in the Indonesian Banking market is the increasing competition among traditional banks and fintech companies. This competition is driving innovation and pushing banks to enhance their digital offerings to stay competitive in the market. Additionally, there is a growing trend of banks focusing on sustainable and socially responsible banking practices to meet the evolving needs of customers.

Local special circumstances: Indonesia's unique geographical landscape, with its vast archipelago comprising thousands of islands, presents challenges for traditional brick-and-mortar banks to reach all customers. This has led to an emphasis on digital banking solutions to overcome geographical barriers and provide financial services to a wider population.

Underlying macroeconomic factors: The steady economic growth and rising middle-class population in Indonesia are key macroeconomic factors driving the expansion of the Banking market. As more Indonesians enter the middle-income bracket, there is an increased demand for banking products and services, leading to market growth and development. Additionally, government initiatives to promote financial inclusion and improve access to banking services are also contributing to the growth of the Banking market in Indonesia.

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.