Banking - Italy

Italy

In 2024, it is projected that the Net Interest Income in the Banking market in Italy will reach US$64.33bn.
Traditional Banks are expected to dominate the market with a projected market volume of US$40.45bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2028) of -1.98%, resulting in a market volume of US$59.39bn by 2028.
When compared globally, it is noteworthy that in China is projected to generate the highest Net Interest Income, amounting to US$5,659.0bn in 2024.
Italy's banking sector is grappling with a high level of non-performing loans, posing a challenge to its economic stability.

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

Italy has a rich banking history dating back to the Middle Ages, with the country being home to some of the oldest banks in the world.

Customer preferences: Italian customers have traditionally valued personalized service and strong relationships with their banks. They often prefer face-to-face interactions when discussing financial matters and making transactions. However, there is a growing trend towards digital banking services, especially among the younger population who seek convenience and efficiency in managing their finances.

Trends in the market: One noticeable trend in the Italian banking market is the consolidation of smaller banks to create larger, more competitive institutions. This trend is driven by the need to adapt to changing regulations, technological advancements, and increasing competition from fintech companies. Additionally, banks in Italy are focusing on enhancing their digital offerings to meet the evolving needs of customers and improve operational efficiency.

Local special circumstances: Italy's banking sector has faced challenges in recent years, including high levels of non-performing loans and low profitability. The country's economy has also been relatively slow to recover from the global financial crisis, impacting the overall performance of banks. As a result, Italian banks have been implementing cost-cutting measures and exploring new revenue streams to strengthen their financial position.

Underlying macroeconomic factors: The Italian banking market is influenced by various macroeconomic factors, including economic growth, interest rates, and regulatory environment. Slow economic growth and low interest rates have put pressure on banks' profitability, prompting them to seek alternative sources of revenue. Moreover, regulatory changes aimed at enhancing transparency and stability in the financial sector have led banks to invest in compliance and risk management practices to meet evolving requirements.

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.