Banking - Japan

Japan

In Japan, the Banking market is expected to witness a significant increase in Net Interest Income, reaching an estimated value of ¥US$156.50bn by the year 2024.
The market is largely dominated by Traditional Banks, which are projected to achieve a market volume of ¥US$146.90bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit a compound annual growth rate (CAGR 2024-2028) of -1.81%, leading to a market volume of ¥US$145.50bn by 2028.
It is worth noting that globally, in China is expected to generate the highest Net Interest Income, with an estimated value of ¥US$5,659.0bn in 2024.
Japan's banking market is characterized by a strong focus on technology and innovation, with a particular emphasis on digital banking solutions.

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

Amid Japan's unique cultural and technological landscape, the Banking market in Japan has been witnessing interesting developments.

Customer preferences: Japanese customers in the banking sector are increasingly leaning towards digital solutions and online banking services. The convenience and efficiency offered by digital platforms have been driving this shift in consumer behavior. Additionally, there is a growing demand for personalized financial products and services tailored to individual needs and preferences.

Trends in the market: One notable trend in the Banking market in Japan is the rise of fintech companies and partnerships between traditional banks and technology firms. This trend is reshaping the competitive landscape and driving innovation in the sector. Moreover, sustainability and ethical banking practices are gaining traction among Japanese consumers, influencing the development of green banking initiatives and socially responsible investment options.

Local special circumstances: Japan's aging population and low birth rate have significant implications for the Banking market. As the population ages, there is a growing need for retirement planning and wealth management services. Banks in Japan are adapting their offerings to cater to the needs of older customers, such as providing long-term care insurance and estate planning services. Additionally, the cultural emphasis on saving and financial stability influences the banking products and services that are popular among Japanese consumers.

Underlying macroeconomic factors: The Bank of Japan's monetary policy and the overall economic environment play a crucial role in shaping the Banking market in Japan. Low interest rates set by the central bank impact the profitability of traditional banking activities, prompting financial institutions to explore alternative revenue streams and cost-cutting measures. Moreover, macroeconomic factors such as GDP growth, inflation rates, and currency fluctuations influence consumer confidence and spending patterns, ultimately shaping the demand for banking services in the country.

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.