Banking - Kenya

Kenya

In Kenya, the Banking market is expected to witness a significant growth in Net Interest Income, which is projected to reach KES US$8,211.00m by 2024.
Traditional Banks are set to dominate this market segment, with a projected market volume of KES US$8,191.00m in the same year.
Looking ahead, the Net Interest Income is expected to exhibit a steady annual growth rate (CAGR 2024-2028) of 4.20%, resulting in a market volume of KES US$9,680.00m by 2028.
In global comparison, in China is anticipated to generate the highest Net Interest Income, with a staggering amount of CNY US$5,659.0bn in 2024.
Kenya's banking sector is experiencing a rapid digital transformation, with mobile banking services gaining popularity among the population.

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

Kenya's Banking market has been experiencing significant growth and development in recent years, reflecting the country's dynamic economic landscape and increasing financial inclusion.

Customer preferences: Customers in Kenya are increasingly demanding convenient and accessible banking services, leading to a rise in digital banking solutions and mobile money platforms. This shift in preferences is driven by the need for quicker transactions, easy access to financial services, and the convenience of banking on-the-go.

Trends in the market: One prominent trend in the Kenyan Banking market is the growing competition among traditional banks and fintech companies. Fintech firms are leveraging technology to offer innovative solutions such as peer-to-peer lending, online payment platforms, and digital wallets, challenging the dominance of traditional banks. This trend is reshaping the market and pushing traditional banks to enhance their digital offerings to remain competitive.

Local special circumstances: Kenya's unique market conditions, such as a high mobile phone penetration rate and a tech-savvy population, have contributed to the rapid adoption of mobile banking services in the country. The success of mobile money platforms like M-Pesa has set a precedent for digital financial services in Kenya, driving further innovation and expansion in the Banking sector.

Underlying macroeconomic factors: The growth of Kenya's Banking market is also influenced by macroeconomic factors such as GDP growth, government policies, and regulatory frameworks. A stable economic environment, coupled with supportive government policies promoting financial inclusion, has created a conducive atmosphere for the expansion of banking services in the country. Additionally, regulatory reforms aimed at enhancing transparency and consumer protection have increased trust in the banking sector, attracting more customers and investments.

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.