Banking - Malaysia

Malaysia

In Malaysia, the projected Net Interest Income in the Banking market is expected to reach US$18.70bn in 2024.
Traditional Banks are set to dominate the market with a projected market volume of US$16.41bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate (CAGR 2024-2029) of 2.39%, resulting in a market volume of US$21.04bn by 2029.
When compared globally, it is worth noting that in China is expected to generate the highest Net Interest Income, amounting to US$4,332.0bn in 2024.
Malaysia's banking market is experiencing a surge in digital banking services, with mobile banking apps becoming increasingly popular among consumers.

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

The Banking market in Malaysia has been experiencing notable developments in recent years.

Customer preferences: Customers in Malaysia are increasingly demanding digital banking services, leading to a surge in online and mobile banking platforms. The convenience and accessibility of these digital channels have become a top priority for customers, driving the adoption of digital payment solutions and online account management.

Trends in the market: One prominent trend in the Malaysian banking market is the growing focus on Islamic banking products and services. As a predominantly Muslim country, Malaysia has seen a rising demand for Sharia-compliant financial products, prompting banks to expand their Islamic banking offerings. Additionally, banks in Malaysia are increasingly investing in technology to enhance customer experience and streamline operations, with a particular emphasis on data analytics and artificial intelligence.

Local special circumstances: The Malaysian banking market is unique in its dual banking system, which comprises both conventional and Islamic banking sectors. This duality allows banks to cater to a diverse customer base with varying financial preferences. Moreover, Malaysia's strategic location in Southeast Asia has positioned it as a regional financial hub, attracting foreign investments and fostering international collaborations in the banking sector.

Underlying macroeconomic factors: The economic growth and stability in Malaysia have played a significant role in shaping the banking market. With a growing middle class and increasing disposable income, there is a greater demand for banking products and services, leading to market expansion and innovation. Additionally, government initiatives to promote financial inclusion and digital literacy have contributed to the overall development of the banking sector in Malaysia.

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.