Banking - Saudi Arabia

Saudi Arabia

In Saudi Arabia, the Banking market is expected to witness a significant increase in Net Interest Income, reaching US$20.51bn by the year 2024.
Traditional Banks are projected to dominate this market segment with a substantial market volume of US$20.02bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit a steady annual growth rate (CAGR 2024-2028) of 5.43%, resulting in a market volume of US$25.34bn by the year 2028.
When compared to other countries globally, it is noteworthy that in China is expected to generate the highest Net Interest Income, with a staggering amount of US$5,659.0bn in the year 2024.
The market segment of Banking market in Saudi Arabia is poised for growth and plays a significant role in the country's economy.
Saudi Arabia's banking sector is experiencing a surge in digital transformation, with a growing number of customers embracing online banking services.

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 Saudi Arabia continues to experience significant growth and development.

Customer preferences: Customers in Saudi Arabia are increasingly seeking digital banking solutions that offer convenience and efficiency. The younger population, in particular, is driving the demand for online and mobile banking services. Additionally, there is a growing preference for Islamic banking products in the country, in line with Islamic principles.

Trends in the market: One of the key trends in the banking market in Saudi Arabia is the increasing focus on fintech and innovation. Banks in the country are investing in technology to enhance their service offerings and improve customer experience. Moreover, there is a trend towards consolidation in the market, with banks looking to expand their presence through mergers and acquisitions.

Local special circumstances: Saudi Arabia's Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil, is playing a significant role in shaping the banking market. The government's push towards digital transformation and financial inclusion is driving banks to innovate and adapt to the changing landscape. Additionally, the regulatory environment in the country is evolving to support the growth of the banking sector.

Underlying macroeconomic factors: The overall economic stability and growth in Saudi Arabia are providing a favorable environment for the banking industry. The country's young and tech-savvy population, coupled with high smartphone penetration rates, are driving the adoption of digital banking services. Furthermore, the increasing focus on financial literacy and inclusion is expanding the customer base for banks 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.