Banking - South Korea

South Korea

In South Korea, the Banking market is expected to witness a significant increase in Net Interest Income, reaching a projected value of US$152.30bn in 2024.
Traditional Banks are set to dominate this market segment, with a projected market volume of US$118.60bn in the same year.
Looking ahead, the Net Interest Income is anticipated to exhibit an annual growth rate of 8.35% (CAGR 2024-2028), resulting in a market volume of US$209.90bn by 2028.
In a global perspective, it is noteworthy that in China is expected to generate the highest Net Interest Income, amounting to US$5,659.0bn in 2024.
South Korea's banking market is experiencing a surge in digital banking services, with a strong emphasis on mobile banking platforms.

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

South Korea's Banking market is experiencing significant growth and transformation in recent years, driven by various factors shaping the industry landscape in the country.

Customer preferences: Customers in South Korea are increasingly gravitating towards digital banking solutions, favoring convenience, efficiency, and round-the-clock access to financial services. The rise of smartphone usage and tech-savvy consumers has propelled the demand for online and mobile banking options. As a result, traditional brick-and-mortar branches are seeing a decline in foot traffic as more customers opt for digital channels for their banking needs.

Trends in the market: One notable trend in the South Korean Banking market is the emergence of fintech companies and digital-only banks. These innovative players are disrupting the traditional banking sector by offering agile, customer-centric services that cater to the evolving needs of the tech-savvy population. This trend is driving competition in the market and pushing traditional banks to enhance their digital offerings to stay relevant and competitive.

Local special circumstances: South Korea's unique market dynamics, characterized by a tech-savvy population and a strong emphasis on innovation, have created a fertile ground for the growth of digital banking services. The country's advanced IT infrastructure and high smartphone penetration rate have laid a solid foundation for the rapid adoption of digital financial solutions. Additionally, the government's push for digital transformation and regulatory support for fintech innovation have further fueled the development of the digital banking ecosystem in South Korea.

Underlying macroeconomic factors: The Banking market in South Korea is also influenced by broader macroeconomic factors such as economic growth, interest rates, and regulatory environment. As the country continues to recover from the impact of the COVID-19 pandemic, banks are facing challenges related to economic uncertainty and changing consumer behavior. Moreover, regulatory reforms aimed at promoting competition and innovation in the financial sector are shaping the future direction of the Banking market in South Korea.

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.