Traditional Banks - Japan

Japan

In Japan, the net interest income within the Traditional Banks market market is forecasted to reach US$146.90bn in 2024.
The market is primarily dominated by Traditional Commercial Banking, which is projected to have a market volume of US$76.07bn in the same year.
Looking ahead, the net interest income is expected to exhibit an annual growth rate (CAGR 2024-2028) of -2.14%, resulting in a market volume of US$134.70bn by 2028.
When compared globally, the highest net interest income is anticipated to be generated in China, amounting to US$4,690.0bn in 2024.
Despite the rise of digital banking, traditional banks in Japan continue to thrive due to a strong cultural preference for in-person and relationship-based banking services.

Key regions: Singapore, United Kingdom, Germany, Brazil, United States

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, 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 and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Traditional Banks market in Japan has been experiencing interesting developments in recent years.

Customer preferences: Customers in Japan still value the reliability and stability offered by traditional banks, preferring the established reputation and long history of these institutions. The older generation, in particular, tends to trust traditional banks more than newer digital banking options.

Trends in the market: One noticeable trend in the Traditional Banks market in Japan is the increasing focus on digitalization and innovation. Traditional banks are investing heavily in technology to improve customer experience and streamline operations. Additionally, there is a growing trend of partnerships between traditional banks and fintech companies to offer more diverse and convenient services to customers.

Local special circumstances: In Japan, the aging population and low birth rate have significant implications for the Traditional Banks market. As the population ages, there is a greater need for banking services tailored to older customers, such as wealth management and retirement planning. Traditional banks are adapting their services to cater to this demographic shift.

Underlying macroeconomic factors: The low interest rate environment in Japan has put pressure on traditional banks' profitability. In response, banks are exploring new revenue streams and cost-cutting measures to maintain their competitiveness. Additionally, the overall economic conditions in Japan, such as slow GDP growth and deflationary pressures, impact the demand for banking services and influence the strategic decisions of traditional banks.

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.