Traditional Banks - Kenya

Kenya

In Kenya, the net interest income in the Traditional Banks market market is projected to reach US$5.25bn in 2024.
Traditional Commercial Banking dominates this market segment with a projected market volume of US$3.55bn in 2024.
The net interest income is expected to show an annual growth rate (CAGR 2024-2029) of 3.91%, resulting in a market volume of US$6.36bn by 2029.
In global comparison, in China is anticipated to generate the highest net interest income with US$3,869.0bn in 2024.
Traditional banks in Kenya are facing increasing competition from mobile banking platforms like M-Pesa.

Key regions: Germany, United Kingdom, France, Japan, China

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 Kenya is experiencing a shift in customer preferences, trends, and local special circumstances that are shaping its development.

Customer preferences: Customers in Kenya are increasingly seeking personalized banking services that cater to their specific needs and preferences. This shift towards more customized offerings is being driven by the growing middle class in the country, which is demanding more sophisticated financial products and services. Additionally, there is a rising awareness among consumers about the importance of financial literacy, prompting traditional banks to focus on education and empowerment initiatives.

Trends in the market: One of the key trends in the Traditional Banks market in Kenya is the adoption of digital banking solutions. With the rapid advancement of technology and the widespread use of mobile phones in the country, traditional banks are investing in digital platforms to enhance customer experience and reach a wider audience. This trend is also fueled by the increasing competition from digital-only banks and fintech companies, forcing traditional banks to innovate and stay competitive in the market.

Local special circumstances: Kenya has a unique market landscape characterized by a high level of mobile penetration and a large unbanked population. This presents both opportunities and challenges for traditional banks in the country. On one hand, the mobile money ecosystem in Kenya is well-established, providing traditional banks with a ready infrastructure to offer digital financial services. On the other hand, the competition from mobile money providers and fintech companies is intense, requiring traditional banks to differentiate themselves through innovative products and services.

Underlying macroeconomic factors: The development of the Traditional Banks market in Kenya is also influenced by macroeconomic factors such as economic growth, regulatory environment, and political stability. A stable economic environment with steady GDP growth and low inflation rates bodes well for the banking sector, enabling traditional banks to expand their operations and attract more customers. However, regulatory changes and political uncertainties can create challenges for traditional banks, impacting their growth and profitability in the market.

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.