Traditional Banks - South Korea

South Korea

In South Korea, the net interest income in the Traditional Banks market market is expected to reach US$118.60bn in 2024.
Traditional Retail Banking dominates this market with a projected market volume of US$63.67bn in the same year.
Looking ahead, the net interest income is anticipated to display an annual growth rate (CAGR 2024-2028) of 6.08%, resulting in a market volume of US$150.20bn by 2028.
When compared globally, in China is projected to generate the highest net interest income, amounting to US$4,690.0bn in 2024.
South Korea's traditional banks are facing stiff competition from fintech companies, forcing them to innovate and offer more digital 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

South Korea is experiencing a notable shift in the Traditional Banks market, reflecting changing customer preferences and local special circumstances.

Customer preferences: Customers in South Korea are increasingly seeking digital banking solutions that offer convenience and efficiency. With the rise of tech-savvy consumers, there is a growing demand for online and mobile banking services. This shift in preferences is driving Traditional Banks to invest more in digital transformation to meet customer expectations and stay competitive in the market.

Trends in the market: One prominent trend in the South Korean Traditional Banks market is the emphasis on personalized services. Traditional Banks are leveraging data analytics and artificial intelligence to offer tailored financial products and services to their customers. This focus on customization is aimed at enhancing customer experience and building long-term relationships with clients. Additionally, there is a growing trend towards sustainable banking practices, with Traditional Banks incorporating environmental, social, and governance (ESG) criteria into their operations and investment decisions.

Local special circumstances: South Korea's Traditional Banks market is influenced by the country's unique regulatory environment and cultural preferences. Strict regulations governing the financial sector play a significant role in shaping the operations of Traditional Banks in the country. Moreover, the collectivist culture in South Korea emphasizes trust and relationship-building, which Traditional Banks leverage to strengthen customer loyalty and retention. These local special circumstances impact the strategies and approaches adopted by Traditional Banks in the market.

Underlying macroeconomic factors: The development of the Traditional Banks market in South Korea is also influenced by macroeconomic factors such as economic growth, interest rates, and government policies. As the economy continues to evolve, Traditional Banks must adapt their business models to align with changing market dynamics. Interest rate fluctuations and regulatory changes can impact the profitability and stability of Traditional Banks, prompting them to diversify their revenue streams and enhance risk management practices to mitigate potential risks 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.