Market Insights Financial Banking Traditional Banks

Traditional Commercial Banking - Europe

Europe

In Europe, the Traditional Commercial Banking market market is expected to witness significant growth.
It is projected that the Net Interest Income in this market will reach US$0.51tn by 2024.
Looking ahead, there is an expected annual growth rate (CAGR 2024-2028) of 1.44%, which will result in a market volume of US$0.54tn by 2028.
When comparing these figures globally, it is noteworthy that in China will generate the highest Net Interest Income in 2024, amounting to US$1,749.0bn.
In Europe, traditional commercial banking in Germany remains highly conservative, with a strong focus on relationship banking and risk aversion.

Key regions: Brazil, China, South Korea, Japan, India

Definition:

Commercial banking refers to the financial services sector that provides a range of financial products and services to businesses, including small and large enterprises. Commercial banks offer services such as loans, lines of credit, and other financial products specifically designed for businesses. These services are critical to supporting the growth and development of businesses and the broader economy.
Commercial banks play a key role in the financial landscape by providing businesses with the funding they need to invest in new projects, hire employees, and expand their operations. They also offer a range of risk management services, such as trade financing and hedging solutions, to help businesses manage their financial risks.
The commercial banking market is highly competitive, with large global players as well as regional and local banks competing for business. Banks in this market are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Changes in regulations and the growing trend towards digitalization are also shaping the commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.
Overall, commercial banking provides a vital range of financial services to businesses and is critical to supporting the growth and development of the broader economy.

Structure:

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

In Europe, the Traditional Commercial Banking market is experiencing notable trends and developments driven by various factors.

Customer preferences: Customers in Europe are increasingly seeking personalized banking services that cater to their specific needs and preferences. This shift is pushing traditional commercial banks to enhance their digital offerings and customer experience to remain competitive in the market.

Trends in the market: In countries like Germany and the Netherlands, traditional commercial banks are facing growing competition from digital banks and fintech companies. As a result, many traditional banks are investing in technology and innovation to streamline their operations and offer more convenient services to customers. Additionally, there is a trend towards sustainable banking practices, with customers showing a preference for banks that prioritize environmental and social responsibility.

Local special circumstances: In the United Kingdom, Brexit has had a significant impact on the traditional commercial banking market. The uncertainty surrounding the UK's departure from the European Union has forced banks to reassess their operations and strategies, leading to a wave of relocations and restructuring within the industry. This has created both challenges and opportunities for traditional banks in the UK as they navigate the changing regulatory landscape.

Underlying macroeconomic factors: The low interest rate environment in Europe is putting pressure on the profitability of traditional commercial banks. With interest rates at historic lows, banks are facing squeezed margins and are seeking alternative revenue streams to maintain their financial performance. Additionally, economic uncertainty and geopolitical tensions in the region are influencing investment decisions and shaping the overall business environment for traditional banks in Europe.

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.