Market Insights Financial Banking Traditional Banks

Traditional Commercial Banking - GCC

In the GCC, the Traditional Commercial Banking market market is expected to witness a significant growth in Net Interest Income.
It is projected to reach a staggering amount of US$61.99bn in 2024.
Looking ahead, the market is expected to continue its upward trajectory with an annual growth rate (CAGR 2024-2028) of 5.11%.
This growth will result in a substantial increase in the market volume, reaching US$75.67bn by 2028.
When comparing the GCC market to the global landscape, it is worth noting that in China is expected to generate the highest amount of Net Interest Income.
In 2024, in China's Net Interest Income is projected to reach an impressive US$1,749.0bn.
In the GCC, traditional commercial banking is experiencing a shift towards digitalization and innovative services to cater to the tech-savvy population.

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

The Traditional Commercial Banking market in GCC is experiencing significant growth and evolution driven by various factors.

Customer preferences: Customers in the GCC region are increasingly demanding more personalized and convenient banking services, leading traditional commercial banks to invest in digital transformation initiatives to meet these expectations. The shift towards online and mobile banking platforms is becoming more prevalent as customers seek seamless and efficient banking experiences.

Trends in the market: In the GCC region, there is a noticeable trend towards the adoption of fintech solutions and partnerships by traditional commercial banks. This trend is driven by the need to enhance operational efficiency, improve customer service, and stay competitive in a rapidly evolving market. Additionally, traditional banks are focusing on expanding their product offerings to include Islamic banking services to cater to the growing Islamic finance sector in the region.

Local special circumstances: One of the unique aspects of the Traditional Commercial Banking market in the GCC is the dominance of family-owned banks that have been operating in the region for generations. These banks have established strong relationships with local businesses and individuals, giving them a competitive advantage in the market. Additionally, the regulatory environment in the GCC, which promotes stability and transparency, has created a conducive environment for traditional commercial banks to thrive.

Underlying macroeconomic factors: The economic diversification efforts in the GCC countries, driven by declining oil prices, have led traditional commercial banks to explore new revenue streams and opportunities for growth. As the region continues to invest in non-oil sectors such as tourism, real estate, and technology, traditional banks are adapting their business models to support the changing needs of businesses and consumers. Moreover, the favorable regulatory environment and government support for the banking sector are contributing to the overall stability and growth of the Traditional Commercial Banking market in the GCC.

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.