Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Indonesia

Indonesia

In Indonesia, the Traditional Retail Banking market market is expected to witness a substantial increase in Net Interest Income, reaching a projected value of US$9.23bn in 2024.
This growth is anticipated to continue at a compound annual growth rate (CAGR 2024-2028) of -13.03%, ultimately leading to a market volume of US$5.28bn by 2028.
It is worth noting that in a global context, in China is predicted to generate the highest Net Interest Income, with a staggering value of US$2,941.0bn in 2024.
Despite the rapid growth of digital banking in Indonesia, traditional retail banking still dominates the market due to a large unbanked population and a preference for face-to-face interactions.

Key regions: Singapore, Germany, India, Japan, South Korea

Definition:
Traditional retail banking refers to the financial services sector that provides a range of financial products and services to individual consumers through store-based branches and other traditional channels. These services include personal loans, savings and checking accounts, credit cards, mortgages, and other financial products designed specifically for individual consumers.
Traditional retail 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.
Despite facing increased competition and changing customer preferences, traditional retail banks continue to play a vital role in the financial landscape. They are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services.
Overall, traditional retail banking provides a wide range of financial services to individual consumers through established, trusted channels and continues to be an important part of the financial landscape.

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., Bank of America Corp., and BNP Paribas.

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Analyst Opinion

Indonesia's Traditional Retail Banking market is experiencing significant growth and evolution in response to changing consumer preferences and market dynamics.

Customer preferences: Customers in Indonesia are increasingly seeking convenience and accessibility in their banking services. This has led to a growing demand for digital banking solutions that offer seamless transactions and easy access to account information. Additionally, customers are looking for personalized services and tailored financial products that cater to their specific needs and preferences.

Trends in the market: One of the key trends in Indonesia's Traditional Retail Banking market is the rapid adoption of digital banking channels. With the widespread use of smartphones and the internet, more customers are turning to online and mobile banking for their everyday financial needs. This shift towards digital banking is driving banks to invest in technology and innovation to enhance their digital offerings and improve the overall customer experience. Another trend shaping the market is the increasing competition among banks to attract and retain customers. To stay competitive, banks in Indonesia are focusing on expanding their product offerings, improving customer service, and implementing marketing strategies to differentiate themselves in the market. This has resulted in a greater emphasis on customer engagement and loyalty programs to build long-lasting relationships with customers.

Local special circumstances: Indonesia's diverse and geographically dispersed population presents unique challenges and opportunities for the Traditional Retail Banking market. With a large unbanked population in rural areas, banks are exploring innovative ways to reach underserved communities and provide them with access to basic banking services. This has led to the development of mobile banking solutions and agent banking services to extend the reach of traditional banks and promote financial inclusion across the country.

Underlying macroeconomic factors: The growth of Indonesia's Traditional Retail Banking market is also influenced by macroeconomic factors such as GDP growth, inflation rates, and government policies. A stable economic environment and favorable regulatory framework have contributed to the expansion of the banking sector and increased investments in infrastructure and technology. Additionally, the rising middle-class population and increasing disposable income are driving demand for banking services and financial products, further fueling the growth of the Traditional Retail Banking market in Indonesia.

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.