Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Latvia

Latvia

In Latvia, the Traditional Retail Banking market market is estimated to witness a significant increase in Net Interest Income, projected to reach US$81.51m by 2024.
This is expected to be followed by a steady annual growth rate of -30.12% from 2024 to 2029, resulting in a market volume of US$13.58m by the end of the forecast period.
When compared globally, in China is anticipated to generate the highest Net Interest Income, with a projected value of US$2,426.0bn in 2024.
The traditional retail banking sector in Latvia is experiencing a shift towards digital banking services, driven by the increasing adoption of online and mobile banking platforms.

Key regions: France, Brazil, Germany, United Kingdom, United States

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

Amidst the evolving landscape of retail banking in Latvia, traditional banking institutions are experiencing notable shifts in customer preferences, market trends, and local special circumstances.

Customer preferences: Latvian customers are increasingly gravitating towards digital banking solutions, driven by the convenience and accessibility they offer. The younger demographic, in particular, is more inclined towards online and mobile banking services, seeking seamless transactions and personalized experiences. However, there remains a segment of the population that values in-person interactions and the trust associated with traditional brick-and-mortar bank branches.

Trends in the market: One prominent trend in the Latvian retail banking market is the consolidation of smaller banks and branches as larger institutions streamline their operations to enhance efficiency and profitability. This trend is also influenced by the growing competition from fintech companies offering innovative financial solutions. Additionally, there is a noticeable shift towards sustainable banking practices, with customers showing interest in environmentally friendly initiatives and socially responsible investments.

Local special circumstances: Latvia's retail banking sector is influenced by the country's relatively small population and market size compared to its European counterparts. This factor contributes to a high level of competition among banks vying for market share, leading to a focus on differentiation through service quality, product offerings, and technological advancements. Moreover, the historical legacy of the banking sector in Latvia, shaped by periods of economic instability and regulatory changes, continues to impact consumer trust and preferences.

Underlying macroeconomic factors: The development of the traditional retail banking market in Latvia is also influenced by broader macroeconomic factors such as interest rates, inflation, and economic growth. As the country navigates economic challenges and adapts to regulatory changes within the European Union, banks are compelled to adjust their strategies to maintain profitability and sustain customer loyalty. Additionally, demographic shifts and changing consumer behaviors play a significant role in shaping the future trajectory of the retail banking sector in Latvia.

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.