Banking - United Kingdom

United Kingdom

In 2024, the projected Net Interest Income in the Banking market of the United Kingdom is expected to reach US$300.00bn.
The market is currently dominated by Traditional Banks, with a projected market volume of US$174.30bn in 2024.
Looking ahead, the Net Interest Income is forecasted to experience an annual growth rate (CAGR 2024-2028) of 4.76%, leading to a market volume of US$361.30bn by 2028.
When comparing globally, it is noteworthy that in China is expected to generate the highest Net Interest Income, reaching US$5,659.0bn in 2024.
With the rise of digital banking services in the United Kingdom, traditional brick-and-mortar banks are facing increasing competition for customer loyalty.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. 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.

Structure:

The market consists of two segments:
- The Traditional Banking 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.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises 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.

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 & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in United Kingdom has been experiencing significant growth and transformation in recent years.

Customer preferences: Customers in the United Kingdom are increasingly demanding more digital banking services, leading to a surge in online and mobile banking platforms. This shift in preference towards digital banking is driven by the convenience and accessibility it offers to consumers, allowing them to manage their finances anytime, anywhere.

Trends in the market: One of the notable trends in the UK banking market is the rise of challenger banks and fintech companies. These new players are disrupting the traditional banking sector by offering innovative products and services that cater to specific customer needs. As a result, established banks are now facing increased competition and are being pushed to enhance their digital offerings to stay competitive.

Local special circumstances: Brexit has had a significant impact on the banking market in the United Kingdom. The uncertainty surrounding Brexit has led to changes in regulations, trade agreements, and economic conditions, influencing the strategies and operations of banks in the region. As a result, banks have had to adapt to a shifting landscape and navigate the challenges posed by Brexit to remain resilient and competitive.

Underlying macroeconomic factors: The low interest rate environment in the United Kingdom has also influenced the banking market. With interest rates at historic lows, banks are facing pressure on their margins and profitability. In response, banks are exploring alternative revenue streams and cost-cutting measures to maintain their financial performance in a challenging economic environment. Additionally, the impact of the COVID-19 pandemic has further accelerated the adoption of digital banking services and highlighted the importance of resilience and flexibility in the banking sector.

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.