Traditional Banks - United Kingdom

United Kingdom

In 2024, it is projected that the Net Interest Income in the Traditional Banks market market in the United Kingdom will reach US$150.70bn.
The market is dominated by Traditional Commercial Banking, with a projected market volume of US$115.20bn in 2024.
Looking ahead, the Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-2029) of -0.70%, resulting in a market volume of US$145.50bn by 2029.
When compared globally, it is worth noting that the highest Net Interest Income will be generated China, amounting to US$3,869.0bn in 2024.
Traditional banks in the United Kingdom are facing increased competition from digital disruptors, forcing them to innovate and enhance their online banking services to stay relevant.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks 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. 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.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These 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.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

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

Amidst the evolving landscape of the financial sector in the United Kingdom, the Traditional Banks market is experiencing notable shifts and developments.

Customer preferences: Customers in the United Kingdom are increasingly valuing personalized services, digital banking solutions, and seamless omnichannel experiences. As a result, traditional banks are focusing on enhancing their digital offerings, such as mobile banking apps and online account management tools, to cater to the changing preferences of tech-savvy consumers.

Trends in the market: One prominent trend in the Traditional Banks market in the United Kingdom is the rise of neobanks and fintech challengers. These innovative players are gaining traction among younger demographics and tech enthusiasts by offering agile, user-friendly banking solutions that prioritize convenience and efficiency. In response, traditional banks are exploring partnerships with fintech firms and investing in digital transformation to stay competitive in the evolving market landscape.

Local special circumstances: The regulatory environment in the United Kingdom, including initiatives such as Open Banking and PSD2, is shaping the dynamics of the Traditional Banks market. These regulations are promoting competition, fostering innovation, and empowering consumers to have greater control over their financial data. Traditional banks are adapting to these regulatory changes by embracing open banking principles, collaborating with third-party providers, and enhancing data security measures to ensure compliance and build trust with customers.

Underlying macroeconomic factors: The economic conditions, such as interest rates, inflation, and GDP growth, play a significant role in influencing the Traditional Banks market in the United Kingdom. Fluctuations in these macroeconomic indicators can impact consumer confidence, borrowing behaviors, and investment decisions, ultimately shaping the demand for banking products and services. Traditional banks closely monitor these macroeconomic factors to adjust their strategies, pricing, and risk management practices accordingly to navigate the changing market conditions.

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.