Market Insights Financial Banking Traditional Banks

Traditional Commercial Banking - Japan

Japan

In Japan, the Traditional Commercial Banking market market is expected to witness a significant growth in Net Interest Income.
By 2024, the projected Net Interest Income is estimated to reach ¥€64.69bn.
Looking ahead, the market is anticipated to display a Compound Annual Growth Rate (CAGR 2024-2029) of 1.58%, leading to a market volume of ¥€69.97bn by 2029.
In terms of global comparison, China is expected to generate the highest Net Interest Income in the Traditional Commercial Banking market market, reaching ¥€1,339.0bn in 2024.
Japan's traditional commercial banking sector remains strong and resilient, adapting to digitalization while maintaining a deep-rooted culture of trust and stability.

Key regions: China, France, Brazil, Singapore, 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

Amidst the technological advancements shaping the global banking industry, the Traditional Commercial Banking market in Japan is experiencing a shift driven by changing customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Customers in Japan are increasingly seeking personalized and convenient banking services. The demand for digital banking solutions is on the rise as customers look for efficient ways to manage their finances. However, there is still a significant preference for in-person interactions and relationship-based banking in Japan, leading traditional banks to find a balance between digital offerings and maintaining a strong physical presence.

Trends in the market: One prominent trend in the Traditional Commercial Banking market in Japan is the focus on sustainability and environmental responsibility. Banks are incorporating ESG (Environmental, Social, and Governance) principles into their operations and investment decisions to align with the growing global emphasis on sustainability. Additionally, there is a trend towards collaboration between traditional banks and fintech companies to enhance service offerings and reach a wider customer base.

Local special circumstances: Japan's aging population presents a unique challenge and opportunity for traditional banks. With a significant portion of the population being elderly, banks need to cater to the specific financial needs of this demographic, such as retirement planning and wealth management. At the same time, there is a growing younger population that is tech-savvy and prefers digital banking solutions, creating a dual customer base that banks must address.

Underlying macroeconomic factors: The economic landscape in Japan, characterized by low interest rates and slow economic growth, is influencing the Traditional Commercial Banking market. Banks are facing pressure on their margins due to the prolonged low interest rate environment, prompting them to explore alternative revenue streams and cost-cutting measures. Moreover, the Bank of Japan's monetary policies play a significant role in shaping the banking sector's performance and strategic decisions.

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.