Market Insights Financial Banking Traditional Banks

Traditional Retail Banking - Hong Kong

Hong Kong

In Hong Kong, the Traditional Retail Banking market market is anticipated to witness a significant surge in Net Interest Income, reaching a projected value of €10.49bn in 2024.
Looking ahead, it is expected that the Net Interest Income will continue to grow steadily, with a compound annual growth rate (CAGR 2024-2029) of 0.04%.
This growth trajectory is projected to result in a market volume of €10.51bn by 2029.
When compared on a global scale, it is worth noting that China is expected to generate the highest amount of Net Interest Income in 2024, with a staggering figure of €2,249.0bn.
In Hong Kong, traditional retail banking is facing stiff competition from digital banks, leading to a shift in customer preferences towards online banking services.

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

The Traditional Retail Banking market in Hong Kong is experiencing significant shifts and developments in response to changing customer preferences and local special circumstances.

Customer preferences: Customers in Hong Kong are increasingly seeking convenience and efficiency in their banking experience. This has led to a growing demand for digital banking services that offer 24/7 accessibility and streamlined processes. Additionally, customers are placing a greater emphasis on personalized services and tailored financial solutions to meet their individual needs and preferences.

Trends in the market: One prominent trend in the Traditional Retail Banking market in Hong Kong is the rapid adoption of digital banking channels. Traditional brick-and-mortar branches are being complemented, and in some cases replaced, by online and mobile banking platforms. This shift is driven by the convenience and flexibility that digital banking offers to customers, as well as cost-saving benefits for banks. Moreover, there is a growing trend towards the integration of fintech solutions, such as mobile payment options and AI-powered customer service tools, to enhance the overall banking experience.

Local special circumstances: Hong Kong's status as a global financial hub and its highly urbanized population have contributed to the unique dynamics of the Traditional Retail Banking market in the region. The competitive landscape is characterized by a high concentration of both domestic and international banks, leading to intense competition for market share. Additionally, the diverse customer base in Hong Kong, which includes both local residents and expatriates, presents opportunities for banks to offer specialized services to cater to different segments of the population.

Underlying macroeconomic factors: The Traditional Retail Banking market in Hong Kong is also influenced by broader macroeconomic factors, such as interest rates, regulatory policies, and economic growth. Low interest rates in the region have put pressure on banks' net interest margins, prompting them to explore alternative revenue streams and cost-cutting measures. Regulatory initiatives aimed at promoting financial stability and consumer protection have also shaped the competitive landscape of the market. Moreover, Hong Kong's economic growth prospects and the overall business environment play a crucial role in determining the demand for banking services and the willingness of customers to invest and save.

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.