Global Market Size: Consumer Standard Banking
The global market size of the consumer standard banking industry in terms of retail banking revenues as of 2018 was $2,134 billion. The incumbent banks in this industry have seen an increase in the customer preference for technology and a growing threat from FinTech players, challenger banks, and new market entrants in recent years.
Global Market Size of the Consumer Standard Banking Industry
- As of 2018, the global market size of the consumer standard banking industry in terms of retail banking revenues was $2,134 billion. This figure is expected to reach $2,850 billion by 2025, a CAGR of 4.2% through the years 2018 to 2025.
- The global retail banking revenues vary from one region to the other. The Western European retail banking market is expected to show the slowest growth between 2018 and 2025, a CAGR of only 1.9%. The highest growth rate is expected to be in the Asia-Pacific region, a CAGR of 6.0% through the years 2018 to 2025.
- The region-wise retail banking revenues in 2018 compared to their expected revenues in 2025 and CAGR through the years 2018 to 2025 are presented here. The figures in brackets indicate (2018 revenue, 2025 revenue, CAGR through 2018 to 2025). These are as follows: Western Europe ($369 billion, $420 billion, 1.9%), North America ($708 billion, $870 billion, 2.9%), Eastern Europe ($50 billion, $65 billion, 4.0%), Middle East and Africa ($104 billion, $145 billion, 4.6%), Latin America ($217 billion, $320 billion, 5.9%), and Asia-Pacific ($686 billion, $1,030 billion, 6.0%).
- Out of the global retail banking revenue of $2,134 billion in 2018, incumbent banks contributed the majority share of $2,054 billion, whereas FinTech players, challenger banks, and new market entrants contributed $80 billion. However, with increasing competition to the incumbent banks from FinTech players, challenger banks, and new market entrants, this difference is expected to become smaller in the near future.
- To counter their market share being eaten away by challengers, the traditional incumbent banks need to change their current business models to focus more on their customers, drive efficiency in their operations, and gain competitive advantage. As per a report by PwC, traditional banks may need to reduce their operational costs by at least 15-20% (even 30-40% in some cases) to stay competitive.
- As per a survey by Business Insider, 61% of the mobile banking users surveyed stated that they would research the bank's mobile capabilities and features prior to opening an account with the bank.
- The customers' growing preference for technology and digital banking has pushed retail banks to invest in artificial intelligence (AI), blockchain technology, analytics, and machine learning to provide better and upgraded products and services to the customers.
- Digital transformation has become the new buzzword for incumbent retail banks. As per IDC's global retail banking research director, digital transformation accounts for over 40% of the IT spending in some of the largest incumbent retail banks in the world.
- In 2017, retail banks in the United States alone spent $20.2 billion on digital transformation. Spending on digital transformation is expected to grow at a CAGR of 22.5% from 2017 to 2020.
We started our research by trying to find several reputed sources that provide hard data on the global market size of the consumer standard banking industry. However, even after extensive searching, we managed to find only one report in which the global market size of the target industry is mentioned. This is a free-to-download report by the Boston Consulting Group, in which they have calculated the global market size in terms of revenue (in US$). Even in this, they have not mentioned the market size of the components in retail banking (like standard checking and savings bank accounts) separately. Rather, they have mentioned the market size of global retail banking as a whole. All the other reports available in the public domain are hidden behind paywalls. Some of these paywalled reports can be accessed vide here and here. Reputed market researchers like Deloitte, PwC, and McKinsey have not presented any market size data in their reports. Considering the inadequacy of figures available in the public domain, we had to make do with the global market size of the consumer standard banking industry as mentioned in the BCG report. We have presented the same in this research, along with the two most important trends in the consumer standard banking industry currently.