A new report by Allied Market Research predicts that the global commercial banking market will grow at a compound annual growth rate (CAGR) of 11.5% from 2021 to 2031, reaching $7,404.4 billion by the end of the forecast period. The report attributes this growth to the increasing adoption of digital banking solutions, the expansion of cross-border trade and investment, and the rising demand for credit and financing services from various sectors.
Digital Banking Solutions Drive the Market Growth
One of the key factors that is driving the growth of the commercial banking market is the increasing adoption of digital banking solutions by both banks and customers. Digital banking solutions include online banking, mobile banking, cloud computing, artificial intelligence, blockchain, and biometrics. These solutions enable banks to offer faster, cheaper, and more convenient services to their customers, as well as to reduce operational costs and enhance security.
According to the report, the digital banking solutions segment accounted for the largest share of the market in 2020, with $1,254.9 billion, and is expected to grow at a CAGR of 12.1% during the forecast period. The report also states that the Asia-Pacific region dominated the market in 2020, with $1,072.9 billion, and is projected to maintain its lead throughout the forecast period.
Cross-Border Trade and Investment Boost the Market Growth
Another factor that is boosting the growth of the commercial banking market is the expansion of cross-border trade and investment activities among various countries and regions. Commercial banks play a vital role in facilitating international trade and investment by providing trade finance, foreign exchange, payment services, and risk management solutions.
The report estimates that the trade finance segment will register the highest CAGR of 13.2% during the forecast period, owing to the increasing demand for trade finance products such as letters of credit, guarantees, and documentary collections from exporters and importers. The report also highlights that Europe is expected to witness the highest growth rate of 12.6% during the forecast period, due to the presence of major commercial banks such as HSBC Holdings PLC and BNP Paribas that have a strong network of branches and subsidiaries across the world.
Rising Demand for Credit and Financing Services from Various Sectors
A third factor that is contributing to the growth of the commercial banking market is the rising demand for credit and financing services from various sectors such as manufacturing, agriculture, retail, healthcare, and education. Commercial banks provide loans, overdrafts, mortgages, leases, and other forms of credit and financing to these sectors to support their business operations and expansion plans.
The report reveals that the credit and financing segment held the second-largest share of the market in 2020, with $1,241.7 billion, and is anticipated to grow at a CAGR of 11.3% during the forecast period. The report also indicates that North America was the second-largest market in 2020, with $1,057.8 billion, and is expected to exhibit significant growth during the forecast period.
