Traditional banks and new banks

Looking at market share and trying to figure out some trends is an interesting exercise.

In Norway and most of the Nordic small newcomer banks have gain a lot of attentions last few years; with a growth rate of more than 50 %. These are banks with a bank licenses like Bank Norwegian (established from the airliner Norwegian), Komplett Bank (established from the online store – Amazon lookalike – Komplett.no) , Skandia:banken (established by the Swedish insurance company Skandia), YaBank, MonoBank and others. They provide mostly high interest (and highly profitable) pay-day loans, and some housing loans. In UK and US they also having P2P lending and Crowdfunding taking 4-5 % of the market share, not significant in the Nordic yet.

I made a graph a few years ago when I tried to trend the evolution of the financial market. As these newcomers have an exponential growth, and traditional banks at least until now have had something close to linear growth by 1-2 %, traditional banks lose market share every year. The Nordic total loan market has increased by approximate 6 % year by year.  And the losing of market share will most likely escalate in the future; when newcomers take significant enough part of the total market, even total income for each bank is stable.  Looking at Half year result 2016 and turnover for most large banks in Europe, it might look like the turning point for escalation is here already, a few years earlier than my estimation some years ago.

There are a lot of things traditional banks can do, and I guess some of them will. Bank Santander is a good example.