Playing To Win: Retail Banking Strategies For Emerging Markets

The first three years of this decade saw rapid growth – an average of 18 percent a year – on retail banking revenue across 12 emerging markets (EM12[1]). This was fuelled by rises in household income and strong macroeconomic conditions, among other factors. These markets accounted for more than 75 percent of global financial services revenue growth between 2010 and 2013.

But there has been a significant slowdown across a number of major markets over the past two years, on account of slowing GDP growth, increasing volatility in currency markets, and changing credit cycles. We expect slower growth to continue over the next five years, with overall retail revenue growth in the EM12 falling to nine percent between 2015 and 2020.

Declines in growth will be most pronounced in China, Brazil, Mexico, and Saudi Arabia. Secular growth shared by incumbents will give way to more differentiated trajectories and a clearer separation between winners and laggards. Four key opportunities that we have identified, will define future growth in these markets. The fates of both incumbents and challenger institutions will be decided by their responses to these opportunities.  

Four Key Opportunities

  • Adoption of digital channels, products and business models
  • The untapped opportunity presented by small- and medium-sized enterprises (SMEs)
  • Sustainable growth in retail credit
  • Development of an affordable banking proposition

Incumbents will need to pursue an agenda of market leadership across these growth areas in order to maintain their market positions. Effective responses will lead to accelerated growth in risk-adjusted performance, enabling market leaders to grow as much as two to four times as fast as lagging institutions.

[1]Emerging markets, referred to as EM12, in the scope of this report are China, Indonesia, Malaysia, Thailand, India, Saudi Arabia, Turkey, South Africa, Brazil, Mexico, Chile and Colombia

Michael J. Wagner – Partner and Head of Financial Services, Latin America
Ritwik Ghosh –  Principal, Retail & Business Banking Practice, Asia Pacific

Playing To Win: Retail Banking Strategies For Emerging Markets


Press Release