Banking sectors of several emerging economies have grown at extraordinary rates over recent years. China, India and Brazil are the most obvious among them. Yet, in most these markets, the banking industry remains immature. As a result, banking revenues as a percentage of GDP are still small, which offers great growth potential for incumbents and new entrants alike – especially when compared to stagnant and saturated Western markets.
The growing wealth of these populations and their increasing levels of education should help to promote the required institutional and infrastructural frameworks to outweigh any potential roadblocks, such as trade protectionism, political instability and underdeveloped liberal institutions.
In this paper, The Future of Banking in Emerging Markets, we present projections for the growth of banking in the emerging economies that we believe provide the most attractive opportunities. We consider the risks to this growth, estimate how it will translate into bank revenues and profits, consider the growth potential of retail, define priorities for the near-term and, finally, give some advice for banks looking to compete in emerging markets.
