Q: Does the interconnectivity between the SAAAME markets create an opportunity or a threat for western financial institutions?
Western financial institutions will be able to readily capitalise on the increasing trade and financial transactions within the SAAAME region
Western financial institutions will be less able than their domestic counterparts to capitalise on the growth in trade and investment within the SAAAME region
The issue with SAAAME -- the fast growing emerging markets of South America, Africa, Asia and the Middle East - is not so much about the speed of growth within the SAAAME markets, but how interconnected the trade flows between them have become. Trade between the SAAAME markets is growing much faster than the developed-to-developed and developed-to-emerging market flows.
Relying on large but slower growing developed markets is not enough for financial institutions to remain competitive. As more trade flows between fast-growing emerging economies, Western financial institutions need to find ways to become involved in this trade to remain competitive.
By 2050, the E7 countries will have 45.9% of global banking assets, compared to 18.2% in 2013 whilst the G7’s share of global bank assets will shrink from 54.4% in 2013 to 29.9% in 2050.
Our latest research anticipates that SAAAME also has a dominant position in Sovereign Wealth Funds, with 39% of SWF assets under management in Asian SWFs, 36% in Middle Eastern SWFs and only 14% of SWF assets in European SWFs.
The development of the SAAAME markets is leading to a radical shake-up in the growth opportunities and competitive environment for your business.
Success will depend on being able to develop the customer-centric model needed to keep pace with consumer expectations. You also need to work out how to attract and retain scarce talent when competitors and companies from other sectors are looking to lure your best people away.
The opportunities are evident, but regulation, local competition and a lack of cultural understanding are making it increasingly difficult to penetrate these markets. Success will depend on being able to deliver products and capabilities that domestic players cannot.