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.
A look at the latest Point of view in the Project Blue framework (SAAAME)
Simply relying on domestic growth doesn’t guarantee a profitable future for SAAAME financial institutions. They need to find ways to follow their customers and tap into the most valuable trade flows.
As more and more commerce flows between the world’s fastest growing economies, it is bypassing the West. Western financial institutions need to find ways to tap into this intra-SAAAME or risk being cut out of the loop.
The SAAAME region’s significant liquid investable capital includes a growing proportion of global assets under management (AUM) and nearly 80% of overall sovereign wealth fund AUM.
Our latest research anticipates that domestic credit in China could overtake the US by 2023 and India will become the third largest domestic banking sector after China and the US by 2050.
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.
|If you have any questions, please contact
Global Leader Financial Services
Tel: +44 (0) 20 7213 3960
Author and Global Leader for Project Blue
Tel: +44 (0) 20 7804 0130