E7 banking markets to overtake G7 earlier than projected - shift accelerated by financial crisis

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16 June 2011


  • China could become biggest banking market in the world within 15 years with projected domestic banking assets of over US$30 trillion by 2030; India to overtake Japan by 2035
  • E7 domestic banking assets to overtake G7  in 2036 - ten years earlier than projected by pre-crisis analysis
  • G7 banks need access to the relatively unbanked populations of the emerging markets
  • UK to be overtaken by India by 2030 and Brazil before 2050.

The combined domestic banking assets of the ‘E7’ emerging economies of China, India, Brazil, Russia, Mexico, Indonesia and Turkey will exceed those in the ‘G7’ countries sooner than predicted before the financial crisis, according to PwC’s ‘Banking in 2050’ report published today.  The G7 comprises the US, Japan, Germany, the UK, France, Italy and Canada. 

Analysis conducted by PwC  in 2007 projected that E7 domestic banking assets would overtake the G7 in 2046, while the updated projections see this date brought forward by a decade to 2036. This reflects the fact that the global financial crisis has hit the G7 much more severely than the E7.   The analysis is based on GDP projections, domestic banking projections and banking profitability projections and assumes governments follow broadly growth-friendly policies and that no catastrophic events throw growth permanently off track.   Full methodology is detailed in the report.

John Hawksworth, chief economist, PwC, said:

“A fundamental shift in the geography of the world economies will take place during the working lifetime of those at the start of their career with huge implications for job creation, language learning and financial systems.  The GDP of the E7 countries is currently well behind that of their G7 counterparts but we’ll see them at level pegging within the next two decades and well ahead within the next four.  In the banking world, this shift is happening even faster than anticipated and appears to have been accelerated by the financial crisis as emerging market banks have been relatively shielded from the effects of declining asset values.  We could now be talking about global banking assets quadrupling to around $300 trillion by 2050 with banks around the world fighting for a share. ”

China is now expected to overtake the US to become the biggest banking economy in the world in about 2023 – 20 years earlier than anticipated by the pre-crisis projections.   India, which has particularly strong long-term growth potential, could overtake Japan to become the third largest by 2035 if it continues to pursue growth-friendly policies.  In practice, this means investing in infrastructure, opening up markets to increased competition, reducing bureaucracy, reducing budget deficits and increasing rural education.   In the long-run, India could overtake China as China’s growth is expected to slow as its population ages.  Brazil looks set to overtake Germany and the UK by 2045. The exception to the trend is Mexico, which is now expected to overtake Italy in around 2048 as opposed to 2038 (the date projected in 2007).*

John Hawksworth, chief economist, PwC, said:

“We are only about 15 years away from China overtaking the US to become the world’s biggest banking economy.  Three of the largest banks in the world by market capitalisation are Chinese and other leaders have heavy emerging market exposure, where they can capitalise on large, unbanked populations and booming demand for financial products.  With populations of well over a billion each, access to markets like China and India is critical for growth.                    

“There are a range of M&A options available to both emerging and developed market banks and we can expect to see a mix of consolidation, foreign banks entering emerging markets and banks from the E7 expanding overseas.  The E7 doesn’t need the G7 for capital, decision making or consumers so the established economies will have to make a strong case to convince new economy policy makers of the benefits of inviting foreign competition in.

“Socioeconomic issues such as ageing populations and increasing demand for natural resources will also have an impact on borrowing and lending requirements.  The banks also need to factor the profound impact of regulation into their scenario planning.”


Notes for editors

  1. For additional information, please contact Natalia Blotskaya at +380 44 490 6777.
  2. *A table ranking domestic banking assets by country in 2009 and projections for 2030 and 2050 can be found on page 19 of the report.
  3. Dates at which E7 economies overtake G7 in terms of the size of their domestic banking assets
Country pairs Overtaking year (2011 analysis) Overtaking year (2007 analysis)
E7 overtakes G7



China overtakes US



India overtakes Japan



Brazil overtakes Italy


Beyond 2050

Russia overtakes Italy



Mexico overtakes in Italy



Turkey overtakes Canada


Beyond 2050

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