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Banks in Emerging Markets: Anticipating Change Through Competitive Forecast Analysis

What are the key trends in banking in emerging countries?

Emerging market economies are experiencing robust growth in their banking sectors due to rapid economic development, increasing middle-class wealth, and the adoption of financial technologies. This sector diversity enhances the finance industry’s resilience to external shocks, contributing to the overall economic stability. Technologies, specifically in terms of mobile banking and payment systems, have attained substantial growth. Due to lower banking penetration rates, these markets possess the agility to leapfrog traditional banking models.

Wherein lies the competitive forecast opportunities?

A significant aspect to consider for banks in emerging economies is the vast untapped potential, especially in remote and rural areas. Lower levels of banking penetration mean there is considerable scope to expand and incorporate these sections into the formal banking sector. Furthermore, the competition offers an opportunity to gain market share by capitalizing on the innovative technology models, particularly financial technologies that sidestep conventional banking procedures.

What changes can be anticipated for emerging markets banks?

While observing a trend of strong growth, we can anticipate changes in the market landscape, such as the consolidation of smaller institutions and the entrance of foreign banks which may reshape the domestic banking industry. Moreover, digital transformation will be a key driver in shaping the future of banking in these markets. Therefore, incumbents should embrace digital innovation to stay competitive, while regulators must ensure a level playing field to benefit consumers.

Key Indicators

  1. Gross Domestic Product Growth Rate
  2. Inflation Rate
  3. Interest Rates
  4. Non-performing Loan Ratio
  5. Tier 1 Capital Ratio
  6. Loan to Deposit Ratio
  7. Government Debt to GDP
  8. Number of Unbanked Population
  9. Technological Adoption Rate
  10. Foreign Direct Investment Inflows