Golden Banking: Emerging Market Prospects

Identifying banking emerging markets suggests a Midas touch. What are the strategies for figuring out which emerging markets will turn to gold in the banking field? The key here is time horizon: you need to look far beyond the next year or two to truly identify potentially golden banking opportunities.

• Research by Berg Insight shows the market for mobile banking services increasing in growth about 89 percent per year - from 20 million in 2008 to an estimated 913 million in 2014. This is especially true in the markets of Asia and Africa, according to the research findings.
• A report recently released by Price Waterhouse Coopers PWC), "Banking in 2050," identifies seven emerging market countries (the E7) of China, India, Brail, Russia, Turkey, Mexico and Indonesia as having the biggest growth potential in the banking market. Currently, according to PWC, the E7 ranks in 10th position. By 2050, the E7 as a portfolio should be bigger than the G7. Chinese banking is predicted to overtake the U.S. banking market by 2040.
• Data from Fitch indicates that banking emerging markets are generating higher rates of return.
  

• When considering whether to invest in a single E7 country, for example, it's probably a more sound strategy to invest in the E7 countries on a portfolio basis.
• Many developing nations are offering attractive incentives in the war for talent. These countries, again citing PWC's report, include Russia, Turkey and China.
• Indian banks are now (and will be for the foreseeable future) a hotbed for outsourcing financial services. They are jump starting greater types of innovation.
• It's easier to invest in the economies of developing nations and their stocks, bonds and mutual funds.
• Focus on the fundamentals: population growth, education, investment markets and other leading indicators of growth when considering banking emerging markets.