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EMERGING MARKETS:
TAPPING THE UNBANKED AND
UNINSURED
Looking ahead, the BFSI sector is poised
to benefit from recent regulatory moves
that are designed to promote greater
financial access in emerging markets, and
in turn, allow it to target underserved
customers. In March, the central banks
of the Philippines and Malaysia signed
an agreement aimed at greater financial
integration, and economic development
among members of the Association of
Southeast Asian Nations (ASEAN)². While
a small start, the agreement between the
two central banks marks a milestone as
being the first under the ASEAN Banking
Integration Framework (ABIF).
The ABIF, which was ratified in 2015, aims
to increase the ease with which banks can
operate across multiple ASEAN countries.
Further, the launch of the ASEAN
Economic Community (AEC) promises to
open up ASEAN markets to ASEAN banks.
All these developments are welcome
news as local banks seek new markets for
growth, and possibly succeed in tapping
the ASEAN region and India.
Emerging market populations continue to
have a high percentage of unbanked and
uninsured people with rapidly growing
incomes. In the Philippines and Vietnam,
seven out of ten people who have savings
opt to keep their cash at home, instead
of entrusting their money to the banks.
Similarly, in Indonesia, the banking
penetration rate stands at just 36% with
about 170 million Indonesians not having
personal bank accounts.³´ In India, banking
penetration has crossed the 50% threshold
in the last two years. However, the Indian
government’s push for financial inclusion
through Jan Dhan Yojana³³, mobile banking,
issuance of new banking licenses by the
Reserve Bank of India and foreign banks’
expansion in India are expected to add
some spring to the financial sector, with
the potential to generate nearly 700,000-
900,000 jobs over the next five years.
² “Philippines, Malaysia Ink Banking Pact,” Philippine Star, March 14, 2016.
³´
The Global Findex Database 2014, Measuring Financial Inclusion around the World, April 2015. The World Bank Group.
³³
This is a government initiative ensuring access to various financial services like availability of basic savings bank account, access to need
based credit, remittances facility, insurance and pension to the excluded sections i.e. weaker sections & low income groups. This deep
penetration at affordable cost is possible only with effective use of technology. (Source: Pradhan Mantri Jan Dhan Yojana)
0.5
1.0
1.5
2.5
5.4
6.8
8.2
9.8
0
2
4
6
8
10
12
Absorption (million sf)
BFSI SECTOR ABSORPTION - EMERGING MARKETS (2016-2020)
Source: Cushman & Wakefield Research
*Refers to net new absorption, Grade A CBD or equivalent submarkets
0.9
1.1
1.2
1.4
1.5
2.8
4.4
11.3
17.1
0
2
4
6
8
10
12
14
16
18
Absorption (million sf)
BFSI SECTOR ABSORPTION - CORE MARKETS (2016-2020)
Source: Cushman & Wakefield Research
*Refers to net new absorption, Grade A CBD or equivalent submarkets
8 ASIA PACIFIC BFSI OUTLOOK 2017