APAC-BFSI-Outlook-2017

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.

BFSI SECTOR ABSORPTION - CORE MARKETS (2016-2020)

17.1

10 12 14 16 18

11.3

0 2 4 6 8

4.4

2.8

1.5

1.4

1.2

Absorption (million sf)

1.1

0.9

Source: Cushman & Wakefield Research *Refers to net new absorption, Grade A CBD or equivalent submarkets

BFSI SECTOR ABSORPTION - EMERGING MARKETS (2016-2020)

12

9.8

10

8.2

8

6.8

5.4

6

4

2.5

1.5

2

1.0

0.5

Absorption (million sf)

0

Source: Cushman & Wakefield Research *Refers to net new absorption, Grade A CBD or equivalent submarkets

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)

8 ASIA PACIFIC BFSI OUTLOOK 2017

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