Improved financial inclusion could boost bank revenues by US$88 billion across the Asia-Pacific region by 2020, with banks in China, Thailand and Vietnam having the greatest opportunities for consumer and micro, small and medium enterprise (MSME) growth, according to EY’s study.
This would mean that the region could become more financially inclusive than Latin America and Europe, Middle East, India and Africa (EMEIA), the EY’s report “Innovation in financial inclusion: revenue growth through innovative inclusion” said.
Globally, potential bank revenue could reach as high as US$200 billion through increased servicing of financially excluded MSMEs in 60 emerging countries.
The more detailed data by EY also showed that China was expected to have the greatest revenues from financial inclusion of around US$63.4 billion, and was followed by Thailand (US$8.5 billion) and Vietnam (US$5 billion).
The study also found that greater financial inclusion would generate sizeable economic benefits, boosting gross domestic product by up to 14 per cent in developing economies such as the Philippines and 30 per cent in frontier markets like Vietnam.
EY’s global emerging markets leader, Jan Bellens, said: “Financial inclusion isn’t merely a corporate responsibility goal, it’s a strategic growth opportunity for financial institutions across emerging markets in Asia-Pacific.”
“Not only does financial inclusiveness have a positive impact on financial institutions’ bottom line, but it is also good for local economies and individuals as inclusiveness tends to smooth income trends, grow local businesses, protect against natural man-made disasters and help individuals to save for important life events.
“If banks do not capture this profitable growth opportunity, the gap will be filled by innovative nonbank institutions.”
Current retail bank account penetration across Asia-Pacific is at 65 per cent, which ET estimated could increase to 74 per cent by 2020.
