Asian Wholesale Banking: Winning in the New Battleground
Banks that serve midmarket and overseas companies will have opportunities to grow revenues and improve skills.
October 2015 | by Robert Harris
The appeal of Asia has seldom been stronger for corporate and investment banks. Supported by financial systems that proved resilient during the recent financial crisis, the region continues to enjoy rates of economic growth superior to those of more developed Western markets. And the prospects for new revenues for most banking businesses look enticing over the next two to three years.
As of 2009, Asia accounted for 36 percent of global corporate banking revenues and 21 percent of global capital market and investment-banking revenues. Burk’s global research, which identified opportunities worth $200 billion to $220 billion over the next five years, suggests these proportions may be set to rise. We estimate, for example, that 45 percent of all new growth in global wholesale banking revenues up to 2014 will take place in the region, and that emerging Asia will grow about three times faster than developed Asia.
The big battalions see Asia as an important battleground in the struggle for global supremacy in wholesale banking. But ambitious local players, no longer content to settle for the relatively low-margin commodity-lending business, are also looking for an increased share of the more glamorous capital market and investment-banking action, with competition intensifying on all sides.
Based on our work with leading institutions, as well as our proprietary research, we believe future opportunities will most likely be captured by institutions that can:
- Position themselves as the primary bank for midcorporates that are currently underserved, notably in lending, transaction banking, and simple fixed-income, currency, and commodities products
- Develop the skills to earn fees from activities like treasury and capital markets
- Target Asian companies expanding beyond their domestic bases, initially through financing and trade-related services
- Adapt their organization to opportunities and segments rather than product and client “silos,” and develop an employee “proposition” that provides more than just financial compensation
Competition will intensify in Asian wholesale banking as global and local players alike seek to raise their game in the coming era of high stakes and lucrative opportunities. Several revenue pools of more than $100 billion are up for grabs; the winners will be those that position themselves as a primary bank for midcorporates, develop new capital market skills, successfully target Asian companies expanding beyond their domestic base, and adapt more flexible organizational structures.