Rise of the Indo Crescent

Neither BRICS nor Emerging Markets works anymore as a geographic concept of value creation in banking. A new engine of global banking has emerged along the coastline of the Indian Ocean.

Based on geography, we call this high-growth region the Indo Crescent. Banking in the Indo Crescent—which stretches from Kenya on the west through India to Australia—is expected outperform banking in the remaining BRCS countries (Brazil, Russia, China, and South Africa, excluding India). Already, the Indo Crescent is home to the world’s fastest-growing financial hubs, including Dubai, Mumbai, Nairobi, and Singapore.

Advantages come from the Indo Crescent’s forecast economic growth, low bank penetration, and advanced use of technology. Between 2021 and 2030, we expect the economy of the Indo Crescent to grow at 7.3 percent per year, compared with 6.0 percent for BRCS and 4.3 percent for the rest of the world. This region is still underpenetrated as banking penetration in the Indo Crescent is 4 percent (share of banking revenues as a percentage of GDP), just over half of the rest of the world’s 7 percent penetration rate, which leaves substantially more room for growth. Additionally, technology has been enabling Indo Crescent banks to leapfrog those in other parts of the world.

At present, Indo Crescent banks hold less than 10 percent of global bank assets, but they hold an outsize share of assets at the best performers among the world’s top 300 banks by market cap. About half (51 percent) of assets held by best performers—those in the upper quartile in terms of price-to-earnings and price-to-book ratios—are with Indo Crescent banks. They accomplish this by driving innovation through technology, leading with beyond-banking business models, and creating next-gen cost efficiency while being thoughtful about risk.

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