22 Nov Business in Asia – $10 Trillion market
Are you doing business in Asia? – If not, you could be missing out on a $10 Trillion opportunity.
According to a report by McKinsey, ‘Asia is the world’s consumption growth engine – miss Asia and you could miss half of the global picture, a $10 trillion consumption growth opportunity over the next decade’.
The consumer market in Asia is rapidly evolving with new growth angles particularly for financial service players who should re-look at their Asian consumer map.
Globally, 1 out of every 2 ‘upper-middle-income and above households’ is expected to be in Asia and 1 of every 2 completed transactions in the world is likely to be in the Asian region.
In 2000, only 15% of Asia’s population was part of the consuming class – consuming class is defined as people who spend more than $11 a day in purchasing power parity (PPP) terms. In the next decade however, by 2030, 3 Billion people or over 70% of Asia’s total population is expected to be a part of the consuming class.
So what are the new growth angles that financial players should look out for? 3 key areas out of the 8 points shared in the article are:
1) By 2030, 40-50% of the market share will be by digital native consumers who are more likely to explore alternative financial services and are more willing to take on consumer debt. Opportunities to serve digital natives include point-of-sale financing with flexible maturities reflecting the fact that this cohort tends to take on more debt to finance consumption than others.
2) Embedded finance – financial services distributed in an embedded way could grow by as much as 60%.
3) Sharing, rental, and subscription economies are gaining traction in, for instance, mobility, fashion, electronics, and housing. As Asian consumers consider new forms of ownership, some conventional financial products like home insurance and car loans may become less relevant. Players need to innovate their product mix.
According to McKinsey’s report, Asia’s dynamic consumer markets require financial service companies to increasingly understand, and learn how to serve markets that are changing radically—socially, demographically, and technologically. The next decade will present countless opportunities to the players that find the right ways to serve the new Asian consumers.
With a strong network on senior leaders across a spectrum of functions in the FinTech sector, NAOS International has been actively working with funds and financial players in hiring their leadership teams to take them to the next level. Reach out for an open discussion on your hiring activities and advise.
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