There is no one-size-fits-all model for emerging markets. Each one has its own unique business environment, local customs and preferences. The legal, regulatory and business requirements vary in each market. And, the competition is two-fold: competition with banks from developed markets, and also with local banks that stand as powerful rivals in their own right.
Strategy and value proposition
An emerging market strategy must accommodate increasing customer expectations, offer innovative products and higher service—without premium pricing.
Investment banks must identify and replicate their key capabilities for each market, offer a differentiated employee proposition to attract and retain talent, and balance global controls with local autonomy.
Banks must prepare for regulatory interventions and the resulting cost of compliance. It’s also likely that demand will fluctuate in the medium- to long-term, so banks must have the flexibility to tune their capabilities as appropriate.
Emerging market entry is not without its challenges. There can be significant barrier to entry for foreign players, as well as complex and onerous registration activities. To succeed, banks must undertake robust due diligence and be selective about selecting business lines where they seek market leadership.
Despite these challenges, the drive for emerging markets is in its increasing demand for financial services, rising incomes and new markets, such as Turkey, Mexico and Indonesia. It’s a ripe opportunity for investment banks to flourish.
Download Challenge 9: Maturing in Emerging Markets (pdf; opens in a new window).