Oliver Wyman highlights opportunities created by climate change while Celent assesses Chinese and Indian ATM markets.

OLIVER WYMAN REPORT:

CLIMATE CHANGE AND THE FINANCIAL SERVICES INDUSTRY

Financial institutions should act now to respond to changing demand due to climate change, while protecting themselves against longer-term erosion of value. An Oliver Wyman report highlighted the opportunity the industry has to contribute to the growing risk management needs of companies, governments and individuals as the world adapts to climate change. It stated that the industry was uniquely positioned to cope with climate change due to its risk expertise and capital mobility. It noted:

  • Corporate/institutional banking and asset management will see the strongest upsides, with new carbon markets, growing demand for hedging innovation and clean technology financing and advisory revenues potentially attracting $225bn of new investment per year by 2016.

 

  • Insurance faces the greatest threats, and could suffer up to $150bn of annual weather-related losses by 2030.

 

  • The ‘green’ banking market is currently tiny, but ‘green’ could increasingly influence consumer choice of retail bank. Greater awareness of flooding and windstorms is already increasing the appetite for property and casualty insurance.

Co-author David Knipe said: “Firms should be stress-testing their portfolios, intelligently strengthening their green credentials, and developing new products to anticipate changing customer demand.”

CELENT REPORT:

THE DRAGON AND TIGER OF THE ATM MARKETS: CHINA AND INDIA

The ATM (automated teller machine) markets in China and India have experienced explosive growth over the past five years, and in the next three to five years there will be an even greater increase from 125,000 ATMs in 2006 to 350,000 by 2010, according to a report from Celent, a Boston-based research and consulting firm.

The report noted:

  • The ATM market in many industrialised countries has reached saturation level and. with the decline of the use of cash, ATM transaction volumes and profitability are slowing across mature markets such as the US, Japan and the UK.

 

  • In China at the end of 2006, there were 102,000 ATMs across the country, mostly in urban areas. Celent expected ATM installations to increase by 20% annually, reaching 233,000 by the end of 2010 with growth in rural areas and small cities.

 

  • In India, there were 21,523 ATMs across the country as at end-March 2006. Celent said it believed that, based on banks’ target branch/ATM ratios of 1:2.5, ATMs would grow to 175,000 by 2012.
  • ATM growth is closely related to growth in debit and credit cards in both China and India. In China, bank card issuance has grown at a compound annual rate of 24.6% since 2002; and in India annual credit card growth has been 39% since 2002.

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