The Financial Services (FS) industry is one
of the fastest growing and most diverse in the
world. It is also one of the most important
enablers of future economic growth and
global economic integration.
In 2007 global FS revenues are a staggering
$2.5TN and market value is in excess of
$10TN. Moreover by 2020, we expect the
industry's revenues to account for around
10% of global GDP – up from about 6%
today and equivalent to a tripling of revenue
over 15 years.
The companies that provide financial
services are extremely diverse. Some are
among the largest corporations in the world,
e.g. the ‘big 5' UK banks actually have
operations in over 80 countries around the
world and between them employ over
600,000 people – or about twice the
population of Iceland, and 6 of the top 20
companies in the Fortune Global 500 list of
largest corporations are banks and insurance
companies. The diversity of activity in the
industry can be seen from the chart below
which summarises the make-up of global FS
revenues in 2020.
Consolidation (mergers and acquisitions) of
global FS providers is also a continuing
trend. Over the coming decades we
anticipate cross-border mergers will become
more common (in terms of value created)
than domestic mergers. Today the 10 largest
global insurers already operate in most major
economies and are actively expanding into
developing economies. Moreover by 2020
we expect the largest 10 global banks to
have revenues in excess of $100 billion
each, accounting for a quarter of all global
FS revenues.
Despite such consolidation there are, and will
remain, many small, but innovative and
rapidly-growing financial services companies
focused on particular products, services or
customers. Examples of these include private
equity houses, private banks, fund managers,
financial advisors, reinsurers, exchanges, and
hedge funds. There are also myriad other
organisations that provide specialist advice
and support within the industry, e.g.
technology providers, consultants, marketing
and recruitment services, trade associations
and trade unions.
The development of financial services will
continue to have a momentous impact on
future global economic growth, as witnessed
by the rate of financial services development
in emerging markets. Indeed, it is widely
recognised that access to investment capital
and availability of reliable banking services
and are key determinants of emerging
markets' economic growth prospects. Hence
we are seeing in these markets a general trend
towards liberalisation of formerly closed
markets, and a corresponding increase in
competition, innovation and customer choice.
In more mature markets, the impact of financial
services on growth will centre on the ability of
providers to develop solutions to emerging
socio-demographic issues such as the funding
of retirement and of healthcare. For example, in
Europe today there are typically three workers
for every retiree but in some countries by the
time today's graduates are making pensions
decisions this ratio will be closer to one-to-one.
What is clear is that as the FS industry grows
ever faster and becomes ever more diverse,
there are correspondingly diverse and
growing opportunities to individuals looking
for a challenging career in the industry.
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