Banking for 7 billion and 7 million

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GLOBAL INVESTOR 3.06 Lead — 12 Photo: UHB Trust/Getty Indonesia Malaysia Malaysien Poland England Ireland Brain drain Migration out of Poland might trigger migration from another cheaper country, such as the Ukraine or Malaysia to fill the gap, which again results in a further population shift. Also, the number of Germans leaving home in search of a better work environment abroad is higher than at any time since the fifties, with a marked drain among young, skilled people.
GLOBAL INVESTOR 3.06 Lead — 13 will increase dramatically. Both developments call for a clear shift in front units’ service strategies as well as in product and wealth management structures towards an embedded wealth management model. Infrastructure investments to boom further — The search for work and prosperity is fueling the growth of the mega-cities. The United Nations expects close to 60% of the world’s population to be living in urban areas by 2030, up from 48.7% today. To grasp the true dimension of this development: this growth is equal to roughly one new city the size of Barcelona emerging every 10 days! The lion’s share of growth is expected to stem from the less developed regions in Asia and Africa. The percentage of the population living in urban areas in Africa is expected to increase from 14.7% in 1950 to 50.7% in 2030, roughly 3.5 times more than at present. The same metrics in Asia imply more than a tripling of the urban population over the same period. The fact that investments in the infrastructure of emerging countries are necessary goes without saying. However, this is also true of older cities in developed markets, which have not been designed for the mobile urban citizen or the sheer size of the 21st century city. This will result in tremendous and costly long-term infrastructure investments as well as a trend towards more decentralization of the biggest cities around the globe. To find a way to finance the infrastructure investments of the 21st century, further privatization, such as plans currently calling for the privatization of parts of the German highway system – until now the country’s “sacred cow” – might soon become reality. Migration gains — The World Bank estimates that a rise in migration from developing countries would generate gains for the world economy to the benefit of all of us. Migration amounting up to 3% of the workforce of high-income countries could lead to a global output gain of USD 356 billion by 2025. This is estimated to be double the global gain from full trade liberalization. Migrants’ level of education and salary has an effect on the amount of the remittances they send home. Studies done for the United States suggest that highly educated and well-paid migrants – 80% of Indians working in the USA have a college degree – tend to save and invest in the host country. It is quite likely that the majority of well-educated migrants come from well-situated families not requiring as much support from abroad. By contrast, less educated workers such as the Hispanics in California or Texas tend to send home a higher amount, which is estimated at up to USD 500 per month on average. The migration revolution discussed thus far is leading to new opportunities in banking: Banking for 7 billion people: Today’s migration is impacting the whole range of banking services. Many of today’s migrants are displaced or are refugees with the potential to become the retail banking client of the near future. On top of this, the mobility of the 21st century citizen is, thanks to short travel distances, higher than ever before, resulting in a rising number of high-skilled economic refugees and the flex-patriate group at the top end (see figure 7). Banking for 7 million people: The vast growth in private banking is currently being driven by Asia and Latin America. Aging in the developed part of the world leads to a generational wealth transfer in private banking. The different needs of new and younger clients, who, as studies show, have a higher degree of investment sophistication, are leading to changes in the structure of private banking services offered. Labor migration to heat up retail banking Globally, the number of people living outside their home countries is estimated to be at 175 million and rising rapidly. Although migrant remittances are an old issue in the migration debate, they have received greater attention in recent years. The obvious reason for this is the sharp rise in the flow of remittances into developing countries (see table 1, figure 4), which makes this volume-driven business attractive. The aim of these people is often to support the family left at home. To do so, some form of money transfer service, and hence banking relationship, is required. Migration is likely to give rise to a new group of banking clients and banks will have to adapt their Table 1 Remittances to developing countries Today’s migration is impacting the whole range of banking services. Globally, the number of people living outside their home countries is estimated to be at 175 million and rising rapidly, with a corresponding sharp rise in the flow of remittances into developing countries at the lower end of the banking range. Source: World Bank, United Nations in USD bn 1990 1995 2000 2001 2002 2003 2004 2005 Change 2001–2005 in % Latin America 5.8 13.4 20.1 24.4 28.1 34.8 40.7 42.4 74 South Asia 5.6 10.0 17.2 19.2 24.2 31.1 31.4 32.0 67 East Asia 3.3 9.7 16.7 20.1 27.2 35.8 40.9 43.1 114 Middle Asia and North Africa 11.4 13.4 13.2 15.1 15.6 18.6 20.3 21.3 41 Europe and Central Asia 3.2 8.1 13.4 13.0 13.3 15.1 19.4 19.9 53 Sub-Saharan Africa 1.9 3.2 4.9 4.7 5.2 6.8 7.7 8.1 72 World (developing and industrial) 65.6 101.6 131.5 147.1 166.2 200.2 225.8 232.3 58
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Imprint Publisher Credit Suisse, Gl
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Banking for 7 billion and 7 million

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