Kristin R. MoyerDavid Furlonger and Peter Redshaw here, freshly returned from Jo’Burg Hilton.
Recently surrounded by many of our clients from the African market at our annual Financial Services Conference, it was interesting to see how the global financial services crisis and economic climate is affecting these emerging markets.
While the fall out from the global economic recession is only now starting to hit the South African economy, it is clear that the banks in South Africa have remained largely immune from the banking crisis that initiated it. During the conference one client remarked on their apparent luck at being “too late to the party.” Luck may be part of it but Peter and I also see evidence of less leverage of the balance sheet– only 15X compared to 80X and upwards at some G7 banks – and a different regulatory/policy stance as being significant brakes.
This is positive in terms of this set of emerging markets, especially when seen in the context of markets that are expanding via microfinance, mobile financial services and regionalization. Conversations with our clients underline that FS firms in this region are not as focused as harder hit regions on cost cutting and are looking to invest in their business and IT, especially in areas such as wealth management, core platform development (albeit still using a fixed cost operating model) and data governance.
FS institutions outside the African market place may find this region a useful yardstick for some (future) return to growth initiatives they choose to pursue.
Category: Executive Decisions Tags: banking crisis, cost cutting, emerging economy, growth, IT investments
1 response so far ↓
1 Chris Holland March 1, 2010 at 9:07 am
Some really great observations by Gartner! I was fortunate enough to attend this event at the Hilton and also heard first-hand the somewhat flippant comment made by one of the delegates. As pointed out in the blog, there is some (limited) value in that statement, but thanks goodness the article continues to reveal some of the more insightful aspects of why South African Banks are avoiding by and large the effect of the Global Credit Crisis. Well done to David and Peter for bravely stepping off the “comfort fence” and telling it like it is, and to Kristin for wording the article with the usual Gartner aplomb!