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Asian consumers are likely to demand more financial services

Asian consumers are expected to account for half of global consumption growth in the next decade, equivalent to a $10 trillion growth opportunity. Globally, one of every two upper-middle-income and above households is expected to be in Asia, and one of every two completed consumer transactions in the world is likely to occur in the region.

An increasing number of people are projected to join the consuming class, defined as spending more than $11 a day in 2011 purchasing power parity (PPP) terms. In 2000, only 15 percent of Asia’s population was part of the consuming class; the incomes of the remaining three billion people were still insufficient to support discretionary spending.

However, over the next decade, a significant reversal is likely. By 2030, three billion people, or 70 percent of Asia’s total population, may be part of the consuming class.

As more consumers experience rising incomes, their financial needs are likely to increase and become more sophisticated. McKinsey’s Global Banking Pools project that total revenue pools in the region are likely to grow at around 7 to 8 percent per annum over the next five years, driven by an increased number of consumers accessing financial services and by existing consumers increasing their uptake of services.

MGI research indicates that most consumption growth in the coming decade will be urban, and driven by higher-income consumers—85 percent of consumption growth is expected to originate in urban areas, and 80 percent is expected to be driven by the two top tiers of the consuming class.

However, more than ever, patterns of consumption and consumption growth are diversifying, reflecting demographic, social, and technological change.

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