Markets
Banking the Unbanked is a $380B Opportunity
View the full-size version of this graphic
Banking the Unbanked is a $380B Opportunity
Today’s infographic comes from Raconteur, and it looks at the opportunity of providing financial services to the population of unbanked people in emerging markets. View the full-size version of the graphic for better resolution.
For those of us living in North America or Europe, we generally take the near-universal access we have to financial services for granted.
Sure, there are many people that have questions or concerns about the way central banks and currencies operate, but even the most skeptical of these people likely keep some money in a bank or investment account. It’s convenient, easy, and it facilitates other economic transactions.
But, there are billions of people in the world that do not have such an opportunity. This “unbanked” population pays for rent and goods in cash, and they usually don’t have easy access to things like a bank account, insurance, investments, or pensions.
Where are the Unbanked?
The World Bank has data from 160 countries on this subject, and it’s clear that there are some pretty significant holes that can be filled – either by financial institutions, or fintech companies – that are willing to take the chance.
Most of the world’s unbanked population lives in highly rural, undeveloped areas such as sub-Saharan Africa and Central Asia. In countries in these regions, such as Turkmenistan (where only 1.8% have bank accounts) or Niger (3.5% have accounts), banking is largely unknown to the masses.
A Multi-Billion Dollar Opportunity
But is an unbanked country like Turkmenistan where the opportunity lies? Not really, because it only has five million people, close to 60% unemployment, and a particularly repressive regime. It’s a lot of risk to take on for an extremely low payoff.
However, emerging economies in the Asia-Pacific and Latin America/Caribbean seem like a much safer potential bet for would-be providers. While smaller proportions of their populations lack access to basic financial services, their higher overall populations and income levels make them a more feasible choice.
In the Asia-Pacific, the World Bank sees increased banking penetration as a $79 billion opportunity for personal banking of individuals with under $8k in annual income. Likewise, it sees a $95 billion opportunity in micro and small business banking in the region.
For Latin America and the Caribbean, the opportunity is similar: $34 billion for personal banking (less than $8k income) and $81 billion for micro and small banking business.
Markets
3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Valuations are much lower than they were during the dot-com bubble, but what else sets the current AI enthusiasm apart?

3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Artificial intelligence, like the internet during the dot-com bubble, is getting a lot of attention these days. In the second quarter of 2023, 177 S&P 500 companies mentioned “AI” during their earnings call, nearly triple the five-year average.
Not only that, companies that mentioned “AI” saw their stock price rise 13.3% from December 2022 to September 2023, compared to 1.5% for those that didn’t.
In this graphic from New York Life Investments, we look at current market conditions to find out if AI could be the next dot-com bubble.
Comparing the Dot-Com Bubble to Today
In the late 1990s, frenzied optimism for internet-related stocks led to a rapid rise in valuations and an eventual market crash in the early 2000s. By the time the market hit rock bottom, the tech-heavy Nasdaq 100 Index had dropped 82% from its peak.
The growing enthusiasm for AI has some concerned that it could be the next dot-com bubble. But here are three reasons that the current environment is different.
1. Valuations Are Lower
Stock valuations are much lower than they were at the peak of the dot-com bubble. For example, the forward price-to-earnings ratio of the Nasdaq 100 is significantly lower than it was in 2000.
Date | Forward P/E Ratio |
---|---|
March 2000 | 60.1x |
November 2023 | 26.4x |
Lower valuations are an indication that investors are putting more emphasis on earnings and stocks are less at risk of being overvalued.
2. Investors Are More Hesitant
During the dot-com bubble, flows to equity funds increased by 76% from 1999 to 2000.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
1997 | $231B |
1998 | $163B |
1999 | $200B |
2000 | $352B |
2001 | $63B |
2002 | $14B |
Source: Investment Company Institute
In contrast, equity fund flows have been negative in 2022 and 2023.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
2021 | $295B |
2022 | -$54B |
2023* | -$137B |
Source: Investment Company Institute
*2023 data is from January to September.
Based on fund flows, investors appear hesitant of stocks, rather than overly exuberant.
3. Companies Are More Established
Leading up to the internet bubble, the number of technology IPOs increased substantially.
Year | Number of Technology IPOs | Median Age |
---|---|---|
1997 | 174 | 8 |
1998 | 113 | 7 |
1999 | 370 | 4 |
2000 | 261 | 5 |
2001 | 24 | 9 |
2002 | 20 | 9 |
Many of these companies were relatively new and, at the peak of the bubble in 2000, only 14% of them were profitable.
In recent years, there have been far fewer tech IPOs as companies wait for more positive market conditions. And those that have gone public, the median age is much higher.
Year | Number of Technology IPOs | Median Age |
---|---|---|
2020 | 48 | 12 |
2021 | 126 | 12 |
2022 | 6 | 15 |
Ultimately, many of the companies benefitting from AI are established companies that are already publicly traded. New, unproven companies are much less common in public markets.
Navigating Modern Tech Amid Dot-Com Bubble Worries
Valuations, equity flows, and the shortage of tech IPOs all suggest that AI is different than the dot-com bubble.
However, risk is still present in the market. For instance, only 33% of tech companies that went public in 2022 were profitable. Investors can help manage their risk by keeping a diversified portfolio rather than choosing individual stocks.

Explore more insights from New York Life Investments.

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