Asia presents many opportunities for local and global financial institutions with several North American and European companies withdrawing from the continent after the 2008 global financial crisis to focus on their respective home markets, according to Edmund Lin and Philippe De Backer global co-heads, financial services practice, at global management consulting firm Bain and Co. In Asia, India continues to remain an attractive market for foreign investors given its sheer size and demographic profile, Lin and Backer said in an interview. Edited excerpts: Financial services is a sector that has been hit the most in the global financial crisis. What has been the impact? How have institutions changed their focus in the ensuing years? Backer: You have to distinguish by geographies. To some extent, Asia has been protected. Europe and North America have been hardest hit. It has brought about more forceful regulatory enforcement when it comes to capital and liquidity rules. It has changed the mindset of executives on how they run the bank. The way capital markets have been looking at to finance institutions and the returns. The way banks have been growing historically, banks look at income statement—top line and bottom line. Now it is much more balance sheet driven. More traditional businesses like retail have become attractive rather than the volatile fee-driven business. Some of these changes were in the making and the financial crisis has only accelerated these regulatory changes. Lin: Institutions in Asia had very ample capital compared to those in North America. Coming out of the crisis, we see quite a strengthened set of local Asian competitors. A number of large global players have had to be far more selective in the regions and type of business they participate in. We have seen already the pullback of a number of financial institutions from a series of markets, customer segments and product areas in Asia-Pacific because of capital and liquidity constraints. We do not see that necessarily stopping anytime soon. And it would present great opportunities both for global banks that remain in Asia in certain segments to increase their share in areas they think are most attractive as well as for local institutions in their respective markets. We have increasingly seen this in couple of recent deals. Lin: It depends a lot on each individual local market. In some markets like South Korea and Malaysia, in the last 15 years, there already has been a quite significant consolidation. In other markets such as India, China and Indonesia there is still an opportunity for local consolidation among large, mid-scale and smaller players. That’s certainly something that we do expect across Asian markets. Will foreign investment into India be affected by the recent aggressive tax provisions in the budget, be it the retrospective amendments or the introduction of the general anti-avoidance rules? Lin: If you look at the economic attractiveness of India, in the medium-to long-term it would continue to attract capital irrespective of whatever tax regime is prevailing. I think the investors would adjust themselves to the prevalent tax regime. If you look at the world around, which market grows at 7%? Short term, there may be some adjustments that take place in response to the crisis, but in the long term, India continues to remain an attractive market. Backer: India is very important for a multiple reasons. As a domestic market, the growth and the expected future growth is a wonderful driver for business. India is playing a greater role in the world economy. Many Indian companies are growing abroad and strengthening further the trade ties. So we are looking at India not just in terms of the domestic market but in terms of the place it has gained in the international markets. Will India’s inability to push through some important reforms such as the increase in foreign direct investment limit in insurance discourage more entrants? Lin: Insurance market in India is large and growing and from just a pure demographic standpoint there is further upside opportunity. It is dominated by a few large local players and quite a number of pre-existing foreign entrants.