Did a colleague forward you the Australian Retail Banker

Transcription

JANUARY 2016
RFi Group Opinion
Maximising the Main Bank Opportunity
RFi Group Insight
The potential for peer-to-peer lenders in Australia
RFi Group Women in Leadership
Samantha Hellen, Westpac
RFi Group Interview
Dr Shane Oliver, AMP Capital
RFi Group Interview
Peter Kell, ASIC
Transactions
Westpac cardholders able to temporarily lock cards
Savings
Deposits steady as rates fall
Mortgages
From variable to fixed rate mortgages
Cards
Frequent flyer points take a hit following RBA reform
Did a colleague forward you the
Australian Retail Banker?
Subscribe to receive YOUR FREE
monthly copy by clicking here
Personal Loans
Uber and SocietyOne partner up to deliver car loans
Payments and Digital
Big banks jump on board with Android Pay
www.rfintelligence.com
03
05
10
14
17
21
22
23
24
25
26
Letter from the Editor
Happy New Year and welcome to the January 2016 edition of the
Australian Retail Banker, a newsletter designed to give you an
update on news and trends within the Australian retail banking
market specifically in the areas of transactions, savings,
deposits, mortgages, cards, personal lending, payments and
digital banking.
This month’s Opinion Piece (page 3), authored by RFi Group’s Managing
Director – Advisory, Alan Shields, shares thoughts on how to truly maximise
the Main Bank opportunity, particularly looking at relevant age segments.
This month’s Insight Piece (page 5) observes the potential for peer-to-peer
lenders in Australia, as we see them going from strength to strength, with no
sign of slowing.
Ahead of the upcoming Australian Mortgage Innovation Summit (18 & 19
February) our interviews feature a range of its speakers.
In our Women in Leadership piece I talk to the Head of Strategy and Service
Quality for Home Ownership at Westpac, Samantha Hellen. Samantha has
enjoyed a cross-industry career and provides some great advice off the back
of her varied roles, as well as achieving balance and how she keeps those
things dear to her, sacred. I hope you enjoy the interview.
This issue’s RFi Group Thought Leader Interviews feature AMP Capital’s
Chief Economist, Shane Oliver and ASIC’s Deputy Chairman, Peter Kell.
Shane and Peter will both also appear in key speaking roles on the agenda
for the AMIS and we welcome you to read the pieces for a sneak preview into
their presentations.
As you know, we really enjoy our privileged position of meeting with these
industry experts and welcome you to let us know if there is anyone you think
would be great to highlight in 2016.
This month’s Product News and RFi Group statistics covers
advancements in card security, how deposit books are faring in the current
low-rate environment, comparisons between variable and fixed rate
mortgages, loyalty point issues, further partnerships between P2P lenders
and breakout disruptors and the state of play with Android Pay.
We hope you enjoy this very first issue of 2016 and look forward to working
together throughout the year.
Chloé James
Media & PR Director
RFi Group
+61 (0) 451 790 929
[email protected]
https://twitter.com/RFiMediaGRB
2
www.rfintelligence.com.au
RFi Group Opinion
Maximising the Main Bank Opportunity – Why what starts with 1824 years old, is won by 25-34 year olds
In the last six weeks, RFi Group has launched its latest study on Global Retail
Banking Cross-sell, focusing on the opportunities for banks to maximise their
main bank customer base. From a total sample of over 40,000 consumer
interviews globally, the report took into account the opinions of 22,000 banking
customers from 11 APAC markets – Australia, China, Hong Kong, India,
Indonesia, Korea, Malaysia, New Zealand, Singapore, Taiwan, and Thailand.
Proportion of consumers
'Very likely' to switch main
bank in next 12 months
By age - Global Average
As well as the opinions and experiences of these banking customers, the
research looked into the initiatives that banks around the world are employing,
to ensure that they win not only the minds, but the hearts of their customers too.
Essentially the report breaks down the main bank success story into four distinct
steps:

16%


14%

13%
12%
The importance of being the first main bank because almost 60% of
customers never switch
The importance of acquiring through a strong transactional banking
product that incentivises main bank behaviour
The importance of retention in the 25-34 year age segment as these
are the least sticky customers; and finally
The importance of digitally engaging customers to drive further crosssell, particularly among the 25-34 and 35-44 age segment
In past studies RFi Group has always been fascinated by the fact that almost
nobody across the globe switches their main bank after the age of 34 – in fact,
around the world, more than 90% of all main bank switchers do so before they
reach the age of 35.
10%
8%
4%
The reasons behind this often lies in life stage changes such as buying/ moving
home, moving/ starting work and getting into or out of a relationship, all of which
in turn often require a rethink of banking arrangements. So from a main bank
perspective, this (18-34 years) is an absolutely critical time for both acquisition,
but perhaps importantly, retention and it is on the latter that we would like to
focus.
This switching is reflected in both past switching behaviour and in future
switching intent. Likelihood to switch main bank accelerates and peaks in the
25-34 segment globally, and it is in this age group that proactive retention should
therefore be focused. In fact, 16% of 25-34 year olds globally are very likely to
switch their main bank in the next 12 months, compared to an average switching
intention of 12%.
Globally, in every country studied, the banks that have the largest share of the
25-34 age segment are the banks that end up having the largest main bank
share of the whole market. The statistics don’t lie, if a bank can acquire and
retain customers in this segment then they will undoubtedly ‘win’ the main bank
war. The table below shows exactly this for the 11 Asian markets studied.
In addition, across the Asian markets, very few of the large incumbent banks
have been able to increase their share of the 25-34 segment in recent years.
Three notable exceptions to this have been ANZ and CBA in the Australian
market and HSBC in the Hong Kong market. In the case of these three banks,
success has been driven by a combination of specific acquisition campaigns
focused on the younger demographic segments, a focus on customer
experience and importantly, a focus on digital engagement.
3
Indeed, in attempting to retain the 25-34 segment, the importance of digital
engagement should not be underestimated. RFi Group found that this age group
was the most likely to be ‘highly digitally engaged’ (determined by using mobile
or tablet banking more than once a week) and that if they could be kept
engaged, then they offered enormous opportunity for main bank product crosssell. In fact, a highly digitally engaged consumer has 4.4 unique products with
their main bank, compared to just 2.7 for a non-digitally engaged consumer.
The caveat on this digital engagement is that highly digitally engaged
consumers are the least sticky of all customers, despite their increased product
holdings. Indeed, any bank looking to drive digital engagement needs to
understand that once they embark on the initiative, they must continuously
adapt and improve their digital proposition so as not to fall behind the
competition.
4.4
Average number of products with main bank
(including investments)
by Digital Engagement - Global Average
3.8
3.2
2.7
Highly digitally Digitally engaged
engaged
Less Digitally
Engaged
Digitally
Unengaged
If you have any other questions, please don’t hesitate to contact me directly:
Alan Shields
Managing Director – Advisory, RFi Group
[email protected]
Main. +61 2 9146 5950
Mobile. +61 405 000 766
4
RFi Group Insight
The potential for peer-to-peer lenders in Australia
Peer-to-peer (P2P) lending is amongst the most prominent forms of alternative
products to rise with the recent wave of FinTech challengers. The Australian
market has already witnessed the entrance of a number of consumer P2P
lenders, with 4 key competitors currently in market.
However, the size of P2P lending in Australia is small, especially in comparison
to the US and UK. Future prospects will depend on customer preferences
(especially youth segments), the competitiveness of P2P offers relative to
existing alternatives and the reaction from banks.
A fledgling sector
The Australian P2P sector is in the early stages of development, with most
players launching within the last few years and representing a small proportion
of the total personal lending market. For example SocietyOne, the most
prominent P2P lender in Australia has a loan book of just $60m (drops to around
$35m when livestock loans are excluded). In contrast, P2P lenders have already
firmly established themselves in the US and UK markets over the last 10 years.
Since launching in 2007 Lending Club has grown its US lending book rapidly to
$13b; in the UK Zopa which launched in 2005 has lent over £1.2bn.
Australian P2P players primarily offer unsecured lending, operate in the sub
$35K loan size segment and charge interest rates which vary according to
borrower risk profile. Key lenders include:





SocietyOne (Range: $5K to $35K; Rates: 8.95%-19.49%; Launched:
May 2011)
Ratesetter (Range: $2K to $25K; Rates: from 8.6%; Launched:
November 2014)
Directmoney (Range: $5K to $35K; Rates: 8.5% to 18.5%; Launched:
October 2014)
Moneyplace (Range: $5K to $35K; Rates: from 8.9%; Launched:
October 2015)
Harmoney (launching in early 2016)
The small scale of Australian P2P is reflected in RFi customer preference data.
In Sep-15, just 7% of personal loan holders/prospective personal loan holders
indicated P2P was a viable alternative to standard personal loans. This
compares to 22% of respondents who considered a credit card and 12% who
considered a loan from friends/family. However the preference for P2P is up
from 4% in Dec-13.
5
When you applied for your personal loan, what
other finance options did you consider?
25%
Sep-13
Dec-13
Mar-14
Jun-14
Dec-14
Mar-15
Jun-15
Sep-15
Sep-14
22%
20%
15%
12%
11%
11%
10%
10%
10%
8%
5%
6%
6%
7%
5%
0%
Source: RFi Group
Demand from the youth segment
P2P lenders are particularly likely to appeal to younger customers, given their
emphasis on simple online applications and flexible borrowing criteria. When
RFi Group data is cut by age we see younger customers do have a higher
preference for P2P, with 13% of 25 to 34 year olds indicating it as an alternative
to personal loans, compared to just 1% for those over 55.
6
Preference for P2P loan by Age
14%
13%
12%
10%
8%
8%
8%
7%
6%
4%
4%
1%
1%
55-64
65-80
2%
0%
18-24
25-34
35-44
45-54
Total
Source: RFi Group
When broken down by loan purpose, we see P2P is most preferred by those
looking to fund education expenses followed by home appliance purchases and
investments.
Preference for P2P loan by Loan Purpose
35%
29%
30%
25%
18%
20%
15%
12%
10%
5%
18%
4%
7%
6%
3%
3%
3%
3%
0%
Source: RFi Group
7
Future prospects
While P2P lenders are currently marginal players, future preference may
increase, particularly amongst younger customers as they move to life-stages
associated with increased appetite for credit.
However, the potential success of P2P lenders is not necessarily a threat to
banks. Banks are likely to react if P2P growth picks up significantly, with the
option to invest in or collaborate with P2P lenders. There is also scope for banks
to fully commit and create their own P2P proposition.
8
9
RFi Group
Women in Leadership
Chloé James’ interview with Samantha Hellen,
Service Quality - Home Ownership, Westpac
Head of Strategy and
Samantha Hellen has enjoyed a varied career, across multiple and really quite
diverse industries.
She holds an MBA, has lived and worked across Australia and the globe, leads
strategy for one of the key product offerings (Mortgages) at one of Australia’s
majors, has three delightful sons and a supportive husband (one with his sights
firmly set on being the next Hugh Jackman – the son, not the husband!), and
still manages to fit in regular Pilates classes and to look cool, calm and collected
every time we meet.
“They were men of action. It
was oil so it was very male
dominated - but they were
people of action. They
didn't just talk or propose,
they actually 'did', and
always, importantly to me,
with the highest integrity.”
Samantha Hellen
Head of Strategy and Service Quality
Home Ownership
Westpac
Down at Barangaroo, where business and energy is picking up as quickly as
the towers seemed to, in late December I met with the successful, polished and
driven mother of three and Head of Strategy and Service Quality - Home
Ownership, for the Westpac Group.
The space at Westpac’s Barangaroo premises is all about collaboration and the
strategic multi-branded floor on which Samantha and I meet, allows the perfect
space for an open chat about Samantha’s career, a continued energetic drive
and advice to young people in business today.
“One of my old bosses once said to me, ‘Samantha, you come as a package.
It’s about understanding where your strengths lie, where your opportunities for
improvement are and surrounding yourself with people who complement your
skills and competencies.’ Since that day, I’ve always been very cognisant of that
and cottoned on very early as to how I could see myself achieving and
succeeding.”
Some wise advice, with much more to follow. I hope you like this interview;
How did you get where you are today and what, or who, has been your
greatest influence in business?
“What brought me into this industry are very much the individuals I’ve had the
pleasure to work alongside. I’ve followed an unconventional trajectory; starting
in the oil industry retail operations and multi-site management, where I was also
exposed to franchising and start-up operations which is still my true love. Having
worked across oil, marketing, franchising, entertainment and health it was
through an old oil industry contact that I moved into financial services. What
began as a 3 month project (to complete an entirely new franchise model for
RAMS, which, to this day remains very fruitful) has led me to a fulfilling career
with the Westpac Group.
The strong leaders I followed have by far been my biggest influences, because
here I am still in financial services. For a number of years while I started a family
and studied an MBA, I worked as small business consultant; predominantly
helping small to medium sized businesses with start-up and growth initiatives.”
On request, Samantha is quick to cite the qualities in these individuals who have
helped shape her career.
“They were men of action. It was oil so it was very male dominated - but they
were people of action. They didn't just talk or propose, they actually 'did', and
always, importantly to me, with the highest integrity.”
What is the driving force behind your career goals/aspirations?
10
“I have a true love of
learning – I love new ideas,
new people and new
processes. I will always
seek and ask to work in
areas where I have no prior
experience and often,
limited knowledge. I find if
I’m stimulated and learning,
then I am performing and
opportunities tend to
present themselves.”
Samantha Hellen
Home Ownership
Westpac
“I have a love of learning and I thrive on building new initiatives, new divisions,
and business start-ups. I don't necessarily consider myself an innovator or
hugely creative, but I do consider myself someone who loves to be involved in
the creation and the true strategy side of things. To achieve this I seek out roles
that combine strategy, business and financial imperatives, with a keen customer
focus. For me, it’s more about the execution of the strategy, than the blank
sheet. I like to proceed with an idea that I can truly implement. I enjoy drawing
people in, getting stakeholders on board and then really, it’s that execution piece
- that is what really turns me on. I would say I am a very aspirational person, but
am also comfortable as a 2IC. I actively seek to work alongside strong leaders
and Greenfield areas.”
Have you ever made a business decision you've regretted and can you
share it? And, what would you say is your greatest professional
achievement to date?
“I do actually. You must have respect for the organisation you work for, its core
values, what it stands for and how it treats its people. I left the oil industry to
work for a US entertainment conglomerate which culturally turned out to be a
very, very poor fit and I regretted the decision almost immediately. From a very
senior level I experienced anger, personal and inappropriate actions and blatant
back stabbing. People were disingenuous and it just wasn't the right fit for me,
at all. Ever since, I have taken great lengths to understand the organisation and
research the leadership prior to accepting a role.”
In terms of greatest professional achievement, Samantha explains it was
probably in her most recent role: Accountable for the end to end development
of group home lending strategy and customer experience which improved
customer satisfaction, reduced customer complaints and drove an increase in
market share.
“I am also on the Board of a wonderful organisation, ‘Uplifting Australia’, a notfor-profit focusing on the well-being of children and their families. We target 612 year old's in their most formative years and their families, in relation to social
and engagement issues. We want to make sure parents and children establish
good strategies to know how to reach out and talk to one another, and especially
to get them through those later difficult times. We are at a stage now where we
can track attendance, parental engagement, NAPLAN scale scores, and
behaviours. It has been hugely fulfilling to me to be a part of this.”
What do you do to keep evolving your career, to ensure its fulfilling and
successful longevity?
“As mentioned earlier, I have a true love of learning – I love new ideas, new
people and new processes. I will always seek and ask to work in areas where
I have no prior experience and often, limited knowledge. I find if I’m stimulated
and learning, then I am performing and opportunities tend to present
themselves. I also like to work for strong leaders, people whom I respect and
from whom I can learn. I keenly follow strength and integrity around an
organisation or industry.”
How do you achieve a work/life balance and what activities do you
participate in outside of your working life, that you see contributing to
your business success?
“I seldom achieve a balance on a given day, however I do strive to have balance
across a week, or probably more realistically, a month. I have a full life that
includes family, friends, exercise, socialising, reading, and home duties in
addition to my career. I am organised and structured and diarise everything.
Everybody's phone has "Find my iPhone" so I can tell you at any point in time
exactly where they are - and they know where I am too - it's all transparent!”
I had never seen this technology before and Samantha happily (cheekily) looked
up the location of one of her son’s to see his whereabouts – thankfully, he was
11
at school and we laughingly agree it would have been slightly awkward had he
not been!
Samantha tells me more about her three boys (or, her ‘three joys’ I quickly come
to realise, as she lights up). She continues on to joke that she was ‘probably
destined’ to be surrounded by men for her whole life. “It was always meant to
be I think, I often think ‘that’s my job in life, to create little men who are worthy
of Australian women!’”
As well as the involvement in the not-for-profit, Samantha enjoys being P&C
treasurer for the local primary school. “It’s impossible to have multiple and
conflicting components in balance but its having this full life that develops
resilience, prioritisation, multiskilling, influence, empathy and collaboration – all
of which is necessary for success in business.”
“I have never felt guilty
about my children having
carers. I've studied, I’ve
worked really hard and
have always had people
help me. If for anything, I
think it's taught my boys
that this can be the norm
and that my aspirations and
dreams are as important to
me, and their fathers are, to
him.”
She enjoys Pilates, particularly when there is a meditative element and during
the week, doesn’t commit to any more than one social event. “I want to be home
in the evenings.” Samantha and her husband outsource too, and with a helper
in the afternoons, know that homework is supervised, dinner is cooked, and
washing and ironing is maintained.
She continues, importantly, to the point on carers. “I have never felt guilty about
my children having carers. I've studied, I’ve worked really hard and have always
had people help me. If for anything, I think it's taught my boys that this can be
the norm and that my aspirations and dreams are as important to me, and their
fathers are, to him. We’ve always invested in quality care, so we don't have to
worry about it and I know and trust the person helping out. I have always been
much, much happier as a working mum, than a stay-at-home mum. There have
been times when I’ve not been working and to be honest, my family saw a
miserable side of me because I wasn't happy or fulfilled, which is not what I
want.”
Do you mentor others? And, what have you learnt in the process?
Samantha Hellen
Home Ownership
Westpac
“I mentor women within and outside of the organisation informally and am part
of a formal business mentoring through the Westpac Foundation’s “More than
Money” program. When the Foundation grants seed funding, they also look to
provide other assistance or expertise that the social enterprise. I have and
continue to provide business, strategic and financial mentoring to the CEO’s of
start-up social enterprises who have been fortunate enough to be recipients of
a Westpac Foundation grant. Ironically I’ve found that as part of the More than
Money program, I absolutely get more than I give.”
What do you think is the most significant barrier when it comes to women
in leadership roles?
Samantha explained that what she has learnt and witnessed over the years, is
that most corporate promotions are largely relationship driven.
“Executives promote based on their prior knowledge or working relationships.
Unfortunately women are still the minority in these pools of talent and don’t have
the breadth or depth of relationships that might include those on decisionmaking panels. In everything, what gets measured gets done. What gets
rewarded gets done faster. Until there are scorecards linked to remuneration
with senior leadership, inclusion in the pool of talent for consideration will
continue to be a challenge for women.”
What advice would you give to young women who want to succeed in the
workplace and what do you see as the biggest challenge for future
generations of business women?
“I would suggest creating authentic networks and planning weekly networking
activities.
In my experience, women who are successful, consistently do so every week.
Whether it be an organised networking function or activity, or to reach out to
12
“The other piece of advice
is to surround yourself with
good people who have
skills, experiences and
personalities that
complement yours. No one
person is perfect and can
do it all effectively.
Furthermore a diverse team
brings a wealth of
experience and ideas which
feed creativity and
innovation. I always make
sure there is someone in
my team who is highly
technical as well as a
mixture of introverts and
extroverts. ”
someone who you admire or feel you could learn from, these kinds of proactive
activities are worth their weight in gold. I’ve also found people tend to be very
generous with their time when you ask them. Who isn’t flattered when asked for
their advice?”
Samantha Hellen
Home Ownership
Westpac
“It’s the same advice I was given as a new mother; don’t sweat the small stuff!
Keep your eye on the big picture, the strategic horizon and the key milestones
that will deliver to that strategy. It’s all too easy to become bogged down in
irrelevant detail, politics, and red herrings. My advice is, don’t ignore them, but
don’t allow them to become all consuming.”
Samantha acknowledges that although these ideas are not new or ground
breaking, they really work. She goes on to suggest that when you do connect
with someone, it’s important to take the time to understand what is keeping them
up at night and see if you are able to do something about it. It might mean
providing them with a contact, an article, a potential referral. It becomes a
meaningful interaction and one which they will respect and recall.
“The other piece of advice is to surround yourself with good people who have
skills, experiences and personalities that complement yours. No one person is
perfect and can do it all effectively. Furthermore a diverse team brings a wealth
of experience and ideas which feed creativity and innovation. I always make
sure there is someone in my team who is highly technical as well as a mixture
of introverts and extroverts. As a leader if you want to succeed, find the people
who have the skills and experience that complement yours, understand where
you have strengths and where you have flaws. I try to do this in every role I
undertake and it has made huge difference. It is just so much easier to be
successful when you've got a balanced team.”
What’s the best piece of advice you have received as a woman in a
leadership role that you would pass on to others hoping to get there?
To read the full Women in Leadership series and all past Australian Retail
Banker editions, feel free to visit to archive centre on our website.
13
RFi Group Interview
Chloé James’ interview with Dr Shane Oliver, Head of Investment Strategy
and Chief Economist, AMP Capital
This coming February, Shane Oliver, Chief Economist at AMP Capital will join
a stellar line up of speakers at RFi Group’s sixth annual Australian Mortgage
Innovation Summit to cover off the current state of the Australian housing
market, economic drivers behind housing and pricing issues, as well as what he
sees to be shaping the market for the next few years.
Regarding the current housing market slowdown in Sydney and Melbourne,
Shane reveals what we are seeing today is really a combination of factors.
“Perhaps the most high profile factor is the measures from APRA to encourage
banks to reduce their lending to investors, as well as forcing higher capital ratios
which has had the effect of not only raising mortgage rates, but also tightening
up credit conditions.”
“I’m afraid to say I think
we've come into a much
tougher period. The debate
seems to be about whether
prices will fall in Sydney or
Melbourne, or just slow
down. My inclination is
towards the latter for 2016.”
Dr Shane Oliver
Head of Investment Strategy and
Chief Economist
AMP Capital
Generally speaking, it's clearly becoming more and more challenging for
investors to receive loans, coupled with a time where affordability had
deteriorated quite sharply. Many individuals in the buyers’ market have already
bought their homes as demand was brought forward by the boom and when the
community receives negative news such as the enforcement of the APRA
measures, it really does tend to change buyer sentiment.
Shane continues – “In the recent past, buyers were of the mentality that they
‘had to get in now for fear of missing out’ or alternatively prices which were rising
at 15% per annum would continue to do so. Quite suddenly these expectations
have been dented and consequently, the Sydney and Melbourne markets have
seen a significant pull-back. Buyers are a lot more cautious, there are less
buyers generally and in some cases, sellers have brought forward their listings
to try and get their properties sold for fear the market may slow further.”
Shane is of the view that our market was ripe for a slowing down after such a
strong run of years.
The predictions are weighted.
“I’m afraid to say I think we've come into a much tougher period. The debate
seems to be about whether prices will fall in Sydney or Melbourne, or just slow
down. My inclination is towards the latter for 2016. Over the last decade
significant increases in interest rates have driven price declines of around 510% in Sydney in or around 2005, 2008 and 2011/12. (He stresses, several
moves, not just the one). “What we are now seeing are measures taken by
APRA which have had the effects of raising rates but, by and large, these hikes
are really relatively modest in the greater scheme of things.” He continues,
tongue in cheek, “If people didn't like them they could always switch to fixed,
which were lower in the first place! It's not as if we've seen an onerous rise in
rates which is going to crash the Australian property market. At this stage I
would say I just really don't think we have seen enough negatives in the interest
rates front to drive sharp price falls.”
Economically, Shane suggests there's been a period of re-balancing in the
economy which is why we haven't had the recession that many had predicted
as result of the mining boom ending.
He points to three to four years ago as the mining boom began slowing, where
‘crash’ predictions were rife. However, it simply hasn't happened because the
boom we had was very different to other proceeding mining booms.
14
“Traditionally when we had a mining boom, everything boomed together,
housing was through the roof and non-mining activity was very strong. The
mining boom we experienced until 2011 however, was very different in the
sense that mining was strong but the rest of the economy was quite soft and
that was evident in very weak conditions in NSW and VIC.” What is happening
now is that non-mining sectors and States in the Australian economy have
bounced back and are helping fill the growth gap left by the unwinding of the
mining boom – albeit not completely.
So, is it all doom, gloom and (ka)boom?
Shane says no.
“One thing I will say is that
we in Australia have always
had this steely focus on
capital cities, whereas I see
a real need for some
serious attention to regional
areas. They offer attractive
rental yields, are a lot less
dependent on capital
growth and haven't
experienced the bubble-like
conditions that prevail in the
likes of Sydney and
Melbourne.”
Dr Shane Oliver
Chief Economist
AMP Capital
“Look, there are still going to be areas of life in the mortgage market and a
natural demand in the economy which keep things ticking over. What I do point
out is that the growth won’t be as strong as it has been over the last few years
in Sydney and Melbourne. At some point there will be more opportunity in areas
like Perth and Darwin which have been quite weak lately, it just may take a while
for those markets to turn around because of the ongoing mining sector
downturn, however in the year ahead, I particularly expect places like Brisbane
and the Gold Coast to pick up a bit as the South East Queensland economy
starts to look a lot healthier.”
Shane has some sound advice, which we discuss with interest.
“One thing I will say is that we in Australia have always had this steely focus on
capital cities, whereas I see a real need for some serious attention to regional
areas. They offer attractive rental yields, are a lot less dependent on capital
growth and haven't experienced the bubble-like conditions that prevail in the
likes of Sydney and Melbourne.”
We discuss population growth, an aging population and increasing immigration
and question, ‘Where exactly is everyone going to go?’
“You would think this would be easy to answer with so much space!” Shane
exclaims, “But it hasn't turned out that way.”
“Housing affordability in Australia is poor and price-to-income ratios are so much
higher than in many comparable countries. If you compare city states like Hong
Kong and Singapore, or New York, well, we are comparable, but not compared
to the US overall for example, where the price-to-income ratio is three and a
half times, on average. In Australia we are sitting at six times overall, but the
statistic is around nine times in Sydney and Melbourne – this is quite an
indictment on housing affordability. Currently, the true failure of the Australian
market is in providing decent affordable housing.”
Shane suggests a keen look at the US should be on our Governments’ agenda.
The building up of urban centres in America, where there are multiple cities with
1 million people show that it is the supporting infrastructure which has driven
the gain.
“After WW2 they began with the mission of having a freeway from the West to
East (where you could drive from NY to LA without a stop light) and then crisscrossing the country with freeways, with the effect of keeping cities alive right
across regional America. We simply haven't done that kind of thing here. If you
look to the US, so many regional centres are known for significant industries.”
He cites FedEx headquartered in Memphis, Delta Airlines in Atlanta and of
course Microsoft and Boeing in Seattle. “This is the key and it simply won’t work
in Australia unless we deploy the infrastructure to support it.”
He believes that to truly solve the housing affordability problem in our country it
will be up to our Governments to find ways to encourage more people to live in
regional centres. “The only way you can really do that is to make sure there is
15
“You can fiddle about with
first home buyer grants, the
tax system and interest
rates until you’re blue in the
face, but is not going to
solve the problem.”
Dr Shane Oliver
Chief Economist
AMP Capital
infrastructure going into and out of these centres, so it becomes a true viable
option of where people can live.”
“This is what I think it really comes down to. You can fiddle about with first home
buyer grants, the tax system and interest rates until you’re blue in the face, but
it is not going to solve the problem. My view is that as long as we continue to
have solid population growth – which we likely will - then the reality is we
absolutely have to find a better way to supply homes and to encourage more
people to settle in regional centres.”
We look forward to bringing you more from Shane on 18th/19th February.
Follow @RFiMediaGRB on Twitter to keep up to date with the latest information
and news at RFi Group.
16
RFi Group Interview
Chloé James’ interview with Peter Kell, Deputy Chairman, ASIC
At RFi Group’s upcoming 6th annual Australian Mortgage Innovation Summit
on 18th and 19th February, ASIC’s Deputy Chairman, Peter Kell will provide a
detailed view on the regulator's thoughts on the current state of play of the
Australian Mortgage Market, as well as perceptions on new entrants,
competition and overall effects for market participants.
RFi Group’s Chloé James sat down with Deputy Chairman Kell in the days
leading up to Christmas, to gain a preview into his February public address.
Deputy Chairman Kell felt it important to remind readers that ASIC’s key
responsibilities lie in the area of regulating consumer credit, and ultimately not
in regulating the overall housing market. Their primary interest ensures that
lending is happening on a responsible basis and that credit is being provided
to consumers in a way that 1) they can afford and 2) is sustainable. “As long as
lenders are complying with the laws around responsible lending then ASIC's
primary concerns will be addressed.”
“ASIC's primary aim is not to
'slow down' or 'speed up' the
market. Rather, we want to
make sure consumers are not
being put in a position where
loans are going to be
unaffordable. After all, if that
occurs on a systemic basis we
all end up paying the price
down the track.”
Peter Kell
Deputy Chairman
ASIC
On to responsible lending, which Deputy Chairman Kell explained has been
ASIC’s clear focus in recent times, including through collaboration with their
colleagues at APRA and the RBA. As ASIC sees it, their regulatory role in the
area of credit is to both help industry understand responsible lending as well as
enforcing the law. They have undertaken a series of major reports in this area,
with the Interest-only Loans report released in August 2015 being a recent
example. This report provided a useful overview of the industry, and also
identified some areas of concern. “We found that interest only loans had grown
by around 80% since 2012. Furthermore, while Interest-only Loans have been
popular with investors for some time, more recently they had been growing
significantly for owner-occupiers. In terms of problem areas, we found that
there was room for significant improvement on the part of both bank and nonbank lenders in the way that they complied with responsible lending
requirements, especially around affordability calculations, and the assessment
of living expenses.”
Deputy Chairman Kell humbly admits ASIC isn’t necessarily in a position to say
that the sharp slowdown in the market is directly attributable to higher standards
of lending and to better adherence to the responsible lending requirements, but
it’s certainly played its part. “ASIC's primary aim is not to 'slow down' or 'speed
up' the market. Rather, we want to make sure consumers are not being put in
a position where loans are going to be unaffordable. After all, if that occurs on
a systemic basis we all end up paying the price down the track.”
We move to how Deputy Chairman Kell sees the impact of the responsible
lending obligations, and he notes it’s important for everyone to remember that
responsible lending laws are still reasonably new, having not yet been through
an entire credit cycle. As ARB readers will know, ASIC is engaging closely with
industry, both lenders and brokers, around how responsible lending laws
should work in-practice. Deputy Chairman Kell honed in on a few areas which
generated concerns for ASIC, especially in the light of some recent legal
decisions. 'We updated our Regulatory Guide on responsible lending late in
2015 (RG 209). One area we've highlighted is that it's important that credit
licensees understand that they cannot rely solely on benchmark living expense
figures. They should take separate steps to inquire into a borrower's actual
expenses. ASIC's reviews have consistently found that there's been an overreliance on expenditure benchmarks. While they can be helpful in giving
lenders a guide, they are not a simple replacement for making appropriate
inquiries about the consumer's financial situation. This goes to the heart of
responsible lending. We have communicated a great deal on this issue as it
affects all players in the supply chain - banks and non-bank lenders as well as
brokers and other intermediaries.
17
I have to say, we have been very pleased that following the Interest-only
Lending Review lenders have committed to implementing reforms, such as
using actual expenses rather than relying on unrealistic benchmarks.”
Another issue that ASIC focused on, was ensuring consumers objectives and
requirements were clearly taken into account and, well documented at the time
of lending approval. As Deputy Chairman Kell outlined, this can be particularly
important when a consumer is borrowing close to their maximum limit (for a
mortgage, for example) and specifically for the lender to have a good sense of
the type of loan product and loan features that will meet the consumer's needs.
This includes knowing what their overall aim is and what loan features are most
important to the consumer. These issues need to be taken into account and
documented so that if a problem does emerge down the track, the lender and
the broker are able to demonstrate that ‘yes, we did have the discussion, we
did understand it and we did take it into account'. He concludes the point that
documenting these requirements imposes a discipline that helps to ensure that
lenders remain “on the right side of the line”.
“…I don't think my crystal ball
is better than anyone else’s!
However, some things are
clear. For ASIC, a significant
priority for 2016 will be the
review of broker remuneration
that the Government has
asked ASIC to undertake.
'This will be a major review, a
thorough assessment of how
the industry works in terms of
remuneration and ownership.”
Peter Kell
Deputy Chairman
ASIC
As consumer borrowing behaviour shifts and changes, we sought Deputy
Chairman Kell’s views on what he sees as big trends for the consumer in 2016.
His response was understandably measured, and insightful.
“Well, I don't think my crystal ball is better than anyone else’s!
However, some things are clear. For ASIC, a significant priority for 2016 will be
the review of broker remuneration that the Government has asked ASIC to
undertake. 'This will be a major review, a thorough assessment of how the
industry works in terms of remuneration and ownership. Having said that, I'd
emphasise that we don't embark on the review with any pre-determined
outcomes, and I look forward to hearing from all parts of the industry as we
progress.'”
In terms of other trends, Kell also emphasised the demand side. “Look, from
ASIC's perspective we are doing all that we can to ensure consumers are
ultimately making good decisions. We have put a great deal of effort into
financial literacy so that consumers understand and make sensible decisions.
One of the interesting issues here has been the growing influence of
behavioural economics (BE) to help us understand consumer decision making
and where risks may emerge – we are certainly using BE to help target our
education.” As consumers we - and Deputy Chairman Kell includes himself
here – have a tendency to short term over-optimism. And we're not good at
long term financial decision making. “That's one reason why superannuation is
compulsory and is also one of the reasons why the responsible lending laws
and protections in relation to credit card borrowing were implemented. These
reforms have a sound basis in addressing the harms that may arise from biases
in consumer decision making. They help ensure that there are some
safeguards in place to prevent people from getting in over their heads, both on
an individual basis and in a way that might be systemically risky.
As for how this might play out over the next 12-18 months, it's hard to predict,
but another interesting issue Deputy Chairman Kell sees over a slightly longer
time frame is the state of competition in this market. “As a regulator we are
always keeping an eye on new entrants and new products.” He points to
overseas participants, non-traditional players, the FinTech sector and
Marketplace lending. 'Who knows whether we may see some new competitors
and/or innovation in products that have wider success?'
“ASIC's role is not to try to pick the winners, but rather to ensure that there is a
consistent level of consumer protection so that everyone can compete on a
level playing field. Furthermore, we want to help industry understand regulatory
requirements so that wherever possible, regulation does its job of protecting
consumers without unnecessarily getting in the way.”
18
He discusses ASIC’s interest in the FinTech area, with an online innovation
hub, a FinTech consultative team as well as close work with the World
Economic Forum (who have a heavily vested interest in innovation).
“It's not about giving new
entrants a leg up 'just because
they're new'. Rather, it's about
ensuring that (1) new entrants
are able to come in to the
market to offer some healthy
competition and (2) existing
players can adopt new
delivery and product
technologies as efficiently as
possible.”
Peter Kell
Deputy Chairman
ASIC
In a range of areas such as those described, ASIC is actively involved in
thinking about the impact of new technologies across the different areas that
they regulate. ASIC are currently consulting on issues ranging from guidance
for P2P lending, or as ASIC prefers to call them, Marketplace Lenders. On
Robo-advice Deputy Chairman Kell exclaims “a terrible term! I prefer ‘Digital
Advice’” but notes ASIC will be releasing a consultation paper early this year
explaining how those who want to provide digital financial advice can do so in
a way that complies with the law. 'While this is initially aimed at financial advice,
it will no doubt influence our thinking on other areas such as credit.'
“What I can close with is; with all these new initiatives - we find that often new
entrants won’t have come from a regulatory background and won’t necessarily
have compliance issues top of mind. In this scenario they might make simple
and unnecessary errors, or, spend a lot of money on things they don’t need! It's
not about creating different rules for new entrants – it's more about helping
people understand what’s required of them in a way that means that there isn’t
an unnecessary or inflated legal or compliance expenditure. And I might add
this also applies to incumbents who are adopting new products or technologies.
What we'd like to be able to do is to facilitate the way that people can navigate
these sort of processes (as an example, he cites licencing processes) without
reducing the standards, because at the end of the day, we want a level playing
field. So it's not about giving new entrants a leg up 'just because they're new'.
Rather, it's about ensuring that (1) new entrants are able to come in to the
market to offer some healthy competition and (2) existing players can adopt
new delivery and product technologies as efficiently as possible.”
It was a great chat with Deputy Chairman Kell, and we encourage you to come
along to the AMIS this coming February, to hear more.
Follow @RFiMediaGRB on Twitter to keep up to date with the latest information
and news at RFi Group.
19
20
Transactions news
Westpac cardholders now able to temporarily lock cards
How do you currently perform
banking tasks (such as applying
for products, checking balances/
recent transactions, paying bill,
etc.)?
Mobile app
40%
38%
35%
30%
29%
Westpac’s newest app update includes a new feature: the ability to temporarily
lock a debit or credit card if it is misplaced. The card can be placed on hold
almost instantaneously for up to 15 days through the app or using the bank’s
online portal. Reactivation occurs automatically after 15 days or when manually
reactivated by the customer. Throughout the temporary lock period, customers
are still able to access the funds in their account and use the Get Cash feature
to withdraw money from any Westpac ATM. Westpac’s General Manger for
Digital, Harry Wendt, said Card on Hold gives customers the ability to quickly
suspend card activities and therefore minimise any unauthorised charges,
giving Westpac customers peace of mind regarding the security of their
finances. Up to 9% of Westpac customers report lost or stolen debit or credit
cards annually. Another minor feature that was added in the Westpac update
enables users to transfer money to another person using their mobile number
instead of BSB and account number. According to RFi Group data, 38% of
smartphone owners use mobile apps to perform banking tasks, an increase
from 29% in March 2015.
Macquarie rolling out core retail banking products
Macquarie Bank has begun rolling out full-service retail banking products.
Customers of the bank have been given offers of transaction accounts, savings
accounts and a new credit card since October. The transaction account is
available in either platinum or standard form. Standard accounts have a
MasterCard debit card, free access to the rediATM network and no monthly
fees. To be eligible for the platinum account, a customer must deposit a
minimum of $4,000 a month, after which they qualify for concierge service and
theft and damage protection on purchases.
25%
20%
15%
10%
5%
0%
Mar-15
Source: RFi Group
Jul-15
The savings account currently offered at Macquarie with a 3.15% introductory
rate for four months on the first $250,000 deposited and a base rate of 2%, can
be linked to the new transaction accounts. Both the savings and transaction
accounts feature real-time processing, and are able to be integrated online with
investment and business accounts. As Macquarie Bank do not have an
established branch network, the focus according to Head of Banking and
Financial Services at Macquarie, Greg Ward, is on customer engagement
through digital channels. RFi Group data indicates that less than 1% of
consumers would approach Macquarie Bank first if they needed to obtain a
transaction account in the future, however this proportion could increase in
2016 as a result of this retail banking product roll out.
NAB sells off British arm of the business
NAB will completely demerge its UK banking business, spinning out Clydesdale
and Yorkshire Bank Group in February of 2016. The UK business which will
have the ticker code CYBG, will operate more efficiently because managing the
UK banking business was currently a high maintenance-low return exercise
according to Chief Financial Officer at NAB, Craig Drummond. The UK
business generated 3.8% of the underlying group’s earnings this year, but
accounted for 12.4% of NAB’s risk-weighted assets. 75% of the selloff in
February, should shareholder approval be given on the 27 th January, will go to
NAB shareholders and the remaining 25% will be offered to institutional
investors through an IPO on the Sydney and London stock exchanges. Under
the demerger proposal NAB shareholders will receive one Clydesdale Bank
share for every four NAB shares owned. According to Andrew Thorburn, Chief
Executive of NAB, the demerger will likely see improved return on equity and
capital generation.
21
Savings news
Deposits steady as rates fall
What is your main savings goal for
your largest savings account?
Retirement savings. By age
25%
Three of the big banks cut savings account interest rates by as much as 25 bps
in October, however these cuts have not deterred savers. According to
comparison site Mozo, ANZ’s Online Saver rate was cut by 20 bps to 1.8%,
with no change to the 2.85% three-month introductory rate. NAB reduced the
rate on its iSaver account by 10 bps to 1.8%, with an additional 10 bps taken
off the four-month introductory rate which now sits at 2.5%. Westpac cut the
three-month introductory rate of its eSaver account by 21 bps to its current rate
of 3.1%. RFi Group data shows that bonus introductory rates are not one of the
leading attributes of importance for a savings account, which may explain why
many savers remain unperturbed by these recent rate cuts.
The Australian Prudential Regulation Authority’s (APRA) banking statistics
support RFi Group’s finding, as their data shows savers have not been
discouraged from depositing in the low rate environment. Interestingly, APRA
data for October showed a 0.5% year-on-year increase for retail deposits.
20%
20%
Soon to be retirees uncertain about retirement funds
According to Mortgage Choice’s Financial Confidence Survey, 62.5% of
Australians are worried that their retirement funds won’t last. Mortgage Choice
CEO, John Flavell, suggests that Australians should start planning their
retirement as early as possible to avoid trying to save enough in only a few
years, a nudge to the 50% of respondents who admitted to not giving their
retirement serious consideration until their fifties. RFi Group data also indicates
that when it comes to their largest savings account, retirement savings is the
main savings goal for less than 1 in 5 people aged 55 and over. Flavell says
there is a disconnect between worrying about the value of a retirement nest
egg and actually actioning sufficient saving strategies to reach future financial
goals. Flavell recommends that Australians start boosting their savings pool
years before retirement through good planning and additional super
contributions in order to retire comfortably with the $600,000 suggested by the
Association of Superannuation Funds of Australia.
16%
15%
13%
10%
10%
Improved transparency legislation for superannuation
5%
5%
2%
1%
0%
Total 65+ 55-64 45-54 35-44 25-34 18-24
Source: RFi Group
The Australian Government has introduced draft legislation aimed at providing
employees greater choice when it comes to super and improving transparency
throughout the sector. The purpose of which, says Kelly O’Dwyer, Assistant
Treasurer and Minister for Small Business, is to lay foundations for a stronger
super system that better supports Australians. The changes will allow
employees to better understand and assess the performance of super funds,
see more clearly where their funds are being invested, as well as have greater
ability to switch funds if they choose to.
The changes, implemented from June 2016, will affect up to 40% of the
estimated two million employees who currently cannot choose their super fund
because they are covered by enterprise agreements or workplace
determinations. The legislation will also enable Australians with multiple jobs
that currently hold more than one super fund to consolidate all retirement
savings into one fund and minimise paying several fees and insurance
premiums. Improvement in transparency will mean that super funds will have
to produce product dashboards for their top 10 most valued superannuation
choice investment options and disclose any investments made directly and
through associated entities.
22
Mortgage news
Attention turns from variable rate to fixed rate mortgages
How likely are you to fix your
interest rate in the next 12 months?
Proportion that were likely to fix
36%
The last couple of months have seen an increased focus on mortgage
lenders’ variable rates, yet considerably less attention has been paid to
falling fixed interest rates. More than 20 lenders cut their interest rates in
November, among those some notable examples are ANZ, Adelaide Bank
and Qantas Credit Union. The rate cuts were substantial as ANZ and
Adelaide Bank both cut their three-year investor rates by 45 bps and 25bps
respectively, while Qantas Credit Union cut its three-year owner-occupier
rate by 25 bps to 4.24%.
Variable home loan rates were lifted at the end of October, which John
Flavell, Mortgage Choice Chief Executive, believes has encouraged more
borrowers to fix their mortgage. This trend of fixing part or all of a mortgage
is expected to continue as RFi Group data, shows the total proportion of
borrowers likely to fix their interest rate increased from 32% to 34% between
June and September.
35%
34%
Households spend a third of income on mortgage repayments
Though mortgage interest rates are currently low – average standard
variable rate is 5.45% which is below the 10-year average of 7.07%, they
have not been able to overcome the impact of rising house prices, according
to Moody’s Investors Service. Households with two incomes spend just
under a third of their monthly income, or 29.3%, on mortgage payments as
of October, up from 28.2% at the same time last year.
34%
33%
These figures were more pronounced in Sydney, where house prices gained
momentum more than any other Australian capital city over the past year,
with 17.6% price growth in the year to October. Sydneysiders are paying
39.2% of their incomes on mortgage repayments - the highest proportional
spend since 2001. Housing affordability has also seen a definite decrease in
Melbourne, where mortgage holders are spending 32.1% of their income on
repayments. In comparison, housing affordability has improved in Brisbane
and Perth, with proportion of monthly income being spent falling from 24.1%
to 23.3% and 23.9% to 21% respectively.
32%
32%
32%
31%
Basel 4 and a potential rate rise on low-deposit home loans
30%
Mar-15
Source: RFi Group
Jun-15
Sep-15
The impending Basel 4 reforms will have far-reaching consequences,
potentially impacting lending strategies of Australian banks, and may make
it harder and more expensive for first home buyers to secure a mortgage,
according to Head of Global Financial Services at Freshfields Bruckhaus
Deringer in London, a prestigious London law firm. Warnings such as these
come after the Bank of International Settlements found that there is sizeable
scope to toughen global rules regarding the amount to which banks can be
leveraged, in order to control risk-taking during booms and mitigate financial
crises risk.
These reforms, which will likely impact the risk models banks use to meet
capital ratio requirements, will likely result in banks carrying more capital
against loans with lower equity deposits provided by the borrowers. The
Basel 4 papers were anticipated to be released before late in 2015, following
a meeting of The Basel Committee on Banking Supervision. Michael Raffan,
a partner of Freshfields, said that such reforms may mean first-home buyers
might find it harder to obtain credit because banks may change their lending
criteria or increase the cost of particular mortgages.
23
Cards news
Christmas season brought new credit cards to the market
We would like you to imagine a
scenario where your credit card issuer
reduced the number of points that you
earned per dollar spent on your credit
card(s). What would be your most likely
reaction?
Rewards cardholders
35%
32%
30%
28%
25%
20%
17%
17%
15%
10%
New credit cards have been launched in Australia as providers hope to
capture a proportion of holiday shoppers. CBA’s newest card, the Limited
Edition Cricket card has the same features as their established Low Rate
Card but also comes with a bonus incentive, a $250 cashback offer for those
who spend at least $500 by the end of January 2016. American Express
also launched their new Essential Credit Card, with 0% interest on balance
transfers for the first 12 months, a 14.99% purchase rate, no annual fee and
$50 credit for cardholders who spend a minimum of $500 in the first two
months. Finally Macquarie Bank’s Black Card extended the 0% balance
transfer offer to 14 months, and offered a $99 annual fee for the initial year
and either 60,000 reward points or 40,000 Qantas points bonus for those
who spend $3,000 within 60 days of approval.
Frequent flyer points to take a hit following RBA reform
The Reserve Bank of Australia has proposed major reforms to credit card
fees, which could see card holders needing to spend more to earn frequent
flyer points. Frequent flyer points are purchased from airlines by banks
primarily through the revenue raised by charging merchants interchange
fees. However, with interchange fees set to be lowered, the loss of revenue
will inevitably change how banks pass on points to customers as rewards.
Probably of more impact to the high spending points seeking cardholders
(and their frequent flyer programmes) will be the regulation of American
Express companion cards, which currently can earn points at three times
the rate of their Visa & MasterCard companions - with the RBA proposed
standards bringing the American Express companion cards down to the
same earn rate. It is possible the major banks will cease offering the
American Express companion card, as it will provide them and their
cardholders with no additional benefits.
For consumers, the biggest change will be the drop in rewards points
earned per dollar spent, according to a senior bank executive. RFi Group
data indicates that, 68% of rewards cardholders would change their
spending, card or issuer if the points earned per dollar spent were reduced.
6%
5%
Qantas points return for Woolworths shoppers
0%
Cancel Switch to
the card, a different
and stop type of
using
credit
credit
card
cards
altogether
Cancel Continue Would
the card to use the
not
and
card, but impact on
switch to would how I use
another use it less the card
rewards
card
offered by
a different
issuer
Source: RFi Group
From mid-2016, members of Woolworth’s loyalty program will be able to
convert their Woolworths Dollars into Qantas points. For customers of the
scheme every 10 Woolworths Dollars is convertible into 870 Qantas points.
Although research had indicated that most Woolworths customers preferred
rewards in the form of cash back, a group of, largely high income earning,
customers preferred receiving Qantas points. According to Lesley Grant,
CEO of Qantas Loyalty, the popularity of Qantas points stems from
consumers ability to earn them in multiple ways, such as through credit card
spending, flying, online purchases, etc.
Woolworths launched its new rewards program in October of 2015, but was
the subject of significant backlash on social media with customers either
preferring to earn Qantas points or complaining that there were too few
items available in store on which to earn rewards points. In response
Woolworths said it was increasing the number of fresh and high-demand
products that can earn rewards in the scheme. Despite some of the social
media criticism, Woolworth’s Food Group Managing Director, Brad
Banducci, reported that they were seeing strong growth in membership
numbers and increased scan rates at the checkouts
24
Personal loan news
Payday loans take off exponentially in 2015
When you applied for your personal
loan, what other finance options did
you consider?
Peer-to-peer loans
Uber and SocietyOne partner up to deliver car loans
8%
7%
7%
6%
5%
5%
4%
4%
According to loan comparison site, finder.com.au, Australians took out 27%
more payday loans in November 2015 compared to the same time last year.
In the lead up to Christmas, such figures may indicate that Australians were
not preparing well financially for the festive season. The convenience and
quick turnaround of available funds is enticing, and targets low income
earners especially. According to finder.com.au, borrowers paid an average
annualised interest rate of 112% on payday loans. Alex Kelly, Principal
Solicitor for the Financial Rights Legal Centre, warns that low income
earners who engage with payday lenders run a heightened risk of landing
in a debt trap, needing to continually take out short-term, high-interest loans
to chase debt from previous loans. Despite the higher interest rates RFi
Group data still found in September 2015 3% of prospective personal loan
holders (those intending to take out a loan in the next 6 months) were
considering a payday lender for their personal loan, suggesting the use of
payday loans will continue to increase.
A new era of car ownership has arrived in Australia, with Uber and peer-topeer (P2P) lender SocietyOne announcing their new partnership. The
partnership, which will enable new and potential Uber drivers to apply for
new car loans, follows a similar deal in the UK between P2P lender Zopa
and Uber in late May 2015. Uber requires their drivers to have cars less
than 10 years old, which means around 10% of Uber drivers each year
would need a new vehicle, and 10-15% of potential drivers applying do not
qualify because their vehicles are too old. RFi Group’s research shows that
currently 9% of Australians hold a car loan, but there is every chance this
number could increase over the coming year, with more and more potential
Uber drivers applying for car loans.
RFi Group data also indicates that consideration of P2P loans has
increased from 4% to 7% between Dec-14 and Sep-15. The number of
drivers using the UberX platform in Australia has grown from zero to 20,000
in the past 18 months; Uber CEO, David Rohrsheim, believes the
partnership with SocietyOne “will help grow the business faster, there is no
doubt about it.”
4%
3%
Auswide Bank commits to P2P lending with MoneyPlace
2%
October saw MoneyPlace receive retail and wholesale Australian Financial
Services license to provide loans of $5,000 to $35,000 in value through its
peer-to-peer platform. In a landmark deal, Auswide Bank will fund up to $60
million to assist MoneyPlace grow its consumer lending over 5 years. In
return, Auswide will receive a 20% stake in the P2P’s business.
1%
0%
Dec-14
Mar-15
Source: RFi Group
Jun-15
Sep-15
MoneyPlace CEO Stuart Stoyan outlines the significance of the relationship,
as a milestone for P2P lending on a global scale, demonstrating how banks
and P2P lenders can work in tandem to provide fairer loans with better rates
to customers. Collaborative projects like this enable traditional lenders
access to implement innovative business models that are more typical of
alternative lenders, says Stoyan. Auswide’s Managing Director, Martin
Barrett, says the deal will allow the bank to take up a position in the
emerging P2P market and boost Auswide’s growth in the consumer finance
space. Barrett also pointed out the integral role technology plays in the
changing market landscape, and that through successful harnessing of
technology this joint venture will take advantage of the opportunities for
growth.
25
Payments & digital news
Australia behind the rest of the world with P2P payments
Have you ever used your mobile to
pay someone money using their
email address, mobile phone
number, PayPal account details or
app user ID?
Yes
No
100%
90%
80%
New research from Visa has indicated that although Australians have
engaged with “tap and go” payments enthusiastically, they have been much
slower to adopt “P2P” payments, where digital money transfers between
people. Visa found that Australia remains dependent on older methods of
transfer between people and small businesses, such as cash, cheque or
electronic bank transfers.
Visa predicts that as more digital firms, including Facebook and Snapchat,
enable digital transfer of money between people, such digital payments will
become more normal. Recent RFi Group data identified only 10% of
Australian smartphone owners have ever used their mobile to pay someone
using their email address, mobile phone number, PayPal account details or
app user ID. Conversely, 22% of US smartphone owners have made P2P
payments through mobile applications, with the proportions rising to 24% in
China and 34% in India.
Rob Walls, Head of Product for Visa, indicated that Visa is in talks with banks
about a new platform that would enable P2P transfers by knowing a mobile
number or email, with funds being available in less than 20 minutes to Visa
or non-Visa accounts – a feature not typically available with banks.
Big banks jump on board with Android Pay
70%
20%
Android Pay has won over six Australian banks, seeing Apple being snubbed
for Google in the payments space. According to Pali Bhat, Google’s Director
of Product Management, the banks’ deal with Google will mean that Australia
will be the second country to roll out Android Pay, after it was launched in
the US in May. ANZ Bank, Westpac, Bendigo and Adelaide Bank, ING
DIRECT, Macquarie Bank and Cuscal will be the first to offer Visa,
MasterCard and eftpos via Android Pay.
Unlike some digital wallets that already exist in the market, Android Pay will
not require a PIN to be entered to make a payment, removing the
burdensome security process that has contributed to poor take up of other
digital wallets. RFi Group data suggests only about 8% of Australian
smartphone owners have used a phone to make a mobile payment. With
Android operating system sales accounting for 54.9% of the Australian
market in the three months before October, compared to 37.9% for Apple’s
iOS, it will be interesting to see if the new deal between banks and Android
Pay will have an impact on handset sales.
10%
NZ: ANZ launches digital wallet for ‘tap-and-go” smartphone
payments
60%
89%
90%
50%
40%
30%
11%
10%
Jun-15
Sep-15
0%
Source: RFi Group
ANZ has become the first bank in New Zealand to launch its own digital
wallet - a host card emulation technology (HCE) based NFC payment
solution. The aptly named goMoney wallet was launched on December 8 th
and is now available to 90,000 customers, who have compatible
smartphones, to make contactless payments using Android smartphones.
RFi Group research illustrates that in mid-2015, 84% of New Zealanders
identified that they would prefer to use a mobile wallet if it was provided by
their main bank, which may explain why ANZ decided to pull out of their joint
venture with Semble to launch their own mobile wallet. “Adding a mobile
wallet has been the number one request when goMoney customers were
surveyed earlier in the year,” explained ANZ’s Head of Digital Channels, Liz
Maguire. The mobile wallet is user friendly as it can be simply accessed
through the regular ANZ banking app and but it is restricted to the same
contactless rules, namely payments under NZ$80 by tapping the app against
a contactless payment terminal will not require a PIN but a PIN will be
required for payments above NZ$80.
26

Did a colleague forward you the Australian Retail Banker

Transcription

Similar documents

bearshare kazaa edonkey

View Sample PDF

Samantha`s Friends Presents

How Our Process Works - 1st American Commercial Lending

STOKE CITY FC Carlo Nash - National Literacy Trust

Mortgage Services

RFI phase2 congregational proposal to proceed with design

Securities Lending

Paula Brennan, Greater Dandenong

county of riverside addendum no. 002 to bidding documents

radio france internationale