Page 1

APRIL 2018 ISSUE

AUSTRALIAN RETAIL BANKER w www.rfigroup.com t twitter.com/RFiMediaGRB

Jane Retimana

General Manager of Strategy & Corporate Affairs for Payments NZ WOMEN IN LEADERSHIP 15

RFi GROUP INSIGHT

INTERVIEW

11 The return of the First Home Buyer

18 David Dawson, co-owner Kohab

DIGITAL & FINTECH

38 Home loan applications by digital bank start-up Xinja will take just 20 minutes to complete


CONTENTS APRIL 2018

08

11

RFi GROUP OPINION

RFi GROUP INSIGHT

Consumers, Choice, Convenience, Confidence. Are we seeing an erosion of trust when we need it most?

The return of the First Home Buyer

18

22

SPECIAL INTERVIEW

DEPOSITS

A Special Feature Interview with David Dawson, Kohab

Top savings accounts for kids

32

38

CARDS & PAYMENTS

DIGITAL & FINTECH

Commonwealth Bank deems cryptocurrency purchases on credit cards to be too risky

Home loan applications by digital bank start-up Xinja will take just 20 minutes to complete


13

15

PODCAST

WOMEN IN LEADERSHIP

Global digital banker

Jane Retimana, General Manager of Strategy & Corporate Affairs for Payments NZ

27

29

LENDING

MORTGAGES

Liberty purchases P2P lender

Did a colleague forward you the Australian Retail Banker? Subscribe to receive YOUR FREE monthly copy by clicking here

ANZ ramps up mortgage scrutiny


SAVE THE DATE!

GLOBAL DIGITAL BANKING SERIES 2018 NEW ZEALAND

Cordis Hotel 83 Symonds St Grafton, Auckland 1010 New Zealand RFi Group is pleased to announce our 2nd edition of the Global Digital Banking Conference in New Zealand.

Join over 100 banking executives and key decision makers to discuss the sector and all that’s top of mind for banking in 2018.

Part of a global event series that has toured London, Toronto, Dubai, Singapore, Sydney and Melbourne, the Global Digital Banking Conference is specifically designed to optimise RFi Group’s global research expertise and provide an opportunity to share insightful global best practice and thought leadership.

For tickets, sponsorship and exhibition enquiries: James Harradine 02 9126 2616 jharradine@rfigroup.com


Welcome to the April Edition of the Australian Retail Banker, a newsletter designed to provide updates on news and trends within the Australian retail banking market specifically in the areas of deposits, lending, mortgages, cards and payments and Digital and Fintech. We begin this edition with Alan Shields’ Opinion Piece on Consumers, Choice, Convenience, Confidence - are we seeing an erosion of trust when we need it most? Our Insight Piece by RFi Group’s Benzir Siddiqui looks at the return of the First Home Buyer. This month’s Women in Leadership piece covers a fantastic interview with PaymentsNZ’s Jane Retimana, ahead of her participation as a speaker at our upcoming Global Digital Baking Conference NZ

Edition taking place on 11th April in Auckland. Our product news looks at the best savings accounts for kids, a new unsecured loan product released for renovators, NAB’s recent purchase stake in fintech BrickX, the launch of real time payments in Australia, and home loan applications by digital bank start-up Xinja, taking just 20 minutes to complete. I hope you enjoy this edition and as always, wish you a great month,

Chloé James Editor / Group Media Director +61 (0) 451 790 929 cjames@rfigroup.com


RFi GROUP APRIL STA TEN SELECTED STATISTICS FROM DAILY STATS ON RFi GROUP WEBSITE (www.rďŹ group.com)

CANADA

UK

34% of UK consum

Almost 1 in 3

have used live chat banking services wit virtual assistant

(31%) of commercial businesses in Canada do not currently sell products/ services online

US

21% of US businesses are very likely (8+/10) to switch their primary Credit Card provider in the next 12 months

UAE

58% of businesses in the UAE

MEXICO

69%

of consumers in Mexico agree that they would use mobile wallets more frequently if given rewards for doing so

have no preference between Islamic and conventional banking products


TATISTICS

mers

th a

c s

#RFiGroupDailyStat

SINGAPORE

42%

of consumers in Singapore are very interested (4+/5) in trying new ways of making purchases

AUSTRALIA

39%

of Australian consumers would be willing to conduct at least one banking task via messaging services

1 in 3

INDIA

38%

of consumers in India have used video chat services with a member of sta from their bank

Australian credit cardholders would not return to a store/ business if they imposed a surcharge for using their card


RFi GROUP OPINION

CONSUMERS, CHOICE, CONVENIENCE, CONFIDENCE. ARE WE SEEING AN EROSION OF TRUST WHEN WE NEED IT MOST? WORDS ALAN SHIELDS

T

he end of February saw one of RFi Group’s biggest events – the Australian Mortgage Innovation Summit (AMIS) - hosted in Sydney and attended by the great and the good of the mortgage market. It was a great forum in which to discuss the goings on in the mortgage industry specifically and the banking industry more broadly. The industry is under unprecedented scrutiny at the moment with reviews led by; The Royal Commission, The Productivity Commission, APRA and ASIC. Politicians and commentators are all investigating and commentating on the goings on within the nation’s banks. On the flip side, the industry is about to gain unprecedented data (and acronym) access through Open Banking, CCR, PSDII and GDPR. At the end of 2017 RFi conducted its latest study of consumer reactions to digital innovation across the globe and gave us our first taste of how Australian consumers might react to the prospect of Open Banking. AMIS was therefore a great forum at which to be discussing the implications of this and I would like to share a thought here.

08 AUSTRALIAN RETAIL BANKER -–RFi RFiMEDIA MEDIA

At the crux of Open Banking is the concept of trust because ultimately consumers will need to consent to their data being used in a specific manner with a defined benefit. So, trust is the gold currency. Trust in the safety and security of data. Trust that a provider will not abuse the privilege that it is granted. During the course of AMIS an audience member asked of a speaker who plans to launch a neo bank, “consumers dislike and distrust banks, so how are you different?”. The response was interesting, but I am more interested in the question Inherent in it is the accepted belief that the banks are not trusted. My belief has always been that however much a consumer might dislike banks, they trust them to keep their money and to maintain their privacy. RFi’s data backs this up. When we asked consumers which organisations they trust the most to maintain the privacy and security of their personal information, the banks win. Banks beat the Government, they beat tech companies, they beat telcos, they beat fintechs. They beat everyone.


RFi GROUP OPINION

PLEASE INDICATE THE EXTENT TO WHICH YOU TRUST THE FOLLOWING TO HOLD AND MAINTAIN THE PRIVACY AND SECURITY OF YOUR PERSONAL INFORMATION Global average - % Consumers that trust (8+/10) the following organisations 45% 42%

40% 36%

35% 31%

30%

28%

25%

24%

24% 20%

20%

20% 18%

15% 10% 5% 0% Banks

Cards schemes/ brands

Goverment agencies

Technology Telecomunicompanies cations providers

Retailers

New digiPrice talonly banks/ comparision Fintech sites

New or emerging technology companies

Source: RFi Research

In fact, in only one country where banks were beaten to the number one spot was in Singapore, where the government is the most trusted organisation. I will leave you to make your own conclusions about that….

In fact, in only one country where banks were beaten to the number one spot was in Singapore, where the government is the most trusted organisation. I will leave you to make your own conclusions about that…

This increase was seen across all markets, with the exception of one; Australia.

What’s more, over time on a global basis, this trust in banks to hold and maintain personal information has grown from 31% of consumers saying they have a great deal of trust in banks (scoring them 8-10 out of 10) in H2 2015 to 42% in H2 2017. This increase was seen across all markets, with the exception of one; Australia. AUSTRALIAN RETAIL BANKER – RFi MEDIA 09


RFi GROUP OPINION

Why might this be? I believe it’s fair to say that we have not heard much positive news about the banks in Australia in recent times. The media loves to tell us how poorly we are serviced. The Government loves to use the banking industry to deflect attention. This coupled with the regulatory scrutiny in the public sphere I mentioned previously is having an impact; it is driving down consumer trust in the most trusted organisations. In another time this would be a big enough issue. But this comes at a time when the Treasurer wants to bring Open Banking to our shores. This is a problem because at the very core of Open Banking as described by the recent review, is the concept of consumer consent. Consent to sharing data for a specific purpose. We as consumers need to trust the organisations that hold our data in order for Open Banking to be successful. The Government’s review paper is sub-titled “Consumers, Choice, Convenience, Confidence”. Confidence does not happen when trust is being eroded.

We as consumers need to trust the organisations that hold our data in order for Open Banking to be successful. The Government’s review paper is sub-titled “Consumers, Choice, Convenience, Confidence”. Confidence does not happen when trust is being eroded.

10 AUSTRALIAN RETAIL BANKER - RFi MEDIA


RFi GROUP INSIGHT

THE RETURN OF

THE FIRST HOME BUYER

WORDS BENZIR SIDDIQUI

T

he Australian housing market has been a topic of interest in the media over the last few years. Low interest rates have fueled investor demand. Data from APRA shows that investment loans as a percentage of total new lending from banks has increased, from 33% in June 2012 to 40% in June 2015. This surge in demand for investment properties has pushed up house prices and locked out many First Home Buyers from entering the market. According to recent ABS data, the proportion of First Home

Buyers in the market has dropped considerably from January 2012 to February 2017. Meanwhile, the average loan size has increased considerably for First Home Buyers. Concerns regarding the rapid pace of investment lending growth has seen APRA introduce new curbs on investment and interestonly lending in order to reduce systemic risk. These curbs have been successful in waning investor demand as APRA data shows that investment loans as a percentage of total new lending from banks dropped from its June 2015 peak of 40% to 34% in December 2017. In addition, the NSW and the Victorian

FIRST HOME BUYERS AS % OF ALL LOANS AND AVERAGE LOAN SIZES FOR FIRST HOME BUYERS FHBs % of all loans

FHBs’ average loan size

Dec-2017 $334,700 $340.000 25%

$330.000 $320.000

20%

$310.000 Dec-2017 $300.000 17.9%

15%

$290.000 10%

$280.000 $270.000

5%

$260.000 0% Aug-2017

Mar-2017

Oct-2016

Dec-2015

Jul-2015

Feb-2015

Sep-2014

Apr-2014

Nov-2013

Jan-2013

Aug-2012

Mar-2012

Oct-2011

May-2011

Dec-2010

$250.000

Source: ABS

AUSTRALIAN RETAIL BANKER - RFi MEDIA 11


RFi GROUP INSIGHT state governments introduced stamp duty concessions for First Home Buyers in 2017 to ease the ability for these buyers to enter the market. Alongside decreasing investor demand, these stamp duty concessions have supported an increase in demand from First Home Buyers in the last year, with the proportion of First Home Buyers in the market increasing from 13% in February 2017 to close to 18% in December 2017.

Younger consumers may already find it difficult to save and this problem persists once they are on the property ladder, with saving becoming even more difficult for some First Home Buyers. RFi Group data shows that in December 2017 40% of First Home Buyers from the last two years strongly agree they have little disposable income after paying for necessities (significantly higher than other borrower segments).

The problem is that whilst stamp duty concessions can assist First Home Buyers they do not do enough to address the underlying issues regarding housing affordability. House prices are still very high in Sydney and Melbourne and wage growth remains subdued. These factors make it difficult for many First Home Buyers to enter the market as they struggle to save for a sizeable house deposit.

To help Millennials budget and save effectively, many Fintechs have introduced digital savings and personal financial management (PFM) tools that help them attain a better overview of their finances and set money aside. In the UK, for example, Monzo (a mobile only neo-bank) offers a built-in budgeting tool and spend categorisation in its app and has introduced savings ‘pots’ to enable consumers to automatically put aside money towards specific savings goals. Closer to home, Acorns has gained significant traction amongst Australian Millennials through its round-up feature that allows users to invest loose change. This allows users to slowly build up investments if they find it difficult to set money aside to do so. There is an opportunity for lenders to gear digital savings and PFM tools towards First Home Buyers who are saving for a deposit - given they are typically a younger more digitally engaged segment. This could help them overcome the first barrier they face and also engage them early on in their homebuying journey, potentially making it easier to win the mortgage relationship.

Being able to save for a house deposit is one of the biggest struggles First Home Buyers face. RFi Group data shows that in September 2017, 53% of Millennials saving for a house deposit had to use money from their savings to fund their lifestyle in the last 12 months. These struggles are leading First Home Buyers to become more reliant on family members to enter the property market. RFi Group data shows that 39% of First Home Buyers who took out their mortgage in the last two years received help from family members to enter the market, compared to 25% amongst First Home Buyers who took out their mortgage more than five years ago.

TO WHAT EXTENT DO YOU AGREE WITH THE FOLLOWING STATEMENT: “I TEND TO SPEND ALL MY INCOME ON NECESSITIES SUCH AS FOOD, UTILITIES, MORTGAGE/ RENT AND DON’T HAVE MUCH LEFT OVER FOR ANYTHING ELSE” Loans taken out within the last 2 years By borrower segments

Disagree (0-2)

Neutral (3-7)

Strongly agree (8-10)

100% 80%

29%

30%

23%

31%

40%

60% 47%

44%

40%

47%

20% 27% 12%

0%

FHB

Refinancer

18%

Subsequent Source: RFi Group

12 AUSTRALIAN RETAIL BANKER -–RFi RFiMEDIA MEDIA

49%

53%

29%

Investor

20%

Total


THE

PODCAST

GLOBAL DIGITAL BANKER

PODCAST www.globaldigitalbanker.com

A weekly, insight-backed podcast focused on key trends, market insights, thought leadership and best practice within the fast growing and dynamic world of digital banking. We interview Banking and FinTech leaders from across the world, providing a truly global perspective on some of the biggest trends within the industry. If you haven’t already, make sure to have a listen to our episodes from the month of March. EPISODE 1

Banks vs. FinTechs Has the pendulum swung back? Charles Green, CEO, RFi Group START LISTENING HERE

EPISODE 2

Can value trump trust? How digital-only providers can position themselves as a MFI for consumers Anne Boden, CEO, Starling Bank Eric Wilson, CEO, Xinja START LISTENING HERE AUSTRALIAN RETAIL BANKER - RFi MEDIA 13


PODCAST

EPISODE 3

Differentiator today, hygiene factor tomorrow? Where consumers stand on chatbots and virtual assistants globally Pete Steel, EGM - Digital, Commonwealth Bank Alan Shields, Managing Director - Consulting, RFi Group START LISTENING HERE

EPISODE 4

Changing the game in cross-border payments Andrew Boyajian, Head of Banking - The Americas, Transferwise Jack Zhang, CEO & Founder, Airwallex Eleanor Page, Group Commercial Director, RFi Group START LISTENING HERE

EPISODE 5

Money 2020 Asia Special Part one Brett King, Founder & Executive Chairman, Moven Kristo Kaarmann, Founder & CEO, Transferwise START LISTENING HERE

NEVER MISS AN EPISODE! SUBSCRIBE & LISTEN TO THE PODCAST ON ANY OF THE BELOW PLATFORMS:

iTunes | Stitcher | Podbean | SoundCloud | globaldigitalbanker.com For up to the minute email notifications, please subscribe here If you are interested in being a part of the show or would like to let us know your feedback, contact us at: gdbpodcast@rfigroup.com 14 AUSTRALIAN RETAIL BANKER -–RFi RFiMEDIA MEDIA


RFi GROUP WOMEN IN LEADERSHIP

Jane Retimana

I like to try to push myself beyond my comfort zone by doing things that are challenging. I think to keep evolving your career you have to be open to learning and acquiring knowledge from different sources with diverse outlooks.

General Manager of Strategy & Corporate Affairs for Payments NZ WORDS CHLOÉ JAMES AUSTRALIAN RETAIL BANKER - RFi MEDIA 15


RFi GROUP WOMEN IN LEADERSHIP

I

n a few weeks, on April 11th, Jane Retimana, General Manager Strategy and Corporate Affairs at Payments NZ will join a full house at RFi Group’s Global Digital Banking Conference - NZ edition, as an esteemed and highly regarded commentator in the New Zealand Payments sector. In advance of this, we had the pleasure of sitting down with Jane to discuss her career and advice she would pass on to others in the industry – this is what she said… She oversees and heads up a broad and complementary portfolio of business units and activities within Payments NZ. Jane leads all company and industry strategy and strategic initiatives as well as the company’s data and business intelligence. This work includes leading the long-term payments system strategy, strategic industry forums and discussions. She is also responsible for corporate communications, public and regulatory affairs, membership and industry and stakeholder outreach and engagement. How did you get where you are today and what, or who, has been your greatest influence in business? I really believe in taking the opportunities that are open to you, even if you can’t always foresee where they may lead to. I have found that in my work life and career, I’ve always been interested by tough jobs and challenging projects and activities and as a result, I’ve had interesting opportunities open up for me. I think if you look for ways to expand what you’re doing all the time, seeing everything as either a chance to learn something new or add to your knowledge, then you will make your work life and career infinitely more exciting. I have a supportive family and a fantastic team at work, but what helps me get out of bed in the morning is an inner drive and determination to always do better, and find the next mountain to climb.

16 AUSTRALIAN RETAIL BANKER –- RFi RFiMEDIA MEDIA

What is the driving force behind your career goals/ aspirations? I’m an ambitious person and I also believe in the value of good teamwork. I believe the healthiest form of competition in business is a form of healthy rivalry, where people are challenged to work collaboratively and think creatively to come up with solutions. Really good quality, thoughtful, innovative work can be achieved by collaboration and teamwork. It’s great when you see people coming together to solve problems, it’s fun and creates opportunities. Being responsible for creating an environment that allows that kind of atmosphere to flourish is a real driving force for me. Have you ever made a business decision you’ve regretted, and can you share it? And, what is your greatest professional achievement to date? There hasn’t been one major decision that I regret, although of course like everyone else I’ve made mistakes along the way. Looking back, the business decisions I’ve come to regret are often the ones where I’ve been talked out of things and are forced to go against my gut. Sometimes though, in order to empower others, you have to be able to let go and allow them room to grow by making their own decisions and taking ownership of the result. The advice given by one of my mentors was to pick your battles because not all of them are worth it. Mistakes are not the end of the world. Most issues can be worked through and I believe that nothing in life is unfixable, including bad business decisions - touch wood. My greatest professional achievement to date would be the work I’m leading at Payments NZ with Payments Direction, which is our key strategic programme set to better understand the future of payments in New Zealand. The work can sometimes be very frustrating, but also

equally as rewarding because you really feel like you’ve achieved something that will help transform an important component of the business world. Payments underpins economics and how we function as a society. There’s been lots of other big and small professional achievements, but my mantra is that the best is always just around the corner. Maybe ask me again in a couple of decades! What do you do to keep evolving your career, to ensure a fulfilling and successful longevity? I like to try to push myself beyond my comfort zone by doing things that are challenging. I think to keep evolving your career you have to be open to learning and acquiring knowledge from different sources with diverse outlooks.

I think to keep evolving your career you have to be open to learning and acquiring knowledge from different sources with diverse outlooks. In my role I have to know about a lot of things, from the latest trends and innovations, to environmental drivers, industry activity and more – until my event manager came on board I also had to know what kind of sausage rolls to have at industry events. Keeping up-to-date and being aware of the wider context of local and global shifts and sentiments are also important when setting strategy and for brand positioning. How do you achieve a balanced life and what activities do you participate in outside of your working life, that you see contributing to your business success? As a working wife and mother, like


RFi GROUP WOMEN IN LEADERSHIP

most women, I’ve learned to become a professional juggler. It’s the eternal pursuit for a balanced life. I think you have to accept that a lot of the time, it can be totally unbalanced either way. My personal life mirrors my work, I have a busy working husband and two beautiful kids, and there are always a lot of colourful balls in the air. Working in a positive environment with supportive colleagues and a fantastic team helps. At Payments NZ we’ve got a great culture that supports flexibility and encourages work-life balance.

Working in a positive environment with supportive colleagues and a fantastic team helps. At Payments NZ we’ve got a great culture that supports flexibility and encourages work-life balance. Outside of work, I love just hanging out with my family and friends. We spend a lot of time in the outdoors and out on the water – boating, fishing, surfing you name it. We’ve recently built a house so there’s no end to the amount of outside gardening jobs that need to be done. I come from a sporting family and have played all sorts of sports over the years. I follow lots of sports and enjoy watching everything from netball to rugby and even the cricket to name just a few. It’s important to take a deep breath and just be grateful for what you have sometimes. I have a busy, rich and full life, and wouldn’t have it any other way. Do you mentor others? What have you learnt in the process? I have managed teams for a big part of my career and I think to be an effective

mentor and leader, you have to actually really, truly like people. You have to be curious about them, and get to know them and what makes them tick. It’s about not just being able to spot someone’s potential, but helping them nurture that potential so they can have the careers what they want. My leadership style is ‘macro management’. I like giving people the freedom to learn and test things and push boundaries, and letting them have the space to make their own decisions and in turn mistakes. The biggest lesson I’ve learned is that trust is a major ingredient and it’s also a two-way street.

My leadership style is ‘macro management’. I like giving people the freedom to learn and test things and push boundaries, and letting them have the space to make their own decisions and in turn mistakes. It’s not just about trusting your team, your team also has to know that you support them and have their backs. Another benefit to having good relationships with your team is that it also makes having difficult conversations, which we all need to have at some point, a lot easier because you have that foundation of trust and mutual understanding. They hopefully know that you have their best interests at heart, and want to help them succeed. 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? Sometimes you just have to put on your big girl knickers – be brave and bold, and make your own way in the world.

Opportunities aren’t just handed to you, you have to learn to spot them and make use of them. Build good relationships with people, not just with your boss but also your peers and subordinates. The biggest challenge you’ll often face as a business woman is yourself. Have the confidence to follow through with your ideas and listen to your gut – I too have to remind myself of that all the time.

The biggest challenge you’ll often face as a business woman is yourself. Have the confidence to follow through with your ideas and listen to your gut – I too have to remind myself of that all the time. 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? Just be authentic and be who you are. People can always tell, sooner or later, if you’re genuine. Being authentic to me is about being open and treating others with respect. There is something likeable about everyone, you just have to be willing to do the work to find out. If you see people as human beings with holistic lives and priorities and passions in and outside of the workplace, then you’ll enjoy the relationship you have with them so much more.

To read the full WIL series and all past Australian Retail Banker editions, feel free to visit the archive centre on our website or follow @RFiMediaGRB on Twitter.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 17


RFi GROUP INTERVIEW

A S P E C I A L F E AT U R E INTERVIEW WITH

David Dawson Co-owner, Kohab 18 AUSTRALIAN RETAIL BANKER –- RFi RFiMEDIA MEDIA

If I had not left Russia, I would have ended up staying. I liked the fact that there was very little order and structure. I thrive in those types of environments despite my self-discipline.


RFi GROUP INTERVIEW

T

here is a sense of adventure about entrepreneur David Dawson. Like many young Australians, Dawson was eager to travel the world but “didn’t want to do the normal London backpacker thing”. Instead the path he chose was a Swiss education, he funded himself by balancing study and work in Switzerland. He was “lucky to finish top of the school”. After working in Zurich, he moved to Moscow just after Mikhail Gorbachev’s Perestroika drove a more open nation. In the Russian capital he worked for a hotel, an oil company and in executive recruitment. After five years, the currency crisis of 1998 – 1999 hit the region and by then Dawson felt it was time to leave and return to his home in Melbourne. Nevertheless, his experiences in Russia made him realise that he could thrive in all types of environments. “If I had not left Russia, I would have ended up staying. I liked the fact that there was very little order and structure. I thrive in those types of environments despite my selfdiscipline. I enjoyed working and living in a culture that was going through enormous change. I loved the Russian people as well,” Dawson said. It was also the right time for Dawson to return to Melbourne. Frequenting a restaurant, he loved so much he ended up buying the business through a friend who was also a business broker. He hired Ian Curley - who later went on to star in the television series Conviction Kitchen. A couple of months later the business scored two hats from the industry bible, the Good Food Guide. “It was a great experience but not one I would do again,” Dawson admitted. “I realised I wanted to earn enough money to go to restaurants not work in them”. Nevertheless, Dawson’s instincts in the restaurant game paid off. Twelve months later, he had made money from the business and managed to sell it for double of what he paid for it.

The next phase of his not-so-linear career was in executive recruitment. After four years working for the business, he set up his own firm PAC. His experiences in Moscow “gave him a nose for reading people” and so over the next decade, Dawson built the business across funds management, banking, insurance and wealth management. In 2014 he merged his business with its “biggest competitor” Profusion. He was now the biggest shareholder of the combined business and in doing so created a large independent search and recruitment firm in financial services.

He was now the biggest shareholder of the combined business and in doing so created a large independent search and recruitment firm in financial services. One plus one equals three He “stuck with the merged business for 12 months” but after that, he had enough and wanted to spend time with his children. It certainly was a period of reflection for the serial entrepreneur. By then Dawson had also been involved in property. A self-confessed property tragic he had bought and sold many properties and even led a number of commercial property syndicates. The idea of Kohab – a shared platform for property ownership, started with a beach house in Victoria. “I would go to my beach house weekender every two weeks, and then every four weeks. Once the kids came along, it would be every three months. In the end the property was empty for 90 per cent of the time. I had friends who had wanted to go in halves with the property. It really

got me thinking. With the experiences of the beach house and property syndicates, I learned that you can buy together and that it can be a good experience,” he said. The idea got further momentum from consistent media reporting around the housing affordability crisis. “Every newspaper seemed to be running a front-page story on the housing crisis. At the same time the shared economy was booming. If people were happy to share their homes why couldn’t they also share property ownership,” he said. He added: “The phenomenal growth of brands such as Uber and Airbnb have clearly demonstrated that the share economy is alive and thriving. These types of concepts have created a seismic shift in how society views cosharing in general.” Dawson eventually meet Darren Clark through a friend. At the time, he had just sold his business – a digital agency. He had also been running digital platforms for over 20 years, building such businesses for a broad range of industries including finance, entertainment, recruitment and property. The idea of shared property ownership also appealed to Clark on a personal level. “He liked the sound of my idea. Darren was also in a situation where he didn’t own property and was keen to buy with someone else. He agreed to join me. One plus one equals three and there was Kohab.

He liked the sound of my idea. Darren was also in a situation where he didn’t own property and was keen to buy with someone else. He agreed to join me. One plus one equals three and there was Kohab.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 19


RFi GROUP INTERVIEW

Launched in March, Kohab is a digital platform that provides a marketplace for friends, family and like-minded buyers to purchase a home together. The marketplace connects property, real estate agents, legal, mortgage and insurance providers in one place. In terms of the platform, Kohab will help potential buyers in three main ways: by co-living – where one or both parties choose to live in the property; co-investing in property and thirdly co-lifestyle – facilitating two or more parties to share a holiday home or second home. “It may not be for everyone but potentially it is a solution as well as an opportunity to address housing affordability,” Dawson said. Indeed, National research commissioned by Kohab in February with over 1,700 people found that 27 per cent of Australians would consider buying a property with someone else.

It may not be for everyone but potentially it is a solution as well as an opportunity to address housing affordability, National Australia Bank was selected by the start-up business as its lending partner. Dawson said NAB’s philosophy around first home buyers was consistent with the objectives of the platform. “We looked at all the banks and what they were doing. NAB’s strong on its charter of getting more Australians into homes. They were a first-mover in embracing what we did,” Dawson said. “We did have to lobby them. It took months of discussions but to their credit, they followed through.”

20 AUSTRALIAN RETAIL BANKER –- RFi RFiMEDIA MEDIA

A Tinder for real estate Dawson also knew former NSW Premier Mike Baird who is now the chief customer officer at the bank. “The idea resonated with him. He wanted to see more Australians in their home. It was Mike’s mantra on power”. Baird said the initiative was like a “Tinder for real estate”. While Baird was not at the launch, NAB general manager of the retail bank, Paul Juergens said the bank was committed to supporting first home buyers and expects to see more innovation in this area. “We are the enablers to help people purchase property. This will only accelerate and with that comes innovative solutions,” Juergens said.

We are the enablers to help people purchase property. This will only accelerate and with that comes innovative solutions, Under the partnership, NAB will launch a co-lending product. The product will apply the lending criteria outlined in the platform’s coownership agreement. Dawson said this standardised agreement will give better transparency and security in buying and selling property under a co-ownership relationship. The co-lending product will also hold each party responsible for their part of the loan only. This means individuals do not have to guarantee their co-buyers mortgage repayments and if buying one half or one quarter of the property, their deposit and repayments are based only on that percentage of the ownership. According to Dawson, Commonwealth Bank will be rolling out a similar product and he expects Westpac, ANZ

and Macquarie to follow suit once they look at changing their credit policies. “Obviously all the banks provide mortgages, but we needed a product that supported co-ownership,” he said. Mortgage insurance is provided in the case of one party defaulting on the loan. The Kohab initiative has already been adopted in parts of the world. In fact, Barclays has launched a similar lending product with a number of housing cooperatives in the UK.

The Kohab initiative has already been adopted in parts of the world. In fact, Barclays has launched a similar lending product with a number of housing co-operatives in the UK. Calls for mortgage innovation are growing in the Australian market, however, there is a general view that action on this front has been slow. For Dawson, Kohab wanted to create an ecosystem that supports shared home ownership as well as support confidence and trust in the process. He acknowledges that industry innovation is slow, but the initiative has caught the attention of some levels of government.

He acknowledges that industry innovation is slow, but the initiative has caught the attention of some levels of government.


RFi GROUP INTERVIEW

He has since been contacted by NSW Treasury “to discuss innovating solutions around affordability. Those guys are listening” he said. For now, however, the next few months for the business will be focusing on finetuning the platform to make it easy for consumers to navigate. “We will also be looking to secure more lenders as partners to the platform. We can’t really be marketplace with just one lender. We need to bring in more experts to give people the choice.”

We will also be looking to secure more lenders as partners to the platform. We can’t really be marketplace with just one lender. We need to bring in more experts to give people the choice. The platform also expects to launch a product soon that will allow existing property owners to unlock equity and sell a portion of their property, which may appeal to existing investors or an older demographic. “We will use our position to lobby state and federal government where we see significant opportunities for housing affordability. We want to be a voice in the community.”

We will use our position to lobby state and federal government where we see significant opportunities for housing affordability. We want to be a voice in the community. David Dawson Co-owner, Kohab

AUSTRALIAN RETAIL BANKER - RFi MEDIA 21


DEPOSITS

Deposits Top savings accounts for kids WORDS AARON TAN

A

ccording to the 2017 Canstar Awards for Junior Savings Accounts, the top savings accounts must have the following three things. Firstly the account must have zero fees for account-keeping and transactions, it must be accessible through multiple channels such as branch, phone or online banking, and have websites specifically designed for kids to help with their financial education. While certain savings accounts have higher rates, there may be conditions that must be met to access the rates. For example, Bankwest’s Kids Bonus Saver account offers 4.75 per cent, but between $25 to $250 must be deposited every month, with no withdrawals made. The money from the Bonus Saver is transferred out into a linked Children’s Savings Account every year. Suncorp’s Kids Savings Account for under 18s and Westpac’s Bump Savings Account for under 12s have a more consistent rate of up to 2.6 percent and 2.3 percent respectively, with much fewer conditions to be met. Kids’ savings accounts may also charge high fees, with branch withdrawal fees going to as high as $20; there could even be additional charges for coin-counting for when children deposit their savings in a branch from their piggy bank. CommBank’s Dollarmites rewards program have led to their Youth-saver accounts being ranked ahead of their competitors in the Canstar Awards.

Firstly the account must have zero fees for account-keeping and transactions, it must be accessible through multiple channels such as branch, phone or online banking, and have websites specifically designed for kids to help with their financial education.

22 AUSTRALIAN RETAIL BANKER - RFi MEDIA


DEPOSITS

AUSTRALIAN RETAIL BANKER - RFi MEDIA 23


DEPOSITS

Exchange traded corporate bonds – an alternative to term deposits WORDS AARON TAN RFi Group data shows that the proportion of Australians that hold term deposits has remained steady for the last 3 years. In a market of high volatility, term deposits may be considered a low-risk investment option, however APRA data shows that household bank held deposits still are over $880 billion as of December 2017. Although almost 1 in 5 consumers hold a term deposit another option for retail investors looking for low-risk investments are corporate bonds. In the past, the majority of retail investors didn’t have access to corporate bonds and were instead forced to choose between high-risk equities or low-risk term deposits. However, now exchange traded bonds allow investors to access corporate bonds issued by companies on the ASX, providing the price stability and fixed income from the underlying bond with no minimum investment. Corporate bonds are considered to be slightly riskier than term deposits but are still considered low-risk investments as they are “high up” in the corporate structure. If a company were to go under, term deposits are first to be paid back, followed by corporate bonds. According to Richard Murphy, Co-Founder and CEO of XTB, corporate bonds can provide up to 40% higher returns compared to term deposits. Similar to a term deposit, corporate bonds allow you to accurately predict your overall returns when the bond reaches maturity, with the added convenience of having more liquidity available through ASX trading.

Corporate bonds are considered to be slightly riskier than term deposits but are still considered low-risk investments as they are “high up” in the corporate structure. % OF CONSUMERS THAT HOLD A TERM DEPOSIT 50% 40% 30% 20%

17%

10% 0% Nov-13

Nov-14

Nov-15

Nov-16

Nov-17

Source: Australian Savings and Deposits Council – Transactions

24 AUSTRALIAN RETAIL BANKER - RFi MEDIA


DEPOSITS

Bendigo and Adelaide Bank’s profits driven by low deposit costs WORDS AARON TAN Driven by the decline in interest rates being paid to savers, Bendigo and Adelaide Bank has seen an increase to their net interest margin by 18 basis points, up to 2.36 percent. This has contributed to lifting their cash profit; Chief Executive, Mike Hirst, indicating that the lower deposit costs and higher home loan rates are the main reasons for the increased profit margins. Deposits account for 80% of the funding Bendigo and Adelaide Bank receives, which is a comparatively higher proportion than other banks. Hirst states that this strong reliance on deposits for funding has allowed the bank to fare well during periods of high volatility on global financial markets. Furthermore, Bendigo’s total impaired loans declined by $11.9 million to $288.8 million; the improvement in loan quality suggests that fewer customers are facing financial stress.

The Australian Prudential Regulation Authority (APRA) is likely to release a paper in the next few weeks analysing financial models also known as “risk weights”, which influence the amount of shareholder capital that banks are required to set aside when issuing loans.

UBS analyst, Jonathan Mott, states that profit margins in the second half are likely to be affected by aggressive discounts given to new customers.

UBS analyst, Jonathan Mott, states that profit margins in the second half are likely to be affected by aggressive discounts given to new customers. AUSTRALIAN RETAIL BANKER - RFi MEDIA 25


DEPOSITS

HSBC launches Australia’s first Everyday Global Account WORDS SARAH NIESSEN HSBC has launched a new deposit product in Australia called the Everyday Global Account. According to Graham Heunis, Head of Retail Banking and Wealth Management at HSBC, the release of the bank’s new product was the result of having identified a gap in the Australian product market. The new transaction account is designed to function as a standard everyday transaction account, as it is equipped with a Visa Debit card, however the unique card can be pre-loaded and house up to 10 different currencies. The account also boasts no international transaction, currency conversion or local or international ATM fees with HSBC ATMs. RFi Group data shows 1 in 5 prepaid travel card users rate the ability to lock in rates, carrying less cash and loading multiple currencies as the top 3 advantages of holding a prepaid travel card. HSBC’s new account eliminates the need for additional travel cards or carrying large amounts of cash when travelling abroad. Customers can use the card for their everyday purchases locally or internationally by pre-loading currencies utilising a set exchange rate like a pre-loaded travel card. The card pre-selects which currency to use but for any currency that may not be loaded or available already a ‘on the spot’ currency conversion is available using available AUD funds which incurs no fees.

WHAT DO YOU CONSIDER TO BE THE BIGGEST ADVANTAGE OF PREPAID TRAVEL CARDS? Ranked in top 3 Top 5 reasons 50%

The new transaction account is designed to function as a standard everyday transaction account, as it is equipped with a Visa Debit card, however the unique card can be pre-loaded and house up to 10 different currencies.

40% 30% 20%

20%

19%

18%

16%

10% 0% Locking in exchange rates

Carrying less Able to load Able to cash multiple withdraw currencies cash from at the same international time ATMs

Source: Australian Travel Card Program, Nov-17

26 AUSTRALIAN RETAIL BANKER - RFi MEDIA

14%

No risk of losing cash


LENDING

Lending Liberty purchases P2P lender WORDS DINETH WICKREMESINGHE

N

on-bank lender Liberty has purchased peer-to-peer (P2P) lender MoneyPlace for an undisclosed amount. MoneyPlace has been operating for 18 months, and while the size of their lending book is undisclosed, the platform is estimated to have matched approximately $40 million of loans. The purchase is expected to create operating synergies through leveraging Liberty’s large network of broking relationships in combination with the additional funding flexibility MoneyPlace’s platform will provide. The credit models of both lenders will be merged and MoneyPlace will continue to operate under its own brand, with staff and management retained, as Liberty’s lending products are integrated into the system.

MoneyPlace Co-Founder, Stuart Stoyan, believes Liberty’s backing will enable them to grow the loan book to $1 billion over the medium term and, “become one of dominant consumer lenders in country, to take on the big four and the likes of Latitude… the long term play is trying to break the oligopoly.” P2P lenders are willing and able to undercut the major bank lenders on price, and Liberty Chief Executive, James Boyle, believes that the only obstacle such lenders stealing market share from the banks is informing customers of their options and choices. This notion is supported by RFi Group data which suggest that the major factor dissuading borrowers from P2P options is a lack of information and knowledge.

WHY WOULD YOU BE NOT COMFORTABLE (0-2 OUT OF 10) BORROWING FROM A PEER TO PEER (P2P) LENDER? Top 3 Trended Jun-16

Dec-16

Jun-17

Dec-17

100% 80% 60% 40%

42% 29%

25%

20% 0% I don’t really know anything about this type of provider

I think a loan from this type of provider would be expensive

I would be worried about hidden costs on a loan from this type of provider

Source: RFi Group ACLC December 2017 Survey

AUSTRALIAN RETAIL BANKER - RFi MEDIA 27


LENDING

New unsecured loan released for renovators WORDS DINETH WICKREMESINGHE Community First Credit Union has announced two new loans that can only be taken out for home renovations and improvements; a new unsecured Home Improvement Loan with an interest rate at 6.12% and a maximum loan term of 5 years, and another with an interest rate of 8.10% and a maximum term of 10 years. According to RFi Group data, 9% of loans are taken out for home improvement, making it one of the most common reasons for taking out a personal loan behind a new or used car. Mozo Property Expert, Steve Jovcevski, believes that extensive research is crucial for anyone looking to take out a loan for renovations and home improvements as lenders may get nervous about contributing further funds midway through the project. Mitigating this potentially risky proposition is reliant upon the accurate calculation of budgets and tracking of expenditures throughout the project.

Alternative lenders to self-regulate WORDS DINETH WICKREMESINGHE

The motivation behind the changes are to instil confidence and build trust in alternative lenders as they seek to capture market share over the larger, traditional bank lenders.

28 AUSTRALIAN RETAIL BANKER - RFi MEDIA

The Australian Small Business and Family Enterprise Ombudsman, FinTech Australia and the Bank Doctor are working towards an industry code of conduct, a glossary of lending terms, pricing conventions and standardised tools that will allows SMEs to compare the true costs of borrowing. A wide range of alternative lenders with different operating models have agreed to participate; including a Banjo, Bigstone, Beyond Merchant Capital, Get Capital, Moula, OnDeck, Prospa, RateSetter, Sail Business Loans, Skippr, Spotcap and TruePillars. The motivation behind the changes are to instil confidence and build trust in alternative lenders as they seek to capture market share over the larger, traditional bank lenders. RFi Group data suggests such these changes could be effective in overcoming the barriers faced by alternative lenders, with trust, reputation and transparency being the reason 24% of SMEs that are aware of alternative lending options haven’t used one.


MORTGAGES

Mortgages

ANZ ramps up mortgage scrutiny WORDS DINETH WICKREMESINGHE

C

aution, community expectations and a low-risk appetite have been cited as the drivers ANZ’s policy changes regarding switching to interest-only home loans and interest-only loans being used as guarantor loans. Situations where customers extend the term of their loan or switch from a principal and interest loan to an interest-only loan will now be classified as ‘credit crucial events.’ This classification means that the reasons driving the customer’s request, and their personal financial circumstances will be subject to increased scrutiny and verification. These changes will apply to both owner-occupiers and property investors. An ANZ spokesman recognised the suitability of interest-only loans for some customers while also reinforcing the banks overarching motivation to ensure all their customers completely understand their home loan and its requirements. RFi Group data demonstrates the significance of these changes, with 13% of principle and interest mortgage holders highly likely to refinance in the next 12 months.

RFi Group data demonstrates the significance of these changes, with 13% of principle and interest mortgage holders highly likely to refinance in the next 12 months.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 29


MORTGAGES

Smaller lenders competing for interest only loans WORDS DINETH WICKREMESINGHE As the major banks are tightening conditions and increasing rates for risker borrowers, smaller banks and non-bank lenders seem to have identified this as an opportunity to capture market share and are contrastingly cutting rates. ING, Macquarie Bank and Virgin Money have all reduced rates on their interestonly products despite widespread scrutiny and concern over growing house hold debt. Bankwest, Homeloans.com and BlueBay Home Loans are the latest to cut interest rate, reduce investment loan loadings for low documentation loans and focus on capturing potential non-qualifying borrowers with the big four banks. Bankwest is cutting interestonly loans and interest and principal loans of over $200,000 by 15 basis points and 9 basis points respectively. Similarly, Homeloans.com is cutting rates on its FlexiChoice program - which is aimed at borrowers who do not fit mainstream products - by up to 40 basis points. RFi Group data supports the strategy of these smaller lenders trying to encroach upon the vast market share of the big four banks by competing on interest rates, with 15% of recent borrowers citing interest rates as the most important consideration in choosing their lender.

RFi Group data supports the strategy of these smaller lenders trying to encroach upon the vast market share of the big four banks by competing on interest rates, with 15% of recent borrowers citing interest rates as the most important consideration in choosing their lender.

30 AUSTRALIAN RETAIL BANKER - RFi MEDIA

WHY DID YOU CHOOSE YOUR MOST RECENT LENDER? Top 3 reasons - Loans take out within the last year Rank 1

Rank 2

Rank 3

They were offering the most competitive interest rates

15%

6%

4%

25%

They were my Main Financial Institution for personal banking

14%

7%

3%

24%

They were recommended by my broker

11%

0%

5%

10%

7%

20%

23%

30%

Source: RFi Group Australian Mortgage Council, December 2017


MORTGAGES

NAB purchases stake in BrickX WORDS DINETH WICKREMESINGHE NAB’s venture capital arm, NAB Ventures, has joined Westpac’s Reinventure fund in purchasing a stake in real estate investment platform BrickX. The size of NAB’s stake was undisclosed but it believed BrickX has been able to raise $9 million in equity through this wider funding round. The BrickX platform enables aspiring property buyers to purchase small stakes in properties through investing in trust, which are then split into units called ‘bricks’ that are bought and sold for a monetary value up from less than $100. Currently, BrickX has 9500 customers, with approximately $14 million in equity held on the platform in average portfolio sizes of $2000. While investors also receiving a cut of rental income after property management costs, BrickX charges a 1.75% transaction fee when a customer buys or sells bricks and deducts 6% from annual rental income as a property management fee. BrickX Chief Executive, Anthony Millet, said by dividing up properties into many small portions, the platform could solve “illiquidity” problems or lumpiness of residential property investment.

The size of NAB’s stake was undisclosed but it believed BrickX has been able to raise $9 million in equity through this wider funding round.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 31


CARDS & PAYMENTS

Cards & Payments Commonwealth Bank deems cryptocurrency purchases on credit cards to be too risky WORDS AARON TAN

W

ith the recent drop in bitcoin’s value by more than 50%, Commonwealth Bank has announced that customers are no longer allowed to purchase bitcoin on credit cards, indicating that these purchases are not “appropriate.” This move follows similar bans by overseas banks such as Lloyds, JP Morgan Chase, Bank of America and Citi, and makes Commonwealth Bank the first bank in Australia to enforce this ban. The bank is concerned about the risk to their customers’ financial well-being from borrowing at credit card interest rates of almost 20% to invest in virtual currencies, which could lead to large debts. Commonwealth Bank indicates that cryptocurrencies do not meet their minimum standards when compared to other currencies as it is unregulated and very volatile.

The bank is concerned about the risk to their customers’ financial well-being from borrowing at credit card interest rates of almost 20% to invest in virtual currencies, which could lead to large debts. Only a small number of customers are expected to be affected by the ban, with a larger proportion of customers trading cryptocurrencies with debit cards. Commonwealth Bank assures customers that they are still able to continue purchasing cryptocurrencies using transaction accounts and debit cards, provided relevant terms and conditions are complied with.

32 AUSTRALIAN RETAIL BANKER - RFi MEDIA


CARDS & PAYMENTS

Commonwealth Bank assures customers that they are still able to continue purchasing cryptocurrencies using transaction accounts and debit cards, provided relevant terms and conditions are complied with.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 33


CARDS & PAYMENTS

With the new credit reporting system, having a high credit card limit could be costly WORDS AARON TAN Australia’s new comprehensive credit reporting system, also called positive credit reporting, could result in unused credit card limits affecting consumers’ credit scores. The new system provides lenders with more information such as credit limits; prospective lenders will also be able to use credit limit information to consider total possible credit card debt, and a high credit limit could lead to a rejected loan approval even if bills are paid promptly each month. RFi Group data shows that credit cardholders are increasingly aware of upcoming/ recent regulation impacting credit cards, especially amongst cardholders who earn rewards points, where awareness has increased by 18% to 29% in the last 12 months. According to RBA data, although the average credit limit has increased to $9,143, the average outstanding balance is $3,368 and most credit cardholders clear their card debt fully every month, with just 61% of total debt accruing interest. Gerard Brody, Chief Executive of Consumer Action Law Centre, stated that this system may lead to lenders charging certain consumers more and provide opportunities for dodgy “credit repair” agencies to charge consumers for unnecessary services. Rating agencies are predicting that there will generally be a positive effect on credit scores, with most scores showing an overnight improvement after July 1.

ARE YOU AWARE OF ANY UPCOMING/RECENT REGULATION IMPACTING CREDIT CARDS? Trended Earn rewards

Do not earn rewards

40% 29%

28%

30%

23% 16%

20% 11%

10% 3%

5%

6%

9%

8%

0% Dec-16

Mar-17

Jun-17

Source: Australian Cards Council (Dec-17)

34 AUSTRALIAN RETAIL BANKER - RFi MEDIA

Sep-17

Dec-17


CARDS & PAYMENTS

St. George and ANZ show their support with rainbow credit cards and ‘GAYTMs’ WORDS JAPESH RAISINGHANI St. George introduced two rainbow credit cards – the ‘Rainbow Vertigo’ and ‘Rainbow Platinum Vertigo.’ Both cards were introduced shortly before the 2018 Mardi Gras in Sydney to support equality. These cards follow St. George’s LGBTQI Financial Wellbeing Report from November 2017, which found that almost 9 in 10 LGBTQI Australians feel that financial products tend to be designed with heterosexual couples in mind. With the legalisation of same-sex marriage in Australia, St. George is also offering a discounted rate for a limited time on unsecured personal loans to assist couples with wedding costs, as well as providing bonus interest on

Incentive Saver accounts for 6 months. ANZ’s decorated ‘GAYTMs’ shows their support for Mardi Gras, celebrating the Mardi Gras parade’s 40th anniversary. The ATMs were covered in light reflecting rainbow prisms and were installed at various branches across Sydney including Oxford Street, Pitt Street, Newtown and Bondi Beach. Mark Hand, ANZ’s Managing Director, Business and Private Banking and Chair of ANZ’s Diversity Council, stated that ANZ has been a participant and major sponsor of Sydney Gay and Lesbian Mardi Gras for 12 years, and as of 2014 is a Principal Partner.

With the legalisation of same-sex marriage in Australia, St. George is also offering a discounted rate for a limited time on unsecured personal loans to assist couples with wedding costs, as well as providing bonus interest on Incentive Saver accounts for 6 months.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 35


CARDS & PAYMENTS

Real time payments launch in Australia WORDS DINETH WICKREMESINGHE Three of the big four banks - CBA, Westpac and NAB – now offer their customers the ability to use the New Payments Platform (NPP), however each bank is adopting a different rollout policy. The NPP is a $1 billion project, supported by the Reserve Bank, aimed at revamping the infrastructure through which payments between consumers and businesses are made. The system allows consumers to create a PayID, which allows them to link their bank account to a mobile number or email and transfer money almost instantaneously. CBA has launched the service for all its customers, NAB

adopted a staggered rollout to its customers throughout February, while Westpac are only launching the NPP for its Westpac branded customers and not its other brands such as St George and Bank of Melbourne. The only one of the big four yet to offer these capabilities to customers is ANZ, who in the words of an ANZ spokesman, are undergoing “rigorous testing” of the systems to ensure the “best possible and safest experience.” RFi Group data indicates that the demand for such services exists amongst smartphone users, especially younger consumers, with almost 50% of 25-34 year olds believing the NPP would have a highly positive impact on their life.

Westpac aims to make payment processes “frictionless” WORDS AARON TAN With the recent introduction of NPP, Westpac is looking to go beyond simple P2P transfers and work towards making complex payment processes “frictionless.” Similar to how Uber allows customers to pay for their fares simply by booking a car, Westpac intends to introduce initiatives that will allow customers to conduct regular payments automatically, such as with green slip insurance renewals and mandatory check-ups for car registrations. Despite the huge decline in cheque usage, Westpac still processes hundreds of thousands of cheques for the government. Dianne Challenor, GM of Global Transaction

36 AUSTRALIAN RETAIL BANKER --RFi RFiMEDIA MEDIA

Services for Westpac, believes that the new payments platform would lead to the introduction of innovative digital services to address such mass payments, prompting a movement away from cash and cheques. From May 2018, NAB business customers will be charged fees to utilise real-time payments through NPP. Ms Challenor indicates that Westpac is still deliberating its pricing strategy but is likely to charge business clients accordingly as well.


CARDS & PAYMENTS

AUSTRALIAN RETAIL BANKER - RFi MEDIA 37


DIGITAL & FINTECH

Digital & FinTech Home loan applications by digital bank start-up Xinja will take just 20 minutes to complete WORDS AARON TAN

A

fter obtaining an Australian Credit License, Xinja has announced that it will soon be offering home loans to customers. The digital bank start-up has also applied for a full banking license with APRA to become a Restricted Authorised Deposit-taking Institution, as well as an Australian Financial Services License (AFRSL) from ASIC. The first product set to be released is a prepaid card, together with a transaction account which is expected to be ready by May. However, the products will only go live after Xinja receives the two licenses. The neobank claims to offer a fully approved mortgage within 20 minutes, much faster than the usual duration of a few weeks. This is achieved by using technology to lead the decision-making process, removing the need for a human credit assessor and leading to more competitive rates and turnaround times. Last month, Xinja raised $500,000 within 24 hours of launching an equity crowdfunding offer through the Equitise platform; the offer is part of a second-round equity raise for $10 million following about $3 million raised in 2017.

The first product set to be released is a prepaid card, together with a transaction account which is expected to be ready by May. However, the products will only go live after Xinja receives the two licenses.

38 AUSTRALIAN RETAIL BANKER - RFi MEDIA


DIGITAL & FINTECH

Revolut prepares to expand globally in 2018 WORDS AARON TAN In December, digital banking app Revolut broke even for the first time. It has a total of 1.5 million users, and a monthly transaction volume of $1.5 billion; this is a year-on-year increase of 700 percent. The fintech start-up indicates that it intends to expand to Australia, Singapore and the U.S. later this year, with plans to move on to India, Brazil, South Africa and the UAE in the future. On average, Revolut has around 6,000 to 8,000 new users joining each day, with 800,000 monthly active users. The app allows customers to open an account within 60 seconds, offering interbank currency exchange rates. Revolut also recently introduced a feature allowing users to buy and sell cryptocurrencies such as Bitcoin and Ethereum. While other start-up banks such as Monzo and N26 are having difficulty turning a profit, Revolut claims to be the first digital challenger bank to break even. RFi Group data shows that

awareness and usage of fintech alternatives remains low, with only 3% of smartphone/tablet owners indicating that they use fintech products or services. Despite this, Co-Founder and CEO, Nikolay Storonsky, states that becoming a profitable business is not their current priority; instead they are focused on expanding to as many countries globally as possible.

While other start-up banks such as Monzo and N26 are having difficulty turning a profit, Revolut claims to be the first digital challenger bank to break even.

AWARENESS AND USAGE OF FINTECH ALTERNATIVES TO TRADITIONAL BANKING PRODUCTS/ SERVICES Trended Sep-16

Dec-16

Mar-17

Jun-17

Sep-17

Dec-17

25% 20% 15%

15% 10% 5%

3%

0% Awareness

Usage

Source: Australian Digital Banking Program (Dec-17)

AUSTRALIAN RETAIL BANKER - RFi MEDIA 39


DIGITAL & FINTECH

Ian Pollari, Co-Head of FinTech, KPMG Global

40 AUSTRALIAN RETAIL BANKER - RFi MEDIA


DIGITAL & FINTECH

Banks investing in AI technology WORDS DINETH WICKREMESINGHE The banking sector is seeing an increase in the adoption of AI technology to deliver personalised baking experiences and optimise decision making. The initial foray into this space was through ‘chat bots’, which allowed customers to interact with their bank by sending and receiving messages through their computer or mobile device. Over the past year these capabilities have progressed to utilising voice biometrics for conducing banking activities. Ian Pollari, KPMG Global Co-Head of Fintech, believes that the continual investment by banks into AI will continue, “we expect global investment in artificial intelligence to continue at a rapid pace, as the underlying technologies supporting AI mature and both incumbent banks and fintechs look to find ways to embed financial services offerings into home automation systems and other IoT enabled products.”

Over the past year these capabilities have progressed to utilising voice biometrics for conducing banking activities. There are many examples of this across the Australian financial services industry. This year CBA and NAB have already launched their chatbots – “virtual banker” and “Ceba” respectively – programmed to respond to hundreds of thousands of variations of common queries customers may have. Similarly, UBank launched RoboChat to respond to home loan customers, Credit Union of Australia (CUA) is developing a chat-bot and ANZ has partnered with technology company Nuance to integrate biometrics voice capabilities into their mobile app. RFi Group Data indicates that the demand from consumers for automated chat-bots does not warrant the widespread investment that is taking place, with only 1 in 5 smartphone users finding the service highly appealing.

RFi Group Data indicates that the demand from consumers for automated chat-bots does not warrant the widespread investment that is taking place, with only 1 in 5 smartphone users finding the service highly appealing.

AUSTRALIAN RETAIL BANKER - RFi MEDIA 41


ABOUT RFi GROUP

RFi Group is a global intelligence and digital media provider focusing exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our aim is to combine global intelligence and local knowledge to provide insightful, valuable and actionable recommendations, with a core focus on the provision of exceptional client service. OUR BRANDS

Covering 44 key global markets with regional offices in San Francisco, Toronto, London, Singapore, Hong Kong and Sydney, RFi Group consistently provides clients with tailored advice and independent intelligence relevant to their specific markets and business needs. EXCLUSIVE FOCUS ON BANKING AND FINANCE RFi Group’s expertise and deep understanding of the banking and finance sector delivers high-value outcomes. Our areas of expertise include: Retail Banking Mortgages Transaction Accounts Savings Accounts Consumer Lending Cards and Payments

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2018 March Australian Cards Council – Coming Soon • Latest survey credit cardholders

2017 December Australian Consumer Lending Council – Results Available • Latest survey of personal loan holder behaviour and sentiment

2018 March Australian Savings & Deposits Program – Coming Soon • Latest survey of transaction account holders behaviour and sentiment

2017 December Australian Mortgages Council – Results Available • Latest survey of mortgage holder behaviour and sentiment

2018 March Australian Consumer Lending Council – Coming Soon • Latest survey of current and prospective personal loan holders

2017 December Australian Digital Banking Program – Results Available • Latest survey of digital banking behaviour and sentiment

2018 May Payments Diary – Coming Soon • Annual diary of 1,000 consumers – tracking over 9,000 payments in a week

Find out how you can access RFi Group’s latest business intelligence! For further information, please contact Julien Wilson, Commercial Director – Australia & New Zealand on jwilson@rfigroup.com or +61 422 462 722

44 AUSTRALIAN RETAIL BANKER - RFi MEDIA

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Australian Retail Banker - April 2018 Edition  

An RFi Group publication

Australian Retail Banker - April 2018 Edition  

An RFi Group publication