DECEMBER 2017 ISSUE
AUSTRALIAN RETAIL BANKER w www.rfigroup.com t twitter.com/RFiMediaGRB
President & Chief Operating Officer, Raise
RFi GROUP INSIGHT
PAYMENTS & DIGITAL
11 Financial management tools and Millennialsâ€™ savings goals
16 Blair Keenan, Loyalty Country Lead, AU & NZ, Mastercard
40 Australian Bank allows iPhone X Face ID logins
CONTENTS DECEMBER 2017
RFi GROUP OPINION
RFi GROUP INSIGHT
The great Australian property dream
Financial management tools and Millennials’ savings goals
A Special Feature Interview with Vipin Kalra, BankBazaar
CBA and ING’s changes on international transfer fees
Banks target customers with low interest rate credit cards
Loans to be used to consolidate debt from Christmas
WOMEN IN LEADERSHIP
Kathleen Pierce-Gilmore, Raise
A Special Feature Interview with Blair Keenan, Mastercard
Minimum wage could be abolished for a new living wage
40 PAYMENTS & DIGITAL Australian Bank allows iPhone X Face ID logins
ANZ watching household debt
Did a colleague forward you the Australian Retail Banker? Subscribe to receive YOUR FREE monthly copy by clicking here
SAVE THE DATE!
Key themes for 2018 include: • Automation vs Personalisation • Regulation and Capital • Housing Affordability • Property Market Outlook/Economics
• Brokers & Third-Party Distribution • Investment Lending Trends • Open Banking • Digital Innovation
RFi Group and AB+F are pleased to announce the 8th Annual Australian Mortgage Innovation Summit on the 22nd & 23rd of February in Sydney.
politicians and regulators discussing market predictions and forecasts for the year ahead.
Hear industry experts explore local and global case studies on mortgage innovation and the ever-changing housing market from 2017. And experience in-depth panels with economists,
For tickets, sponsorship and exhibition enquiries: James Harradine 02 9126 2616, firstname.lastname@example.org
Welcomes to December and this, the last Edition of the Australian Retail Banker for 2017, a newsletter designed to provide updates 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. We begin this edition with Alan Shields’ Opinion Piece on the Great Australian Property Dream ahead of our annual Australian Mortgage Innovation Summit and Australian Lending Awards on 22/23rd February 2018, while our Insight Piece - by RFi Group’s Kate Wilson, takes a look at how personal financial management tools are helping Millennials to meet their savings goals. Our Women in Leadership interview features features PayPal Americas’ ex VP Kathleen Pierce-Gilmore, who has sidestepped into start-up land, as the President & Chief Operating Officer of Raise. Chloé James caught up with Kathleen at Money2020 in Las Vegas
recently, to chat with the executive about her exciting new venture. Our product news looks at ANZ’s Visa debit card for the vision impaired, AMP’s new Bett3r account ‘three is better than one’, how moving your mortgage may be easier than you think, personal loans to be used to consolidate debt from the Christmas period, Westpac’s removal of Amex companion cards and new mobile payments app Beem’s plans, to hit the Australian market by the end of the year. Wishing you a very happy and safe festive season from everyone at RFi Group, as always, thank you for your support throughout the year. See you in 2018!
Chloé James Editor / Group Media Director +61 (0) 451 790 929 email@example.com
RFi December Sta
The “Pays” – Changing consumer payment
2017 has seen usage of mobile wallets such as the “Pays” – Alipay, Andr 2018 will see consumer payment behavior continue to be reshaped, imp
Consumer payments behavior is changing at pace. More than 1 in 4 banked customers have chosen to pay with a non-bank “Pay”
The bar will be raised. Two-thirds of consumers who use one of the Pays say they are highly satisfied with the experience
Consumers are using the “Pays” frequently. 42% of users are now doing so at least on a weekly basis
When shop consumers is the mean most often
* Insights on the “Pays” are based on interviews with more than 10,000 consumers in 10 markets conducted in 201
t behavior and expectation
roid Pay, Apple Pay, Samsung Pay, PayTM and WeChat Pay â€“ increase. pacting usage and expectation of more traditional payment forms. Usage of mobile wallet is set to increase further still.
of consumers expect their usage to increase over the next 12 months
pping online, 9% of in France say a mobile wallet ns of payment they use n
of non-users are likely to start within the next 12 months
50% of consumers in Hong Kong strongly agree (4+/5) that they would use mobile wallets more frequently if there were rewards for doing so
RFi GROUP OPINION
THE GREAT AUSTRALIAN PROPERTY DREAM – IS IT ACTUALLY A TWO-HEADED DEMON? WORDS ALAN SHIELDS, RFi CONSULTING
ovember saw submissions put forward for RFi’s Australian Lending Awards, the winners of which will be announced in February 2018 at the Australian Mortgage Innovation Summit (AMIS). This is therefore a good time of year to reflect on innovation in the mortgage market and where it might meet the pain points of the population – particularly for would-be first home buyers and those at the other end of the property ownership cycle.
One in two millennials has the primary financial goal of owning their own home. House price appreciation is making it harder for these individuals to own their own home and this is evidenced by the ageing profile of first home buyers (FHB) in Australia. In recent work that we have conducted at RFi, we asked consumers of all ages what their top three financial goals were and it’s quite revealing. When you break it down by generation, you can see the evolution of the very pain points that innovation in the home lending space could and should address.
08 ARB - RFi MEDIA
RFi GROUP OPINION
WHAT ARE YOUR TOP 3 FINANCIAL GOALS? Retail banking customers By generation
Owning my own home 49%
Control my budget and watch what I spend 46%
Maintain my current lifestyle 59%
Maintain my current lifestyle 89%
Ensuring a stable family life in future 48%
Ensuring a stable family life in future 43%
Ensure a comfortable lifestyle after retirement 57%
Control my budget and watch what I spend 74%
Control my budget and watch what I spend 45%
Owning my own home 41%
Control my budget and watch what I spend 52%
Ensure a comfortable lifestyle after retirement 47%
Source: RFi Research
Take the Millennials (aged 18-34); one in two has the primary financial goal of owning their own home. House price appreciation is making it harder for these individuals to own their own home and this is evidenced by the ageing profile of first home buyers (FHB) in Australia. RFi research suggests that in the 1970’s the average age of a FHB was about 22 years, whereas in the 2010’s, the average FHB is almost ten years older. What to do? Serviceability of debt is pretty affordable at the moment given interest rate levels, but we don’t live in an environment where lenders (or regulators) have an appetite for 100% LVR lending. If we look globally, there are examples of government-sponsored affordable housing initiatives and lenders partnering with construction companies to build and fund affordable housing. On the product innovation side of things, lenders are constructing products that enable groups of FHBs to share the purchase of properties, or as Barclays is doing, to share the purchase with the bank, paying rent on the unowned portion.
ARB - RFi MEDIA 09
RFi GROUP OPINION
The concept of sharing fits well within the shared economy of the future and sits comfortably alongside our share cars and our Airbnb holidays. But what about the property ownership issues among older generations? To start with, RFi research shows that the average expected retirement savings gap for Baby Boomers sits at just greater than $500k. And yet, many of these same people are sitting on extensive property wealth here in Australia. Indeed, the top two goals of this generation are to maintain their current lifestyle and to ensure a comfortable retirement.
The average expected retirement savings gap for Baby Boomers sits at just greater than $500k. And yet, many of these same people are sitting on extensive property wealth here in Australia. So, what is the answer? I was also fortunate enough in November to attend and participate in Fintech Australia’s Intersekt conference in Melbourne. One of the speakers – Ron Suber (“the Godfather of Fintech”) – was putting forward a proposal that as a Baby Boomer with property, should he wish to go on a big holiday or have a more comfortable retirement without borrowing against or selling his property, why couldn’t he sell a share in his property? Would there be opportunity to structure investment products to specifically offer liquidity to these property owners? Would Millennials be interested in getting a foot on the ladder by investing in the pooled properties of older generations and benefiting from the upside, even if they can’t actually move in? Going forward it seems there is ample opportunity for innovation and I am excited to see how the industry responds.
10 ARB - RFi MEDIA
RFi GROUP INSIGHT
WILL PERSONAL FINANCIAL MANAGEMENT TOOLS HELP MILLENNIALS TO MEET THEIR SAVINGS GOALS? WORDS KATE WILSON, RFi RESEARCH
t RFi Group we have a set of internal saver segments, created based on savings behaviours and attitudes, which we use to analyse and view the savings market. When we profile these segments by age it becomes apparent that there are two segments where Millennials over-index; Goal Savers â€“ savers who are saving steadily towards a specific goal and who will not withdraw money from savings until that goal is reached - and Rate Chasers - savers who use multiple accounts or who move savings around to take advantage of rate changes or to access the best rate. The higher than average proportion of Millennials in both these segments largely reflects the fact that Millennials are more likely than any other age segment to be saving towards a specific goal, and often a large goal such as a house deposit. Millennials are also more likely to be engaged with their
savings, as reflected by the higher than average proportion of Millennials who are Rate Chasers, with Millennials significantly more likely than older Australians to know the interest rate applicable to their account and to deposit into their account regularly. With Millennials demonstrating that they are engaged with their savings as well as saving towards a specific goal, there is a question around whether traditional financial service providers are doing enough to help Millennials meet these goals. Especially when the savings goal is a house deposit, are savers getting the support they need from their savings account providers to achieve such a goal? The rise of 3rd party budgeting and personal financial management tools suggests that there may be a gap in the market.
ARB - RFi MEDIA 11
RFi GROUP INSIGHT
According to RFi Group data, Millennials are significantly more likely than average to use a 3rd party budgeting or personal financial management tool, with Acorns and Pocketbook among those most commonly used. Millennials are also significantly more likely than average to consider the concept of a personal financial management tool appealing, with 28% of Millennials rating the appeal of such a tool highly appealing (8+/10), compared to 19% of Generation X and 11% of Baby Boomers.
% OF CONSUMERS WHO CONSIDER PERSONAL FINANCIAL MANAGEMENT TOOLS HIGHLY APPEALING (8+/10) 35% 30%
10% 5% 0% Millennials
Source: RFi Group
12 ARB - RFi MEDIA
Perhaps unsurprisingly, given the higher propensity of Millennials to be saving towards a specific goal, the ability to set and track progress towards a savings goal is ranked the third most popular feature of a personal financial management goal for Millennials. The feature considered most valuable would be the ability to create budgets for different categories, followed by access to a tool that identifies areas where they could cut back to save more. All of this points to Millennials being open to the idea of receiving help and guidance to meet their goals. Despite the increasing number of 3rd party provided apps and tools designed to help consumers budget and save, the vast majority of Australians would most prefer a personal financial management tool to be offered by their main financial institution. Even among Millennials, who are the most likely to prefer to use a 3rd party provider (9% compared to 5% for Generation X and 3% for Baby Boomers) and who are also the most likely to be open to using FinTech and other challenger brands more generally, two in five indicate that they would most prefer this tool to be offered by their main financial institution. For now, at least, it is traditional players who have the greatest opportunity to bring these sorts of tools to customers. Furthermore, with Millennials less likely than average to be satisfied with their primary savings account provider and more likely to switch, perhaps the offer of tools to help Millennials save and reach their goals could differentiate providers in the current low rate environment and even facilitate higher retention and cross-sell.
RFi GROUP WOMEN IN LEADERSHIP
hile in Las Vegas, attending the mammoth Money2020 global payments and fintech extravaganza, RFi Group’s Chloé James met with the impressive Kathleen Pierce-Gilmore, or ‘KPG’, as she is affectionally known. Kathleen is a global expert in consumer lending, fintech, endto-end P&L management, strategy development, talent management, people leadership and partnership creation. She is also a lot of fun! A former PayPal executive, she is currently leading the charge for one of the USA’s hottest fintech start-ups Raise and here are her thoughts on leadership, career fulfilment and living a truly joyful life…
Interview continued on page 14
President & Chief Operating Officer, Raise
WORDS CHLOÉ JAMES
previously VP & GM Credit Americas, PayPal
ARB ARB--RFi RFiMEDIA MEDIA 13
RFi GROUP WOMEN IN LEADERSHIP
How did you get where you are today and what, or who, has been your greatest influence in business? I have been extremely fortunate with the opportunities I have had through the years; from being able to take challenging classes in my younger years, to attending a great university with more than just great academics, to having the chance to take on important work in each of my jobs across the companies I have worked for. If I think about the themes that have existed along the way that have enabled my progression they are curiosity, courage, and gratitude. If I think about how I have been able to find great roles, it mostly comes down to me expressing passion and excitement for something I care about or want to learn more about - like when I shared with a friend how much I loved American Express’s products and brand and she introduced me to a friend who worked in their internal consulting team, which is how I ended up joining the company.
Kathleen Pierce-Gilmore President & Chief Operating Officer, Raise
I think about the times where I have discovered opportunities to do better for customers or for my company and having to find the courage to stand up for what I believe in and make the case for change, which has then led to greater leadership opportunities to drive the change. And most importantly, the times I have excelled the most and have had the most abundant personal growth and development is when I have felt deep gratitude. I have been so thankful and almost surprised by the people, the challenging problems, the learning I have had exposure to through the years, and when I revel in it, I find my energy and optimism and capacity to contribute and learn shoots through the roof. What is the driving force behind your career goals/aspirations? Starting out, I wanted financial security - plain and simple. I wanted stability. As I started to gain confidence and learn, I started to develop a passion for problem solving and more curiosity
14 ARB - RFi MEDIA
for how companies work. My passion for financial health subconsciously drove my affinity for American Express and once I was in the financial services industry, I developed great passion on helping more and more people succeed financially through innovative and consumer centric products and services. As time has gone on, I have sought ways to expand my reach on making that impact.
My passion for financial health subconsciously drove my affinity for American Express and once I was in the financial services industry, I developed great passion on helping more and more people succeed financially. 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 have made many mistakes and continue to do so on pretty much a daily basis :) ! I am not sure I have ever made a “business decision” that I have regretted because I believe everything is just data. You invest in something and it yields value - that is data. You invest in something and it doesn’t - that is data too. As long as you are constantly in learning mode, then you have nothing to regret. I have definitely impacted people in ways that I regret but have invested greatly from learning and growing from those experiences. I could say I also regret not seeing a few opportunities all the way through because I believe I missed out on some great learning in a few cases that I would value now. My greatest professional achievement
RFi GROUP WOMEN IN LEADERSHIP
is more around the people I have built great relationships with through the years, my leaders, to my peers, to people I have hired and developed. I almost can’t believe how lucky I am to have worked with so many amazingly talented and passionate people in so many different opportunities and all they have done for me along the way.
I believe everything is just data. You invest in something and it yields value - that is data. You invest in something and it doesn’t - that is data too. What do you do to keep evolving your career, to ensure a fulfilling and successful longevity? As hard as it is, I keep taking risks and they have been growing in magnitude through the years. I think I am like most people, and am afraid of failure in general. Learning to take on opportunities that have a high chance of not working out (for whatever reason) is difficult, but it often leads to the greatest breakthroughs and certainly the greatest sense of fulfillment. I have also really focused on making sure I am surrounded by people I trust and admire. 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? I would be lying if I said I have balance! I have a rich life, but I am just like any other working mum - trying to keep it together at every moment. I have three kiddos who I adore and who hold a mirror up for me to see myself honestly. I also love running and it serves as therapy for me and also time for me to work through problems, practice difficult conversations, or plan my day. I think I
am at my best when I feel good about how my kiddos are doing and when I feel physically healthy, so these are integral to my success in general. Do you mentor others? And, what have you learnt in the process? I do spend time investing in people. I am naturally curious about people and personally really enjoy deep connections with folks I admire and relate to. This has naturally led me to “mentor” folks but it never feels like that is what I am doing intentionally. It is usually more mutually sharing and listening and discussing and learning. I have learnt so much about what motivates people and what holds people back in being their best and constantly try to incorporate that into how I lead and how I manage my own experience. 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 think the biggest challenge for anyone now and in the future, is balancing the need to demonstrate competence and confidence while always remaining open to learning and taking risks. Learn, take risks, learn, develop deep relationships with people you admire, learn, follow your curiosity and learn. I think the biggest challenge for anyone now and in the future, is balancing the need to demonstrate competence and confidence while always remaining open to learning and taking risks.
of having to hold their own in a crowd of men (especially the more senior you get) and establishing a feeling of belonging and connection can be challenging when you are trying to prove you should even be in the room. I think this will continue to get better over time, but there will always be some need to be aware of it. 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?
Don’t put your life on hold for the sake of your career. I chose to have children relatively young compared to my peers and it was the greatest decision ever. Don’t put your life on hold for the sake of your career. I chose to have children relatively young compared to my peers and it was the greatest decision ever. A female leader I admired invited me to spend time with her and her two young children while we were on an international assignment together and I saw how she navigated the chaos of it with grace and humour and it made me realise it would never be easy and I should just go for it. Knowing that I could have a life outside of work has made my work joyful and fulfilling and never a burden as a result.
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.
Women especially are often in a position
ARB ARB--RFi RFiMEDIA MEDIA 15
RFi GROUP INTERVIEW
A S P E C I A L F E AT U R E INTERVIEW WITH
Blair Keenan Loyalty Country Lead, Australia & NZ, Mastercard
16 ARB - RFi MEDIA
Loyalty programs must change in order to stay relevant. A digital loyalty experience is key to ensure programs can meet consumer expectations.
RFi GROUP INTERVIEW
What was the initial driver behind the creation of Mastercard’s ‘Achieving Advocacy and Influence in a Changing Loyalty Landscape, A Mastercard Asia Pacific Study’? With loyalty a key part of Mastercard’s business globally, we wanted to better understand the drivers of loyalty across the region. This was the first time we have done such an extensive study into consumer behavior and needs, conducting research into loyalty across 7 markets, talking to over 7,000 people across Asia Pacific. The three key objectives were: 1. To understand the changing loyalty program landscape in the region, the extent of program participation, the prevailing rewards currencies and the typical ‘’loyalty wallet’’; 2. To examine the extent to which programs are achieving their goal of influencing member behaviour and delivering value to both members and program operators; and 3. To explore how programs can further engage with members, sustainably deliver greater value and cultivate greater influence. In general, how have consumer’s perspectives changed when it comes to loyalty programmes over the past 12-24 months across Asia-Pacific? Things are definitely changing and while consumer perception of loyalty programs is shifting, so too are the behaviours that programs are meant to influence. Consumers are shopping very differently, starting to pay differently with tech giants introducing new ways to pay via smartphone, and they are travelling differently with new players changing the way people travel. Many consumers are reluctant to wait for a distant reward and are less motivated by point based reward structures that they feel set unobtainable targets. There is a high demand for more immediate rewards in the form of discounts, bonuses and other incentives. In Australia for
example consumers aren’t seeing value in loyalty programs like they used to. It is a mature loyalty market and they have a lot of choice in when and how their loyalty is to be rewarded. Importantly loyalty is no longer just about rewards i.e. points no longer hold the value they once did, and consumers are seeking personalised experiences to compliment points and demonstrate true value. Wallets remain crowded and consumers are a member of more than 6 programs on average. This includes an average of 2.1 supermarket/ retail programs, one bank program, one airline program. The notion that Millenials are not interested in loyalty is false. Our findings are indicating that Millennials are more active than what we may have anticipated. They participate in a higher number of programs than other segments or generations. They are more responsive to the communications they are receiving from loyalty programs. We know Millennials are the greatest users of digital channels to engage with their loyalty programs and they are also the most willing to share personal information if it results in a more personalised experience. With insights like this, we can see that Millennials offer a bigger opportunity for loyalty program operators than what we thought. What were some of the key findings of the study and did anything come out of the research which you found surprising? The consumer loyalty space in Asia Pacific is at a crossroads and is a hotly contested and crowded market. There is an uneven loyalty landscape with markets at different levels of maturity. Markets like Australia, Hong Kong, Japan and South Korea are highly mature; programs are well established, but customers are seeing reduced value from loyalty programs due to increased regulation and deteriorating program economics. Emerging markets like China, Indonesia, and India present an opportunity to capitalise on a stronger appetite for loyalty among the growing middle classes.
Consumers on average have 7.9 loyalty programs in their wallets, however there is a difference between a consumer’s participation in a program and what they consider to be the Most Important Program (MIP) – the program that motivates and influences them to the greatest extent, owning the greatest share of their wallet. There are mixed levels of customer advocacy across the region. By definition we had a starting assumption that loyalty programs would drive advocacy. For the first time we measured the Net Promoter Score (NPS) as part of the research, and when customers were asked if they were likely to recommend their most important program (MIP) the NPS outcome was –5 across the seven markets. Mature Market: Australia’s individual NPS -6. Loyalty in mature markets is a well-established concept. For many consumers, there is the realisation is that program value is diminishing – ultimately, rewards are becoming harder to earn, and this is driving the NPS scores down; and Emerging Markets: It is the opposite in India (NPS+37) and China (NPS+14). In emerging markets consumers are still seeing increasing program value and have strong appetite for loyalty generally, it also appears that the prevalence of real time cashback rewards in India and digital wallet and social media integration in China are having a positive impact. The reason why these factors such as MIP and NPS are so important to measure is because they correlate to the overall influence a program is having on their member’s behaviours. For example, in India where consumers are highly satisfied with the programs, they also report that their MIP is influencing their payment, travel and shopping behaviour. A surprising thing we found was also that it’s all about good experiences within programs. The more personalised the offers, the easier the digital experience, the more relevant the communications
ARB - RFi MEDIA 17
RFi GROUP INTERVIEW
the opportunity for the program to influence consumer behaviour was threefold. The research found strong performance by loyalty programs in the emerging markets, notably India and Indonesia. Why or what do you think programs in these markets are doing well? Both India and Indonesia are considered emerging markets. Consumers are still seeing an increase in program value and have a strong appetite for loyalty overall. In both India and Indonesia, a large majority of consumers believe the value they obtained from their MIP had increased over the last two years. (India: 75%, Indonesia: 67%) When we compared the top types of rewards that consumers wanted versus what programs were actually providing – there was a good match in both markets, which would point to higher satisfaction levels. For India and Indonesia, the focus is much more about a “reward me now” culture where instant gratification and recognition of status is very popular. When consumers in these markets were asked “what benefits are you able to earn as a member of your MIP?” Discounts were highest in these markets (Indonesia 65% and India 53%) and VIP/ special treatment were significantly higher than other benefits (Indonesia 24%, India 21%). We have seen the concept of loyalty change quite dramatically with the rise of technology and therefore accessible information at consumer’s fingertip – Will this trend continue? What can business do to embrace this trend? Loyalty programs must change in order to stay relevant. Being able to do this requires the capacity to adapt to market conditions. A digital loyalty experience is key to ensure programs can meet consumer expectations. There is a significant opportunity to improve the consumer loyalty digital experience. More than 60 percent of
18 ARB - RFi MEDIA
consumers in Asia Pacific are now able to interact with their MIP online. This implies 40 percent don’t interact with loyalty programs online, which is a significant opportunity. Only 40 percent of consumers can do so via a mobile app and these metrics vary quite widely across the region. In Japan, 71% of consumers have access to a website where they can track benefits, claim rewards, check latest offers or their points balance but only 29% said they have access to a mobile app where they can do the same.
of highly-digital, personalised experiences when it comes to customer loyalty programmes?
The research told us that members who can engage with their program via these platforms are more likely to believe programs are increasing in value, they are also more likely to be highly satisfied. In India members who have access to both a website and mobile app, 80% feel highly satisfied, underlining the importance of a digital servicing model to broader program engagement.
• 28% of consumers who indicated they are highly satisfied with one of the three program experiences reported their MIP is strongly influencing their behavior; and • 70% of consumers who are highly satisfied with all three experiences also reported their behaviour being strongly influenced.
In China, 47% of consumers who are members of a loyalty program prefer to communicate with their program(s) through a smartphone app. Chinese consumers are welcoming the value they are getting from WeChat, including promotional messages, news, latest offers and updates on program benefits. What the research is telling us is that this kind of digital, proactive communications are encouraging Chinese consumers to spend more to attain benefits and redeem points, which can lead to increased engagement with their loyalty programs. Will this trend continue? While providing a strong digital proposition is a key driver of member engagement and the ability to influence behaviour it shouldn’t be viewed in isolation as a silver bullet. We know that there are three key areas that work together to achieve stronger engagement – effective digitisation, personalisation and relevant and timely member communications. What are some of the benefits
Programs delivering strong levels of digitisation, personalisation and communication are most likely to influence consumer behaviour. We found that if consumers can be delivered better experiences in two of the three areas of digitisation, personalisation and communication, or better yet in all three, then the impact on program influence is magnified threefold.
Consumers often reported low levels of satisfaction with their ability to personalise their program experience. Regionally, only 36 percent of consumers reported being highly satisfied with the level of personalisation. However, +70% of consumers in AP are willing to share personal information if it results in a more personalised experience, in developing markets this number is closer to 85% As a concept, personalisation has greatest opportunity in the developing markets where consumers are more willing to share information and less cynical of program motives in using it. • Consumers are after loyalty providers to make better use of information already provided before seeking additional information. Onerous experiences can both deter program sign-ups, and get new members off to a bad start with regards to program engagement. • Programs need to determine how to utilize the existing information that they collate from members. If information is useful then program operators should cease requesting it.
RFi GROUP INTERVIEW
How are you using these three pillars to drive your business success? Mastercard is focused on enabling our customers and partners to be at the forefront of digital payments: 1. The broadest set of digitally enabled products and services that drive profitable behavior; 2. Simplifying access to and integration of our digital assets; and 3. Delivering the best digital experience everywhere Our platforms are being strengthened, transforming our solutions to enable customers to advance their digital strategy. We have a personalised offers platform that allows personalization at the individual customer level. Allowing a program operator to truly control the proposition and economics to an individual. The offers are merchant funded and offers and based on a customer transaction behavior, at the moment we have several programs live in the region. Our Pay with Rewards product allows cardholders to use their rewards points to make purchases, wherever Mastercard is accepted â€“ domestic, cross border, or online. The research indicated this was the number one feature consumers across the region wanted. Pay with rewards is live with 30 customers across 14 counties globally. Finally, we have a significant array of data capabilities across Mastercard that we are leveraging to develop, segmented, informed customer analytics and communications. Mastercard has a clear focus and ongoing role when it comes to shaping loyalty across Asia â€“ why is the area so important to the business? Firstly, Asia is a key region for Mastercard globally given the significant growth potential across the region. The emerging nature of payments in a
number of markets (China, India, SEA) combined with the mature payments landscapes in others (Australia, Japan, Korea) make Asia a fascinating opportunity for our increasing suite of payment capabilities. Mastercard has the largest global footprint in the loyalty market powered by the fastest and most secure processing network in the world. Mastercard is in a unique position to connect buyers and sellers using strategic loyalty solutions to create
valuable customer experiences. Ultimately loyalty programs are seeking to drive behaviour, which in most cases involve a payment and at its heart loyalty is a data driven business. Through combining our core payments processing business, with many of our acquired capabilities, including Data Analytics, Test and Learn and Loyalty, Mastercard has created a valuable and unique range of capabilities for Card Issuers and Merchants to understand their customers more deeply, improve engagement and influence their behaviour.
ARB - RFi MEDIA 19
RFi GROUP INTERVIEW
A S P E C I A L F E AT U R E INTERVIEW WITH
Vipin Kalra Chief Executive Officer, BankBazaar International Former Visa executive for Singapore and Australia
20 ARB - RFi MEDIA
Special Feature Interview with Vipin Kalra, Chief Executive Officer, BankBazaar International â€“ former Visa executive for Singapore and Australia What can incumbent financial institutions learn from Fintechs? Many incumbent financial institutions (FIs) have been around for decades, if not centuries. Over the years, they have worked on the same business models with little competition from outside. With the digital and FinTech revolution shaking up the financial services industry, incumbent FIs are recognizing the need for change. They key areas where they can learn from FinTech firms are: 1) Customer-centricity: Historically, the focus for large FIs was largely sales and
profit driven, with little importance given to the customer needs and experience. As customer behaviour changes and loyalty declines, FIs need to put customer experience at the heart of their offering. When it comes to FinTech firms, most are born from a customer need and have built their business models around the customer. This has allowed them to fill in the gaps in traditional banking models and gain customer interest. 2) Simplify processes: Incumbent institutions have built vast and complex structures with a number of individual systems, departmental siloes and data management issues. As such, introducing new business models and adopting new technologies is riddled with challenges. On the other hand, FinTech firms have been able to simplify the delivery of financial services through digital platforms, making it
RFi GROUP INTERVIEW
easier for them to move fast and adopt emerging technology, while providing a better customer experience. For FIs to compete, digital initiatives need to move beyond the front-office, they must automate internal processes and build digital capabilities at the core of their operations.
Collaborations can also fail if the expected outcomes are not discussed and agreed upon beforehand. It is necessary to discuss the KPIs, how performance will be measured and the payment structure to avoid any points of contention that could ultimately derail the partnership.
How do you ensure incumbent-fintech partners stay on course, and deliver on the collaboration?
Finally, regulation can be another reason behind unsuccessful partnerships. With rapid advances in technology, regulations may change at any time, making it difficult for FIs to continue the collaboration.
In order for incumbent-FinTech partnerships to stay on course, it is important to have an aligned vision and strategy. FIs need to view Fintech organisations as partners and not just third-party vendors. This means creating an environment for open communication and sharing resources to jointly acquire and serve customers. One of the cornerstones of a successful collaboration is opening up of APIs, allowing partners to seamlessly integrate their offerings and get access to relevant customer data. FIs and FinTech both have core capabilities â€“ for FIs it is the years of experience, large customer base and regulatory support; for FinTech firms it is their understanding of the customer and digital expertise. By playing to their strengths and working together to plug in the gaps, incumbents and FinTech firms can create a sustainable and successful partnership model. The when and how incumbent-fintech collaborations fail. Incumbent-FinTech collaborations can fail for a number of reasons. For one, the two organizations may not have the right fit in terms of culture and values, leading to friction in the collaboration. FIs must create a culture that supports innovation and is open to change across all levels of the organization. Similarly, FinTech firms must ensure they have an understanding of the industry and a sustainable business model that can address the needs of the FIs.
Irrespective of how itâ€™s done, having a measured approach is important. Scaling prematurely or too fast can spell doom. Digital banking risks to look out for in 2018. Banks will continue to face a host of strategic, operational, compliance and security risks in 2018. In terms of digital banking, as technology continues to evolve, current digital banking solutions will run the risk of becoming redundant if they do not adapt and cater to the changing customer demands. Banks will have to go beyond offering mobile banking applications as consumers turn to digital solutions for more advanced services such as financial advisory. The ubiquity of technology will also leave banks more vulnerable to cybersecurity risks. Attacks are becoming more sophisticated and given the sensitivity of financial data, it will be imperative for banks to build a security framework that can withhold breaches. How will regulation impact Fintech commercialization? A supportive regulatory framework can be a key enabler for FinTech
commercialization. As players in the financial services ecosystem, FinTech organizations need to function in accordance with regulations, even if they are not directly governed by them. Especially so when it comes to building partnerships with FIs, which is one of the main routes to commercialization. Regulatory restrictions can make it hard for banks to provide customer data to partners such as FinTech firms. In addition, the regulatory framework can limit the products and services FIs are able to work with. Conversely, an open regulatory framework which promotes innovation can allow FinTech organizations to build better solutions and work with FIs to meet customer needs, thereby making FinTech more commercially viable. How can Fintechs solve the scalability issue? Scalability can be elusive for many organisations as they grow. It is especially hard for FinTech firms as they have to compete against bigger FIs with heavy pockets. Before attempting to scale the business, it is important to ensure that one has a solution that is truly addressing a need in the market and work out any kinks in the business model. Ideally, FinTech firms should look at building scalability into the business model from the very beginning rather than trying to work it in at a later stage. This involves building low-cost, replicable platforms, and creating automated internal processes. FinTech firms can also explore working with a network of partners and advisors who can share resources and expertise, and consider investing in cost-effective digital marketing capabilities to grow their customer base. Irrespective of how itâ€™s done, having a measured approach is important. Scaling prematurely or too fast can spell doom. FinTech firms must have enough runway or committed investors to back up their efforts.
ARB - RFi MEDIA 21
Transactions CBA drops exorbitant international transfer fees, ING abolishes all international fees WORDS CORINNE BARRETT
BA has recently announced it will be slashing fees for sending money internationally by as much as 70%. This decision will again place pressure on the other Big 4 banks to follow suit, much like CBA chose to abolish ATM fees. CBA customers will now only pay a $6 fee when sending less than $1000 overseas and a $12 fee when exceeding $1000, much lower than the initial $22 fee that was incurred in both cases. However, if the transaction is conducted within branch this will result in a $30 fee highlighting the trend towards pushing banking tasks towards digital. The decision to ATM fees, lowering international fees and announcing the launch of a new low-rate credit card is all a bid to regain customer trust. When looking at RFi Group data, inconvenient ATM locations is a driver for just over 1 in 10 regarding their likelihood to switch institutions and the incentive of zero ATM fees is ranked highly as an acquisition tool. On November 10th ING also announced that their Orange Everyday and Orange One cardholders would avoid ATM fees not just in Australia but were to be rebated fees globally, both ATM transactions and international transaction fees when purchasing goods or services online and overseas. To qualify for the offer customers will need to deposit at least $1,000 a month into their account which is already a natural behaviour for ING customers wanting to gain maximum interest rate on their savings account.
22 ARB - RFi MEDIA
ARB - RFi MEDIA 23
ANZ Visa debit cards for the vision impaired WORDS HUW GRIFFITHS ANZ is issuing new Visa debit cards, which have new accessibility features to aid vision-impaired Australians with their banking needs. ANZ’s Visa debit cards will now feature tactile indicators, have increased font size and highly visible edges to assist customers identify their card and determine which way it inserts into card accepting machines. ANZ Senior Manager of Everyday Banking, Steve Price, said, “We know that one in five Australians lives with a disability of some sort, so it’s really important we develop products all our customers can use conveniently. We have a commitment to inclusive design and accessibility standards in all aspects of our product development, so the extension of these features to a further 3.4 million cards is a significant part of delivering on that.” This decision comes following the release of the new $10 and $5 notes. The new notes all include small bumps, similar to brail, to help vision-impaired determine the exact value. ANZ’s new Visa debit card is expected to be particularly helpful as RFi Group data shows that more and more Australians are choosing to use debit and credit cards instead of cash.
24 ARB - RFi MEDIA
SA venues are moving towards a cashless culture
NET SWITCHING BEHAVIOUR IN THE LAST 12 MONTHS – TO WHICH PAYMENTS HAVE YOU SWITCHED SOME SPENDING FROM/FROM WHICH PAYMENTS METHODS HAVE YOU SWITCHED SOME SPENDING?
WORDS AARON TAN Switched from
South Australia’s payment landscape is evolving with many local cafes, restaurants and entertainment venues moving towards using contactless and mobile payments. Aaron Martin, the owner of Coffee Branch, said that, “cash payments have declined from about 80 per cent to 20 per cent over the past year.” Amongst his customer base of city workers and university students, a higher percentage are using contactless cards and mobile payments. RFi Group data also reflects the growing trend towards cashless payments across not only South Australia, but also the rest of the nation, with a 10% net movement away from cash, towards other payment methods such as debit or credit cards. At the Adelaide Oval, the proportion of card transactions has increased over the past 3 years, from 13 per cent to 88 per cent. The venue now sees most of its outlets at the oval already only accept card payments, with the possibility of the other outlets also adopting a cash-free policy in the future. Cashless adoption however, is not necessarily evenly spread across all of demography. A survey by the Reserve Bank of Australia indicated that many older, lower income or disabled people are less comfortable with using digital technology, and would face difficulties if Australia were to become completely cash-free.
15% 10% 5% 0%
-15% -20% PayPal to make an online payment
Source: RFi Group Australian Payments Diary May 2017
ARB - RFi MEDIA 25
Savings Australian minimum wage could be abolished to make way for a new living wage WORDS JAPESH RAISINGHANI
Fi Group data shows that over the last six years the proportion of Australian savers who use their savings to fund their lifestyle has declined. Compared to July 2011 where 68% of savers used their savings to fund their lifestyle only 53% used their savings to fund their lifestyle in March 2017. Although the proportion has declined, with more than 50% of savers dipping into savings to fund their lifestyle many Australians are still struggling to save. Sally McManus, Australian Council of Trade Unions (ACTU) Secretary, explained that a living wage must be enough to cover basic expenses such as rent, healthy diet, good quality education, healthcare and utility bills and that income disparity is so wide that the gap is no longer creating ambition and motivation to succeed. Ms McManus explains, â€œA class of people who barely keep their heads above water, despite working full time, sometimes in multiple jobs.â€? As a result, the (ACTU) is set to begin a campaign with an aim to introduce a living wage pegged at 60% of median wages to aid families keep up with burgeoning costs of living. If this campaign succeeds, the lowest paid workers will be earning $738/week based on a median wage of $1230. This is an $80/week increase from what the worker was previously earning. The ACTU stated that the present minimum wage system has pushed 3 million Australians into poverty.
26 ARB - RFi MEDIA
Get a better return through term deposits WORDS AARON TAN Term deposit rates have been declining since July making it tough to lock in a good rate of return so savers will need to shop around to find the best deal available in the market. There is a trade-off however, with lenders asking savers to commit to longer terms for higher rates. One of the higher rates on offer at the moment at the moment is for a four-year term deposit offered by RaboDirect at 3.15%. RFi Group data shows that the key driver for switching a savings account such as Term Deposit is the interest rate on offer. As a result, competition for a slice of this pie amongst financial institutions will be largely rate driven, trading it off between the rate and the term. Longer terms are beneficial to banks by ensuring customers keep their money in one place for greater periods of time. Peter Marshall, a Data Manager from Mozo, stated that, â€œthe RBA is unlikely to change interest rates for the remainder of the year, with any changes more likely to be a decrease in rates than an increase.â€? As a result, the Australian consumers can expect low rates on term deposits to be around for a little while longer.
WHY ARE YOU LIKELY TO CONSIDER SWITCHING YOUR LARGEST TERM DEPOSIT TO ANOTHER FINANCIAL INSTITUTION? Savers that hold a term deposit Highly likely to switch their PTD provider (8-10 out of 10) 50%
The RBA is unlikely to change interest rates for the remainder of the year, with any changes more likely to be a decrease in rates than an increase.
28% 22% 19%
Peter Marshall, Data Manager, Mozo
Better Take interest rates advantage of introductory interest or offer
The brand of the provider
My Unhappy relationship with savings status has account changed provider
Source: RFi Group Australian Savings and Deposits Council September 2017
ARB - RFi MEDIA 27
AMP’s new Bett3r account: three is better than one WORDS CORINNE BARRETT Recently awarded ‘Best Savings Account’ by Finder, AMP’s new three-in-one account beat out the competition due to the savings rate offered. The Bett3r Account from AMP is the first of its kind which includes three linked accounts; Pay, Save and Spend. It was created to help customers get on top of their finances whilst also rewarding savings through offering a rate of up to 3 per cent per annum with conditions of depositing a minimum of $2,000 into the Pay account each month. The linked accounts have been designed to work together to provide a simultaneous view of income, upcoming bills, progress on savings goals and spending priorities all available on a mobile application.
1 in 3 current transaction account holders find the ability to see all online accounts within the one location the most appealing tool or service offered by a financial institution. Sally Bruce, AMP Bank’s Group Executive stated, “As a wealth management bank our aim is to help our customers achieve their goals, including helping them own their home sooner – we know the foundation to achieve these goals is day-to-day cashflow management, a challenge for many of us in our busy lives”. According to RFi Group data, 1 in 3 current transaction account holders find the ability to see all online accounts within the one location the most appealing tool or service offered by a financial institution. Millennials are focused on goal tracking and convenient all-in-one tools above other personal finance management services offered.
28 ARB - RFi MEDIA
ANZ watching household debt WORDS HUW GRIFFITHS & JAPESH RAISINGHANI
NZ, following the suggestions of regulators at the Reserve Bank of Australia (RBA), have announced that they will be paying close attention to the growing levels of household debt. The new focus for ANZ comes as the regulators from the RBA believe that many consumers could fall victim to interest rate increments in the future, particularly since wage growth is so low. Australian households may have their motives for carrying greater amounts of debts when compared to other citizens of other countries, however, ANZ is choosing to remain cognizant in an atmosphere where income growth is slow at 2% but basic expenses are on the rise. This ties in with RFi Group data which shows approximately 1 in 5 borrowers expect to feel mortgage stress in the next 12 months, out of which 25% are between the ages of 18-34. Shayne Elliott, CEO of ANZ, explained ANZ will be paying particular attention to customers who have difficulties making full repayment on their mortgages in the past 90 days, using this metric as a key indicator of mortgage book risk. The proportion of customers who were 90 days past their due date of repayment was 0.75%.
ANZ is choosing to remain cognizant in an atmosphere where income growth is slow at 2% but basic expenses are on the rise. This ties in with RFi Group data which shows approximately 1 in 5 borrowers expect to feel mortgage stress in the next 12 months, out of which 25% are between the ages of 18-34.
ARB - RFi MEDIA 29
Moving your mortgage is easier than you think WORDS AARON TAN With the advent of new technology, switching mortgages and loans is getting easier and easier, requiring less paperwork nowadays. However, Stuart Symons from People’s Choice Credit Union says that 1 in 3 people do not switch because they believe the process is too difficult and isn’t worth the trouble. As a result, the key focus for financial institutions looking at providing technology focused solutions for loan applications is to ensure that the solution is as easy as possible for the end customer. RFi Group data shows that property owners are increasingly likely to submit a mortgage application entirely online, with 39% indicating they are highly likely to do so.
HOW LIKELY WOULD YOU BE TO COMPLETE AND SUBMIT A MORTGAGE APPLICATION ENTIRELY VIA AN ONLINE CHANNEL? Highly likely (8-10 out of 10) - Trended 50% 40% 33%
30% 20% 10% 0% Sep-16
Source: RFi Group Australian Mortgages Council September 2017
30 ARB - RFi MEDIA
With the advent of new technology, switching mortgages and loans is getting easier.... However, Stuart Symons from People’s Choice Credit Union says that 1 in 3 people do not switch because they believe the process is too difficult and isn’t worth the trouble. Switching to a financial institution where you can receive a lower rate will result in significant savings over long periods of time, with financial institutions offering benefits and rebates to attract customers. While age is perceived as a barrier for older people who do not want to refinance and end up with a long mortgage, shorter loan options can cater to their requirements. Customers who are self-employed also tend to believe they will receive a higher rate if they switch. This is not necessarily true, with Jessica Darnbrough from Mortgage Choice indicating that providing proof of a long-term stable income through documents such as tax returns, would go a long way to helping self-employed mortgage holders get a better loan rate.
Moneycatcha to revolutionize home loan applications WORDS CHARLOTTE NEWELL Moneycatcha is an Australian fintech, which is looking to help streamline, simplify and speed up home loan applications in Australia. The Moneycatcha platform will help tackle two problems; the number of times an application is reworked and to improve transparency and trust. The new fintech attests it will be able to use its own platform, Homechain, to reduce the number of times an application is reworked by aggregating the entire verification process in one workflow using blockchain technology. It also believes using the Homechain platform will enable it to provide a transparent system that can be trusted by lenders as well as consumers. RFi Group data shows that when applying for a mortgage, consumers were the least satisfied with communication and receiving updates on the status of their application. If the Moneycatcha systems are implemented it could help to improve consumer confidence in the entire mortgage application process.
When applying for a mortgage, consumers were the least satisfied with communication and receiving updates on the status of their application.
ARB - RFi MEDIA 31
Cards Banks are targeting customers with new low interest rate credit cards WORDS AARON TAN Following Westpac’s new Lite card, which only has an interest rate of 9.9 per cent on purchases, and CBA also announcing a new low-rate card it is apparent that many Australian lenders are looking to introduce rates under 10 per cent into the market, much lower than the current highest rate of 24.99 percent. Low rates are not just something the Big 4 are introducing. The financial comparison website, RateCity, reports that smaller lenders, such as Bank Australia and Teachers Mutual Bank, are also offering similar low interest rate deals. ING is now offering an instalment plan to pay off larger purchases at 9.99 per cent.
Whether or not the low interest rates still drive customers to switch their card depends on their personal situation... RFi Group data shows that amongst non-rewards cardholders likely to switch their card, 16% plan to switch to receive a lower interest rate. Whether or not the low interest rates still drive customers to switch their card depends on their personal situation. Sally Tindall, from RateCity, explained, “Interest rates are essential for people who have revolving credit card debt. However, people tend to be less likely to switch credit cards because it’s tied to their home loan, and end up using the card that is given to them by their bank.” Reducing interest rates is very helpful for reducing household debt but, Tribeca Financial CEO, Ryan Watson warns that credit card debt can result in a cycle of debt lasting a lifetime. The top priority for credit card debtholders is to minimise their payable interest by switching to a no or low interest credit card. RFi Group data shows that amongst non-rewards cardholders likely to switch their card, the main drivers of switching are interest rates and annual fees; 16% plan to switch to receive a lower interest rate.
32 ARB - RFi MEDIA
Sally Tindall, Money Editor, RateCity
ARB - RFi MEDIA 33
Westpac cuts ties with Amex companion cards WORDS HUW GRIFFITHS
estpac is the third of the Big Four banks who have removed its American Express companion card, with current Amex cards still be useable up until the 4th of April 2018. The removal of the Amex companion card will affect a wide range of Westpacâ€™s reward offering, with Altitude cardholders no longer having the choice of using an Amex card with their Visa/Mastercard. The outcome of this relationship ending is the loss of higher rewards points that Amex offered, in comparison to the other two major card schemes, even with the earlier reductions this year on earn rates. RFi Group data, from the September 2017, shows that of credit cardholders around 1 in 4 are available to have an additional companion card. 64% of Westpac MFI customers eligible for a companion card currently do have this companion card, therefore resulting in a significant proportion of customers losing out on one of their frequently used cards. The removal of the Amex companion card may result in a shift of customers as they look for the highest earning rewards card. CBA is the last of the Big Four banks still offering Amex companion cards.
THINKING OF YOUR PRIMARY CREDIT CARD, DO YOU HAVE TWO CARDS LINKED TO THE SAME ACCOUNT - AN AMERICAN EXPRESS AND A VISA/MASTERCARD? By main fiancial institution - Westpac Yes
I am not sure
60% 40% 64% 48%
20% 0% Westpac
Source: RFi Group Australia Cards Council Sep-17 Wave
34 ARB - RFi MEDIA
Credit card rates explained WORDS JAPESH RAISINGHANI Credit card interest rates, also known as purchase rates, refer to the interest one is required to pay on their credit card purchases. When one uses a credit card, they are loaning money from the lender. Most credit cards have monthly interest-free periods or introductory offers where rates can go as low as 0%. However, once these periods expire, customers are charged interest on what they owe at the purchase rate. Another rate to consider is the balance transfer rate which comes into play when one is switching credit cards. Many credit cards charge no interest for any balance one brings over from their old card to a new card for a short period of time. During this time frame, one can repay their old balance at no additional accruing interest rates. However, once
this period expires, customers are charged on what they owe at a Balance Transfer Rate, which tends to be much higher than the purchase rate. Lastly, when a credit card is used to withdraw money from an ATM, it is known as a cash advance interest rate which also tends to be much greater than the purchase rate as many credit card companies consider a cash advance to contain high risk. Many customers are charged interest on their cash advances on the spot, without the luxury of having interest free days. This ties in with RFi data which suggests that cash advances are on a general downtrend, the number of cash advances has dropped drastically from about 2.4 million in Jun-15 to less than 2 million in Jun-17.
RFi data suggests that cash advances are on a general downtrend, the number of cash advances has dropped drastically from about 2.4 million in Jun-15 to less than 2 million in Jun-17.
ARB - RFi MEDIA 35
Personal Loans Personal loans to be used to consolidate debt from Christmas period WORDS CHARLOTTE NEWELL
ccording to RFi Group data 9% of current personal loan holders, took out their most recent loan to consolidate debt. When asked what alternative methods of credit were considered borrowers, who took out their most recent personal loan to consolidate debt, were most likely to have considered taking out a personal credit card if their loan was not approved. But with Christmas fast approaching, Australians are being urged to consider taking out personal loans to consolidate debt incurred from Christmas expenses rather than using credit
cards. The suggestion comes as many Australians will experience financial stress in January due to costs incurred during the holiday break. The Australian Securities and Investments Commission (ASIC), shows that the average Australian will spend over $1,000 during the Christmas period of presents, travel and entertainment. If this amount of money were to be put on a credit card, the interest which would be incurred would be significantly higher than that incurred on a personal loan, according to Maria Loyez, Spokeswoman for SocietyOne.
WHEN YOU APPLIED FOR YOU LOAN, WHAT OTHER FINANCE OPTIONS DID YOU CONSIDER? Borrowers who took out their loan for debt consoldiation Top 5 options 20% 15% 11%
5% 0% Personal credit card
Personal line of credit
Redraw on my mortgage
Loan from friend/family
Source: RFi Group Australian Consumer Lending Council
36 ARB - RFi MEDIA
Increasing home loan
ARB - RFi MEDIA 37
Limits to be placed on payday loans and consumer leases WORDS HUW GRIFFITHS The federal government is drafting legislation which will affect Australians who take out payday loans, consumer leases and small amount credit contacts (SACC). In 2016 a review was conducted relating to these lending products and found that they can have adverse effects on customers, with some suffering interest rates up to 884% and inescapable debt. The new legislation is to set a limit the amount consumers can borrow for rental or payday loans, only allowing repayments to comprise of 10% of their net income. This legislation is similar to current restrictions which apply to Australians receiving half of their income via Centrelink. Consumers receiving such high levels of government assistance are restricted to short-term loan repayments not exceeding 20% of their gross income.
38 ARB - RFi MEDIA
In 2016 a review was conducted relating to these lending products and found that they can have adverse effects on customers, with some suffering interest rates up to 884% and inescapable debt.
Australians with a good credit history compensated with cheaper loans WORDS JAPESH RAISINGHANI & CORINNE BARRETT Australians may soon be able to acquire cheaper financial products such as home loans, personal loans and credit cards with a good credit history. The changes are expected to take effect from the 1st of July 2018. Treasurer, Scott Morrison, stated that this change could be a huge positive for both consumers and lenders, eventually leading to increased competition and the ability for more Australian households and small businesses to access financial aid.
Treasurer, Scott Morrison, stated that this change could be a huge positive for both consumers and lenders, eventually leading to increased competition and the ability for more Australian households and small businesses to access financial aid.
Under the changes the Big 4 Banks will be required to share more data about their customersâ€™ credit history to improve competition between providers. If borrowers have a good credit history, i.e. those who have not missed a repayment on their car loan and if their credit cards are not continuously maxed out, will be able to demand a better deal on their interest rates. This could be a positive for a number of Australians as RFi Group data shows 60% of current personal loan holders are aware of their personal credit rating whereas about 70% of prospective borrowers are aware of their credit rating.
60% of current personal loan holders are aware of their personal credit rating whereas about 70% of prospective borrowers are aware of their credit rating. Such systems which compensate customers with a good credit history are already in place in the U.K and the U.S. While this movement aims to target home loans in the early days, it could potentially move forward onto telecom and energy providers in the future. This movement can affect borrowers in both ways- those with positive credit scores are expected to be better off, however, banks are unlikely to give up their profit margins and thus, those with negative credit scores are expected to be worse off.
ARB - RFi MEDIA 39
PAYMENTS & DIGITAL
Payments & Digital Australian Bank allows iPhone X Face ID logins: User dream or security nightmare? WORDS CORINNE BARRETT
BA is the nation’s first bank to allow customers the ability to access their accounts using the facial recognition technology built into Apple’s iPhone X. According to the CBA’s Executive General Manager of Digital, Pete Steel, “Our customers use secure fingerprint logins on the CommBank App about 30 million times a month. Offering the additional capability of Face ID to their customer base is part of their continual efforts to provide a more seamless and better banking experience.” Since the announcement, Westpac has followed suit, offering the additional feature to its customers as well as the customers of its subsidiaries. Face ID uses more than 30,000 points of reference making it one of the most secure channels to use to log into an account. The greatest caveat for the banks undertaking Face ID is to make sure the process used to enroll their customers in Face ID is just as secure. It won’t be up to Apple to certify that the user using their iPhone is the true user CBA expects him or her to be therefore it’s up to the banks to ensure the set-up process is secure which in turn creates the biggest challenge of gaining the customers trust to start using the service.
Offering the additional capability of Face ID to their customer base is part of their continual efforts to provide a more seamless and better banking experience. Pete Steel, Executive General Manager of Digital, CBA
40 ARB - RFi MEDIA
PAYMENTS & DIGITAL
New mobile payments app Beem plans to hit the market at the end of the year WORDS JAPESH RAISINGHANI NAB, Westpac and CBA have come together to introduce the new mobile payments app, Beem, at the end of 2017. Beem will permit users to make instant payments between people or small businesses via a smart phone. The app aims to allow payments such as slicing up a restaurant bill between a large group of people or paying a tradesperson. The app is free and available to all iPhone and Android phone users, regardless of their bank. The app guarantees to process payments instantaneously, very much different from the current system which takes up to 3 days especially if customers are from differing banks. Beem will also allow small businesses without
an Eftpos terminal to request for on-thespot payments as opposed to delivering invoices and having to suffer a delay in their payment. Beem is the first conjunctive service between the 3 major banks whom have thus far struggled to bring Apple Pay on board. Beem targets a different audience when it comes to Apple Pay- looking at money transfers rather than contactless payments. These banks are placing their bets on a rapidly changing world of consumer transactions and they have said that they will be looking into the possibility of exploring the â€œpoint-of-saleâ€? payment space as well.
Beem is the first conjunctive service between the 3 major banks whom have thus far struggled to bring Apple Pay on board. These banks are placing their bets on a rapidly changing world of consumer transactions.
ARB - RFi MEDIA 41
PAYMENTS & DIGITAL
George Frazis, Group Chief Executive of Consumer Banking, Westpac
Image source: Westpac
42 ARB - RFi MEDIA
PAYMENTS & DIGITAL
Westpac introduces its own wearable devices WORDS HUW GRIFFITHS Westpac has announced the launch of its own wearable device line called PayWear, instead of relying on implementing its payment technology into other firm’s consumer devices. From December, customers applying via Westpac Live for a PayWear Card will have the ability to insert a microchip into devices, which can then be attached to existing personal items, such as a watch. PayWear will have a designer range focusing more on the style and aesthetics of the product, which will be available to customers in early 2018. The reason behind the designer range is because consumers demand this from their wearables, as stated by Westpac Group Chief Executive of Consumer Banking, George Frazis, “When speaking with customers, personal style and choice were important. In fact, 70 percent agreed that they would only wear a wearable device if it suited their own personal style and lifestyle.”
The ownership of wearables has been steadily increasing over the last two years with close to 1 in 6 Australians now owning a smartwatch. RFi Group data shows that the ownership of wearables, such as smartwatches, has been steadily increasing over the last two years with close to 1 in 6 Australians now owning a smartwatch. The increase suggests that there is a growing market for products such as Westpac’s PayWear Card and competition is expected to increase as ownership increases.
WHICH OF THE FOLLOWING DEVICES DO YOU OWN? Smartwatch 15%
Source: RFi Group Australian Digital Banking Council September 2017
ARB - RFi MEDIA 43
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 worldâ€™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 Groupâ€™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
For any advertisement en, please contact your regional RFi office or email your enquiry to firstname.lastname@example.org For more information, visit: www.rfigroup.com www.globalretailbanker.com
44 ARB - RFi MEDIA
Mobility and Banking Technology SME and Business Banking Private Banking Wealth Management Banking Regulation
RFi AUSTRALIA & NZ
RFi NORTH & LATIN AMERICA
Level 12 70 Phillip Street Sydney NSW 2000 Australia
One Embarcadero Center Suite 500 San Francisco, CA 94111, USA
P +61 2 9126 2600
P +1 415 315 1690
RFi NORTH ASIA
Unit 740, 2 Exchange Square 8 Connaught Place Central Hong Kong
Level 12, 9 Battery Road MYP Centre Singapore 049910
P +852 2297 2427
P +65 6597 7028
2nd Floor, Saxon House 48 Southwark Street London SE1 1UN United Kingdom
100 King Street West Suite 5600 Toronto, Ontario M5X 1C9
P +44 203 862 2166
P +1 416 644 8524
ABOUT RFi GROUP
RFi GROUP ACTIVE IN 44 INTERNATIONAL MARKETS
Our markets include Australia, Argentina, Belgium, Brazil, Canada, Chile, China, Colombia, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait, Lebanon, Malaysia, Mexico, Netherlands, New Zealand, Nigeria, Peru, Philippines, Poland, Qatar, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Switzerland, Taiwan, Thailand, Turkey, UAE, UK, Uruguay, USA and Vietnam.
SOME OF OUR CLIENTS AROUND THE WORLD
AU / NZ
ARB - RFi MEDIA 45
G LO B A L D I G I TA L B A N K I N G CO U N C I L RFi GROUP’S GLOBAL DIGITAL BANKING COUNCIL IS A COMPREHENSIVE RESEARCH STUDY, PROVIDING INSIGHTS ON THE DIGITAL BANKING BEHAVIOURS AND PREFERENCES OF 1,000 CONSUMERS PER MARKET IN 10 COMPARABLE MARKETS ACROSS THE GLOBE – THE US, MEXICO, CANADA, UK, FRANCE, INDIA, HONG KONG, CHINA, SINGAPORE AND AUSTRALIA.
KEY INSIGHTS FOR FINANCIAL SERVICES ORGANISATIONS IN AUSTRALIA INCLUDE:
Adoption, uptake, consideration, sentiment and the role of the traditional bank
Banks v’s fintech’s v’s telecoms v’s government – Who do consumers trust with their finances and personal information and how is this changing?
Biometrics, chatbots, robo-advice, augmented reality or virtual reality – What will be the next big thing in banking?
Are we moving ever closer to a cashless society and via which route?
Key examples of banking innovation driving uptake and satisfaction with consumers globally
For further information, please contact Julien Wilson, Commercial Director – AU & NZ on email@example.com or +61 422 462 722 46 ARB - RFi MEDIA
An RFi Group publication