CANBERRA: Australian bank customers are among the world’s fastest adopters of mobile banking, a trend that is predicted to make the big four prime targets for technology-based firms eyeing banks’ huge profits.
Mobile banking has overtaken online banking through a desktop computer as the main way for customers to interact with their bank, and Australian consumers are leading the charge, consultancy Bain & Company says.
Survey figures from Bain showed that 38 per cent of Australian customers’ interactions with their bank occurred via a smartphone or tablet in 2014, up from 22 per cent a year earlier.
This made mobile banking even more common than online banking, which fell from 42 per cent to 35 per cent of customer interactions.
Although the trend is occurring globally, Bain partner Gerard du Toit said Australian consumers were leading the world in their use of mobile banking.
“The pace of change over the last 12 months is stunning,” said Mr du Toit, Bain’s head of banking in the US, on a visit to Australia.
At the same time, Australian consumers were less likely to visit a branch than customers in other counties.
“Australia is leading the world in adopting mobile banking, and at the same time taking the unnecessary interactions out of the branches,” Mr du Toit said.
While convenient for customers, the embrace of mobile technology is a potential threat for Commonwealth Bank, Westpac, ANZ Bank and National Australia Bank, Mr du Toit said.
That is because the high usage of mobile – and the lucrative profits earned by the big four – act as a “bright red target” to the growing number of technology-based businesses competing with banks in payments and lending.
The big four also have an average return on equity of 15.8 per cent, compared with about 10 per cent for banks in the US.
“Given Australia both has customers who are now used to doing their banking on mobile, which all these start-ups are going after, and has really attractive profit margins, it just makes it really attractive to go after it,” Mr du Toit said.
Despite the dwindling role for Australian bank branches, Mr du Toit said branches still had a viable future helping customers with complex problems or providing advice.
The findings were based on surveys of 83,000 consumers from 22 countries, including 2700 people in Australia.
In contrast to Bain’s view, other experts believe the local banks are less vulnerable to “digital disruption” because they have invested heavily in digital technology.
A report from Citi analysts last week said the impact of digital disruption on Australian lenders could be “small”, citing banks’ already high spending on technology and the role of regulation in deterring new entrants in the market.
