THE future of the banking industry lies with the lucrative business banking market – not small retail customers – says newly appointed National Australia Bank Australian Financial Services CEO Mike Pratt.
THE future of the banking industry lies with the lucrative business banking market – not small retail customers – says newly appointed National Australia Bank Australian Financial Services CEO Mike Pratt.
“Funds management, investment and insurance will, in the near future, account for more than 50 per cent
of bank industry profitability in Australia,” Mr Pratt told a recent Melbourne business forum.
“Traditional bank products such as deposits and lending will shrink to an estimated 40 per cent of the Australian financial services market within the next five years,” he said.
This compares with around 60 per cent today.
The trend had not been lost on the many foreign banks who have entered the Australian market since banking was deregulated in the 1980s, according to Mr Pratt.
He said, while foreign banks and financial institutions had major market shares in areas such as banking, funds management, custodian services, credit cards and leasing, “they have not been attracted to mass retail markets and the reason is that those markets are mostly unprofitable.”
Mr Pratt said the NAB had managed to transform its business to improve customer relationships, a move which seemed to be working.
“Our market share of small business loans is more than ten per cent above our nearest competitor and growing,” he said.
“Equally, our market share of small business deposits is almost ten per cent greater than our nearest competitor.
“The servicing of the small business market in Australia has been another area that has undergone a major transformation in recent years,” Mr Pratt said.
“In banking, we use the term ‘platform’ to describe the manner in which we integrate our various activities to provide a service for a specific segment.
“We have had a successful business banking centre platform in place for a number of years, the aim being to place business banker expertise in the areas where our business customers are located.
“We are expanding our products to enable small business customers to gain access to wholesale type products once solely marketed to large corporate clients,” he said.
“We are transforming the way we manage our relationships with business customers in the same way that we are needing to transform the relationships we have with our retail customer base,” Mr Pratt said.
The NAB has also embraced electronic commerce in enhancing its services.
“There is certainly scope to extend the range of online products and services – particularly in funds management, equity information, portfolio management and ‘business to business’,” he said.
“However, at the National we believe ‘back office’ processing systems technology and competency is already a significant point of differentiation between Australia’s major banks,” Mr Pratt said.
“We want to derive maximum growth and value from our existing businesses that rely on relationship management.
“Funds management, investment and insurance will, in the near future, account for more than 50 per cent
of bank industry profitability in Australia,” Mr Pratt told a recent Melbourne business forum.
“Traditional bank products such as deposits and lending will shrink to an estimated 40 per cent of the Australian financial services market within the next five years,” he said.
This compares with around 60 per cent today.
The trend had not been lost on the many foreign banks who have entered the Australian market since banking was deregulated in the 1980s, according to Mr Pratt.
He said, while foreign banks and financial institutions had major market shares in areas such as banking, funds management, custodian services, credit cards and leasing, “they have not been attracted to mass retail markets and the reason is that those markets are mostly unprofitable.”
Mr Pratt said the NAB had managed to transform its business to improve customer relationships, a move which seemed to be working.
“Our market share of small business loans is more than ten per cent above our nearest competitor and growing,” he said.
“Equally, our market share of small business deposits is almost ten per cent greater than our nearest competitor.
“The servicing of the small business market in Australia has been another area that has undergone a major transformation in recent years,” Mr Pratt said.
“In banking, we use the term ‘platform’ to describe the manner in which we integrate our various activities to provide a service for a specific segment.
“We have had a successful business banking centre platform in place for a number of years, the aim being to place business banker expertise in the areas where our business customers are located.
“We are expanding our products to enable small business customers to gain access to wholesale type products once solely marketed to large corporate clients,” he said.
“We are transforming the way we manage our relationships with business customers in the same way that we are needing to transform the relationships we have with our retail customer base,” Mr Pratt said.
The NAB has also embraced electronic commerce in enhancing its services.
“There is certainly scope to extend the range of online products and services – particularly in funds management, equity information, portfolio management and ‘business to business’,” he said.
“However, at the National we believe ‘back office’ processing systems technology and competency is already a significant point of differentiation between Australia’s major banks,” Mr Pratt said.
“We want to derive maximum growth and value from our existing businesses that rely on relationship management.
