Australia boasts a sophisticated and diverse banking sector, The sector is a central artery in the body of Australia's economy.
During and following the GFC, Australian banking institutions continued to perform strongly relative to international peers. Our ADIs remain profitable, adequately capitalised and well-positioned to meet the various global regulatory requirements.
However, the Australian banking sector is currently undergoing transformation. This is due to a confluence of various factors including:
accelerating technological take-up;
introduction of open banking;
subdued credit growth; and
"The accelerating pace of change from regulatory and technological developments brings unprecedented potential to transform retail banking"
- UK Financial Conduct Authority
As has been widely publicised, banks globally need to adjust to new, more challenging era for banking. Australian ADIs are no exception.
During the 2007-2008 GFC, Australia’s well-managed and supervised ADIs helped keep our country out of recession. Unlike our overseas peers, Australian ADIs continued to make healthy profits during the GFC.
The situation today is arguably more challenging than a decade ago. Australian ADIs are currently are being squeezed by the new world of ultra-low interest rates, subdued credit growth and low inflation. With mortgage lending rates projected to continue to fall, ADI net interest margins (NIMs) are likely to face sustained downward pressure.
In Gen Advisory’s view, further challenges to Australian ADIs will come in the form of:
Technological disruption from non-traditional banking players; and
A weakening Australian economy.
The new era, however, also brings with it new opportunities.
With the impending mandatory Open Banking regime as well as recent advancements in financial technologies, far-sighted ADIs which are able to capitalise on the opportunities which FinTech and RegTech present will enjoy a competitive advantage over their peers.
Strategy & Planning
Current and intended markets
Gen Advisory has the depth of experience to advise ADIs on the following:
Industry and regulatory
Growth and exit strategies