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Deloitte sees digital value in major banks

Major lenders have the brand and reputation strength to weather digital disruptors.

Speaking at the release of Deloitte’s Digital disruption – Short fuse, big bang? paper last week, Deloitte Access Economics partner Dr Ric Simes said that during the GFC customers returned to the big banks “in spades”.

“That is a big barrier for any new entrant to overcome in some of the core parts of banking,” Mr Simes said.

“The areas where it is easier to disrupt are ones where you are not as reliant on the balance sheets, so in payments, or in the provision of broking services,” he said.

“I think that overall the banks are in a very strong position to perform very well in a digitally disruptive world, but there will be elements of how their business will change profoundly over the coming years with more niche parts of the market being taken over with new players.”

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The Deloitte paper singled out UBank as an example of a digital success story in financial services, a sector that is expected to feel significant digital disruption over the coming years.

The online lender is now Australia’s fastest growing bank, according to the report.

UBank chief executive Alex Twigg said that being attached to NAB has been fundamental to UBank’s success.

“UBank is a digital business that is a bank,” Mr Twigg said.

“It has been deliberately run very separately from the NAB brand both from an operating and customer perspective, while under the same umbrella of regulation and governance,” he said.

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The bank has seen significant mortgage growth in the six months to March 31, growing its loan book by 22.8 per cent to $2.7 billion.

“We have had a significant uptake in our mortgage volumes direct through UBank and you will see that across the globe,” Mr Twigg said.

Digital technology has been a key theme of the Financial System Inquiry (FSI) and is expected to feature prominently in the FSI interim report to be published next month.

 

Deloitte sees digital value in major banks
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