Australia’s biggest bank has highlighted its technology and digital platforms as a key point of difference when it announced its half-yearly profit results yesterday.
In a 154-page results presentation, CBA advertised the fact that it was the first bank to perform property purchase settlements on the PEXA platform.
CBA is also a shareholder in the company.
According to PEXA chief executive Marcus Price, the basis of mortgage competition will become about how well integrated PEXA is for lending systems and what tools and information customers are provided with.
Mr Price expects banks to develop mobile apps that will track a customer’s mortgage, not unlike the tracking systems used by postal services.
“I expect they will be able to provide mobile apps that will tell people exactly where their settlement is up to, they will have something on their phone which will tell them the other bank is ready, the settlement date, SMS messages to confirm the transaction has happened and confirming receipt of funds and so forth,” he said.
“There will be a lot more visibility and application for consumers to see into the process.”
While he has not seen any evidence of these apps yet, Mr Price is confident they will arrive soon.
“We are providing all the hooks for the banks and it is a certainty they will be there,” Mr Price said.
“There is no doubt that is part of their strategy, to put that into the consumers' hands.”
Mr Price believes CBA is well placed because it has the front-end capability and will be able to take advantage sooner than others.
“That’s their real play, I think,” he said. “They will have a first-mover advantage with their front-end technology.”
CBA’s online and electronic origination technology gained momentum over the six months to December 31 last year, with 75 per cent of new home loan customers taking up e-docs where offered.
The bank also claims to have the number one free financial app and takes pole position in customer satisfaction.
The CommBank app records 15 million log-ons per week and $2.5 billion in transactions per week.
The lender posted a statutory NPAT of $4,535 million, up 8 per cent, and a cash NPAT of $4,623 million – also up 8 per cent, in the six months to 31 December 2014.
Commenting on the result, CBA chief executive Ian Narev said the group invested in innovation within the business during this period.
Mr Narev highlighted the establishment of a Group Innovation Lab, digital property settlement (PEXA) and the 'Temporary Lock' functionality.
CBA’s net interest margin (NIM) declined 2 basis points (to 2.12 per cent) on the prior half, reflecting competitive asset pricing, partially offset by lower wholesale funding costs.
The annualised ratio of loan impairment expense (LIE) to average gross loans and acceptances improved 2 basis points and 3 basis points (to 14 basis points) compared with the prior comparative period and prior half respectively.
CET1 (Internationally Comparable basis) was 13.3 per cent. CET 1 (APRA basis) increased 70 basis points (on the prior 12 months) to 9.2 per cent.
Strong deposit growth during the period saw the group satisfy a significant proportion of its funding requirements from customer deposits, with deposits remaining at 63 per cent of total funding.
During the period, CBA took advantage of improving conditions in wholesale markets, issuing $18 billion of long-term debt in multiple currencies.