Australian Retail Banker - February 2016

FEBRUARY 2016
RFi Group Opinion
All Mortgage Brokers Care About is….. Credit Policy
and Process Efficiency!
03
RFi Group Insight
Gen Y and the Future of Banking
05
RFi Group Women in Leadership
Susie Babani - ANZ
07
RFi Group Interview
John Arnott – ING Direct
13
RFi Group Interview
Sue Coulter - CUA
18
Transactions
CBA launches innovation lab in downtown Hong Kong
21
Savings
Two out of three Aussies short on retirement savings
22
Mortgages
Yellow Brick Road brand gets a facelift
23
Cards
Push for transparency on credit card rates and fees
24
Personal Loans
A rise in interest rates could threaten P2P lending
25
Payments and Digital
Samsung Pay coming to Australia in 2016
26
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www.rfintelligence.com.au
Letter from the Editor
Welcome to the February 2016 edition of the Australian Retail
Banker, a newsletter designed to give you an update on news
and trends within the Australian retail banking market
specifically in the areas of transactions, savings, deposits,
mortgages, cards, personal lending, payments and digital
banking.
Only a few short weeks away from RFi Group’s Australian Mortgage
Innovation Summit, this month’s Opinion Piece (page 3), authored by RFi
Group’s Managing Director – Advisory, Alan Shields, suitably shares
thoughts on the mortgage market’s drivers over the last 12 months, with a
close up on the broker channel.
Meanwhile, this month’s Insight Piece (page 4) - ‘Gen Y and the Future of
Banking’ - looks at the customers of tomorrow.
In our Women in Leadership piece, I talk to none other than the Chief
Human Resources Officer at ANZ, Susie Babani. Susie shared some frank
and very honest feedback from her position as not only a woman in a C-level
leadership role, but one who looks after the career trajectories of so many.
Susie has a sharp eye on young people and their success in her own
organisation and provides some fantastic advice, with lots of laughs along the
way. I hope you enjoy the interview.
This issue’s RFi Group Thought Leader Interviews feature ING Direct’s
Executive Director for Customers, John Arnott, as well as CUA’s General
Manager for Business Transformation & Technology (and CIO), Sue Coulter.
John and Sue are also both appearing as key speakers at RFi Group’s
upcoming Australian Mortgage Innovation Summit, and we welcome you to
read the pieces for a sneak preview into their presentations.
As you know, we really enjoy our privileged position of meeting with these
industry experts and welcome you to let us know if there is anyone you think
would be great to highlight this year.
This month’s product news covers CBA’s new Hong Kong based innovation
hub, concerns about Australian’s retirements savings, a new look for major
industry broker Yellow Brick Road, a continued need for transparency in the
credit card space, some new threats to P2P and the arrival of Samsung Pay
in Australia.
We hope you enjoy this edition and as always, welcome any feedback you
may have.
Have a great month,
Chloé James
Media & PR Director
RFi Group
+61 (0) 451 790 929
cjames@rfintelligence.com
https://twitter.com/RFiMediaGRB

3
Source: RFi Group
If you have any questions, please don’t
hesitate to contact me directly:
Alan Shields,
Managing Director - Advisory, RFi Group
ashields@rfintelligence.com
Main. 02 9146 5950
Mobile. 0405 000 766
RFi Group Opinion
All Mortgage Brokers Care About is….. Credit Policy and Process
Efficiency!
RFi Group’s Australian Mortgage Innovation Summit is this month so I thought
it might be a good time to reflect on the mortgage market and its drivers over
the last 12 months. In my article in December, I spoke a little about the different
pricing dynamics that had occurred during the course of 2015 – something
which has more or less defined the mortgage market conversation in recent
times.
Another factor that I think is worth a mention is the rise of the broker segment
in Australia. According to APRA, the proportion of bank loans that are distributed
via the third party channel is creeping inexorably towards the 50% mark, which
would make the reliance on the broker channel in Australia one of the highest
in the Western world. In addition, in most markets, the broker channel has seen
a decline in recent years, rather than the growth we have seen here in Australia.
In the face of this broker success, it is critical that banks understand how best
to appeal to the broker segment. In a recent survey of the broker market
conducted by RFi Group, the attributes of a ‘good lender’ are a constant and
obvious theme running through the results. These are:
The 3 attributes that make a lender the ‘most preferred’ for brokers
 Fastest turnaround times
 Best (consistent) credit policy
 Best BDMs
The top 3 attributes that correlate to satisfaction with a lender
 Ease of application assessment
 Loan approval process
 BDM Support
Essentially, this makes a lot of sense. It’s all about making the broker’s life
easier. If brokers know that when they submit a loan to a particular lender that
they will get a consistent outcome in a known timeframe, then they are happy.
The end customer won’t be surprised, nor will they need to badger their broker
for updates on the application process.
So what about price? And commission? Interestingly, these factors do rate
highly for certain segments of the broker market when it comes to lender
preference. If we cut the data by value of loans written in a year, then there is a
clear trend. The less business the broker writes in total, the more concerned
they are likely to be with pricing and commission (as shown in the chart on the
left).
So for lenders, this should read a bit like the story of the hare and the tortoise.
The hare goes out hard with price and commission and wins over an initial group
of brokers writing business for them. Meanwhile, the tortoise takes its time to
ensure that credit policy is consistent and as few manual interpretations of it are
made as possible, while ironing out the application process. Only then does the
tortoise start to sell loans. At the end of the reporting period, the tortoise wins.
Without wanting to sound any more like Aesop, the moral of the story is that if
you have a great rate and hefty incentives but no back-end rigour, then it’s all
for nought.
0%
10%
20%
30%
40%
50%
60%
Why do you most prefer
working with this lender?
By residential mortgage
lending written in the last 12
months
Less than $5 million*
$5 million to $10 million
More than $30 million

5
RFi Group Insight
Gen Y and the Future of Banking
In previous editions of the Australian Retail Banker, we have looked at changing
consumer perceptions towards banking, and, in particular, the potential for
FinTech players to capitalise on these changes. Leading on from this, in this
edition, we look at Gen Y’s perspective towards banking – how they differ in
terms of channel usage, product applications and attitudes towards switching –
and what this means for the future of banking.
The overarching theme in banking over the last decade has been digitisation,
with the rise of online and mobile banking. Nevertheless, traditional physical
networks, including branches and ATMs, have been surprisingly resilient, driven
by sticky consumer preferences. However, as Gen Y grow older and increase
their economic prominence, we could see a rapid erosion for the traditional
means of banking, paving the way for new digital focused players to make
significant inroads.
RFi Group’s global data reveals that Gen Ys are characterised by the following:
1) More digitally engaged, with 52% of Gen Y classified as highly digitally
engaged, (use mobile banking at least once a week, alongside other banking
channels). This compares to 38% of Gen X and 14% of Baby Boomers. This
implies mobile banking will gain prominence over time, a positive for digital-only
new entrants (like Simple and Moven in the US).
Source: RFi Group
2) More likely to apply via digital channels with 38% of Gen Y customers
currently applying for products* via digital channels and 44% preferring to apply
via digital channels in 2020 (when asked about future preference). Product
applications, especially for more complex products, remain one of the primary
reasons as to why branch networks retain a degree of prominence.
Furthermore, branch proximity is consistently cited as a top reason for
customers choosing their main bank. Thus, a rapid shift in preference for digital,
particularly if facilitated by FinTech players, could erode one of the core
competitive advantages of established banks.
*includes credit cards, personal loans, transaction accounts and term deposits
3) More likely to switch their main bank, with 21% of Gen Y indicating they
are more likely to switch their main bank in the next 12 months compared to an
average of 12%.
52%
38%
14%
10%
32%
0%
10%
20%
30%
40%
50%
60%
Gen Y Gen X Baby Boomer Silent Total
Australia: % Highly digitally engaged

6
Source: RFi Group
4) Top reasons for Gen Y to switch main bank are rates on loans, customer
service and general fees, which bodes well for service-focused, low rate and
low fee digital players across the banking product spectrum. An example of this
includes the Gen Y-focused BankMobile in the US, which offers a completely
fee free banking app (including a checking and savings account with access to
55,000 surcharge free ATMs). BankMobile allows customers to use their
camera to upload identification information in order to open a bank account.
5) 55% of Gen Y are comfortable sharing personal information with banks
in return for improved products and services. This is a positive for FinTech
companies looking to leverage personal data to design products, create
alternative credit scoring processes and tailor marketing strategies; but banks
are also well placed to take advantage of and utilise existing customer data to
counter new players.
All in all, the above points do not bode well for banks, with changing perceptions
amongst the next generation likely to shift the competitive landscape and erode
bank profitability. However, the situation is far from hopeless, as banks are
armed with resources and numerous strategic options including: partnering with
or acquiring FinTech players, investing in and innovating via digital channels,
while at the same time leveraging core advantages such as brand, customer
data and physical networks. The key for banks is to not rest on their laurels, and
to prepare for coming change.
21%
10%
6%
2%
12%
0%
5%
10%
15%
20%
25%
Gen Y Gen X Baby Boomer Silent Total
Australia: How likely are you to switch your main
banking relationship to another institution in the next 12
months? Highly likely (8-10 out of 10)

7
“I’m optimistic. I tend to
have a very ‘can-do’
attitude to life so I hope that
makes me an easy person
to work with. It doesn’t
mean I’m not demanding,
as people who work with
me know, I am, but I tend to
look at the bright side of
most of things during that.”
Susie Babani
Chief Human Resources Officer
ANZ
RFi Group
Women in Leadership
Chloé James in interview with Susie Babani, Chief Human Resources
Officer, ANZ
Susie Babani is curious, bright and sharp as a tack. A passionate lover of travel,
food, novels, the essential mani-pedi, and any new experience she can find in
work and in life. She has lived and worked all over the world, with absolutely no
sign of slowing down.
As this month’s Women In Leadership interviewee, we jumped right into what
makes her tick, what makes her who she is, and what she has done to bring the
unbridled success to ANZ’s HR machine.
She is fast, fun and full of energy, ensuring I am recording our conversation so
she can speak quickly, truly and freely about where she finds herself today.
And so we begin, with what I see as some truly wonderful advice as we embark
on 2016…
How did you get where you are today and what, or who, has been your
greatest influence in business?
Susie explains it’s absolutely been a combination of hard work and
determination.
“I come from a Baby Boomer generation so we didn't have offers of formal
‘mentors’ or ‘sponsors’ as we tend to give our talent and younger people
nowadays. You just got on, and you ‘did’. As far as my success today, I think
I’ve always been that ‘deliverer’.”
“I’ve also worked with some great bosses who really pushed me.”
Interestingly, especially for RFi Group’s Women in Leadership series – these
first two bosses were, in fact, women.
“It was back in the late 70s and early 80s when it was even more unusual to
have women in these leadership-type roles - although I never really realised that
at the time! On reflection, and for the purposes of this interview, that was
certainly very influential to me. I was 18, 19 and they were probably around 35,
which to an 18 year old felt much older and wiser! I guess their influence was
that I never had that concept of ‘there are senior jobs that women simply can’t
do’. It was my norm.”
Susie cites a trait in herself that I often hear from my Women In Leadership
interviewees.
“I’m also highly curious as an individual.”
She is interested in learning new things, meeting new people, going to new
places, and experiencing all life has to offer.
“I’ve lived all over the world and I’ve loved it.” She tells me she is on her 7th
country! “I feel I’ve got two more in me!”
“I’m also optimistic. I tend to have a very ‘can-do’ attitude to life so I hope that
makes me an easy person to work with. It doesn’t mean I’m not demanding, as
people who work with me know, I am, but I tend to look at the bright side of most
of things during that.”

8
“I have been in really very
tough environments when
I’ve spoken up about things
that I simply didn’t think
were right. I knew at these
times this would most
probably (and she
discloses, it did) damage
me personally, but
nevertheless I felt I had to
raise those issues.”
Susie Babani
ANZ
What is the driving force behind your career goals/aspirations?
Susie is startlingly honest, a refreshing theme that continues throughout our
conversation.
“When I started work, I never thought about a ‘career’ to be frank, I thought
about a ‘job’.”
Starting professional employment at the ripe age of 18, during a time when the
UK was experiencing a major recession, Susie explains to me that jobs were
hard to come by and careers were “a bit of a luxury honestly!”
“If I look back, what ‘drove’ me was a desire for financial independence. I am
and always have been a fiercely independent person. I know my own mind and
I always wanted, from a very young age, not to have to rely on anybody
else. Roof, clothes and food on the table, that was what I wanted.” she quite
honestly proclaims.
“It’s what propelled me, probably more than ‘the career’ actually.”
The other thing Susie “knew for sure”, was that she wanted to live and work all
over the world. “I didn’t mind where, I didn’t even really mind what I was going
to be doing to be honest! Well, to have someone pay me to live in another
country? Yes I thought, that would be pretty cool.” she laughs.
“So, that was then and this is now – and, what gets me out of bed today and
every day? I love my job. I really enjoy working. It is such a core part of who I
am and what makes my life, my life. I don't have any trouble getting up in the
morning. As long as I’m not bored and as long as I’m being stretched, I’m
happy.”
Have you ever made a business decision you've regretted and can you
share it? And, what would you say is your greatest professional
achievement to date?
Susie explains she’s made a lot of tough ones, but hasn’t regretted them.
“I have been in really very tough environments when I’ve spoken up about things
that I simply didn’t think were right. I knew at these times this would most
probably (and, she discloses, it did) damage me personally, but nevertheless I
felt I had to raise those issues.”
“That’s really hard. People don’t want you around when you’re the person
talking about the elephant in the room, but, for me, I have to sleep at night and
have to keep to some degree true to what I believe is the right thing to do, even
if it’s sometimes easier to shut up and not say anything. So I’ve always done
that. I wouldn’t say I’ve regretted it and I feel sometimes I’ve been vindicated
years later, so it’s not a regret - in fact I think I would have regretted more, not
saying something.”
Susie explains some of the initiatives she’s been heavily involved in at ANZ, of
which she is understandably proud.
“Our work on diversity, particularly gender diversity with our Notable Women
program has really focused on ensuring women in our organisations have a
voice.”
“We want them to be confident to speak up as experts, to use them with the
media as spokespeople for the bank. The program has really created a degree
of confidence from our women that we really didn’t have before.”
She tells me proudly of the success of ANZ’s Laos-based CEO Tammy Medard
who participated in the program.
“Tammy had loads of ability but no one knew who she was. She went on the
program, got focused on LinkedIn and Twitter and has since become one of the

9
“The nice thing about being
senior is that you can say
and do a lot more and not
worry so much about what
people think. You can do
the right thing, be
outspoken and have a point
of view, which I always
have and I’m quite happy to
share it with people. I think
overall, people appreciate
honesty from others.”
Susie Babani
ANZ
‘Under 40 - People To Watch’. She was invited to present at the United Nations
conference in New York, speaking to heads of state about, perhaps most
importantly, women's issues in this sector. She rang the bell of the New York
Stock Exchange! Something she’s never imagined doing. It’s helped put Laos
on the map and it is fantastic for the bank to have these kinds of confident
women.”
“I’m proud to be a part of this, especially when you see the progress that is being
made, like with Tammy.”
What do you do to keep evolving your career, to ensure its fulfilling and
successful longevity?
For Susie – it’s about a genuine, raw enjoyment.
“It’s about what can I do that is new.”
Susie tells me, as is no doubt true of most highly functioning successful
individuals, she is very easily bored and when she gets bored she admits to
being bad tempered and difficult to deal with.
“So, thankfully enough, I recognise this and throughout my life and career, I’ve
tried to ensure that I don’t get bored. It's not nice for me or anybody else around
me!”
Although Susie has moved around in her career, ANZ has had her in their midst
for 8 years and therefore she consistently ‘reinvents’ aspects of her role.
With this in mind, Susie tells me about how over the last 18 months it’s been all
about social media.
“It’s something that honestly, I wasn't at all interested in, but when I discovered
reasons as to why it would be good for the bank, Twitter, LinkedIn, writing
articles for BlueNotes (ANZ’s new digital publication for news, insight and
opinion), it made perfect sense to jump on-board.
And jump on board she did.
“I love writing articles. I think I’m probably a frustrated journalist! I like writing for
the masses about topics that I’m interested in that hopefully they’re also
interested in. It’s probably provided me a bit of a different release. And, when
you get to this level, you can write about almost whatever you feel like writing
about and people will read it!” she laughs out loud “and that’s really nice!”
She continues to say that using new technology has been a fun way for her to
share and spread the word typically further than you could have in previous
times.
Susie shares a moving tale of a post she made some months ago. In the
process, she thanks ANZ for their support in what was the sharing of a very
confronting music video about a topic Susie felt needed sharing in her own
networks.
“The nice thing about being senior is that you can say and do a lot more and not
worry so much about what people think. You can do the right thing, be
outspoken and have a point of view, which I always have and I’m quite happy
to share it with people. I think overall, people appreciate honesty from others.”
“A few months ago I posted a music video to LinkedIn - Lady Gaga’s “Til It
Happens To You”. It is a very, very confronting song and film about violence
towards women in colleges in the United States, where 1 in 5 women are
assaulted during their time spent studying. It is a beautiful song with a very
graphic video which gets you right between the eyes. I felt it was a very powerful
message against violence towards women. Now, 10 years ago I probably
wouldn’t have had the confidence to post something like that, but today and at

10
“I'm banning ‘work/ life
balance’ as a phrase! I like
‘life balance’... I think work
is a really big part of life
and I feel ‘work/ life
balance’ makes ‘work’
sound like this big, bad,
dreadful thing and ‘life’ the
fun, lovely thing, when
actually, for a lot of people,
work is a really cool part of
life.”
Susie Babani
ANZ
this level of my career I think ‘No, this is really, really important and powerful
and I’m going to tell people that I think this is really important and powerful’.”
“I think I have a responsibility to use the position I’ve got to make statements I
feel are very important, particularly when it comes to women’s issues.”
How do you achieve a work/life balance and what activities do you
participate in outside of your working life, that you see contributing to
your business success?
“Well Chloé,” she abruptly stops me, but of course, with a smile, “I'm banning
‘work/ life balance’ as a phrase! I like ‘life balance’.”
She goes on to make a very good point.
“I think work is a really big part of life and I feel ‘work/ life balance’ makes ‘work’
sound like this big, bad, dreadful thing and ‘life’ the fun, lovely thing, when
actually, for a lot of people, work is a really cool part of life.”
But for the ‘life balance’ she offers some sound advice. Having lived all over the
world, Susie is a traveller who is on the quest to visit 100 countries in her lifetime
(she has currently visited around 83!) and explains that whenever she can travel
for business, she is always the person who will spend the Sunday to extend
any business trip and explore. “I have done, and always will, absolutely love it.”
“Other than that, I’m a reader, but mostly of novels, not of business books! I go
to the theatre and my special time is in spas. Going to the spa for me, massages,
facials, scrubs, manicures and pedicures are what I do to unwind. I really do
think they help me be successful. Not because my nails always look lovely, but
because I take the time to be pampered. I work very hard, I work long hours,
I’m on the road a lot so I think it is very important to make sure I take the time
to look after myself.”
I couldn’t agree more.
Do you mentor others? And, what have you learnt in the process?
As the Head of HR, Susie can only informally do so but has “picked up a few”
along the way.
“They are mostly women, and what I most often learn is, a lot of people who are
younger than me, know a lot about things I know very little about! There are so
many very smart and very capable people here at ANZ. We also have a reverse
mentoring program, whereby I have a young chap (Peter) who mentors me on
technology and social. He’s great. Quite a few of us at senior levels have them
because we are not the digital natives, we're the digital immigrants!”
What do you think is the most significant barrier when it comes to women
in leadership roles?
“In this day and age, even in 2016, so many young women still lack self-belief.
There is a lack of confidence, self-belief and willingness to self-promote. That is
in stark contrast to what guys are willing to do. I also think many women
underplay their competencies. There’s still a bit of that ‘waiting to be tapped on
the shoulder/ waiting to be noticed’ and not talking about themselves, out of fear
of how that might be perceived.”
“It’s such a shame!”
I ask her advice on how to overcome these types of issues.
“Individuals need to find a way to do it, in a way they are comfortable with. You
also need to let management know what you want to do. What’s that next dream
job on your horizon? Where do you want to move? What would you like to try?
Management are not mind readers, and if you don’t speak up, someone else
will.”

11
“Don’t underestimate how
much harder it might be to
succeed in the corporate
world than you think it will
be. It is outlined in clear
black and white statistics,
that young women are
graduating from school and
university out-performing
their male peers. Over the
last few years especially,
for the first time they
outperform in almost
everything. The issue there
lies that if this is happening
in our schools and
universities, why is it not
carrying through to our
senior, leadership roles in
professional services?”
Susie Babani
ANZ
What advice would you give to young women who want to succeed in the
workplace and what do you see as the biggest challenge for future
generations of business women?
She offers some gentle words of warning, which echo back to the reasons for
her own success – hard work and determination.
“Don’t underestimate how much harder it might be to succeed in the corporate
world than you think it will be. It is outlined in clear black and white statistics,
that young women are graduating from school and university out-performing
their male peers. Over the last few years especially, for the first time they
outperform in almost everything. The issue there lies that if this is happening in
our schools and universities, why is it not carrying through to our senior,
leadership roles in professional services?”
Susie admits that something absolutely ‘happens’ in the work place.
“We are doing the research, looking at our data and coming to a clearer
understanding around this. We find that even at the point where women are
being considered to move into a management role, they are holding back. They
are high performers, the role is right, but they’re not following through with an
application.
We feel there’s a perception of 'if I become a manager, I will be responsible for
all sorts of different things. I may not have the flexibility I need at this stage of
my life. I may have to go out with clients in the evenings. I may not like it. So I
won’t apply’. Rather than ‘actually, let me find out about the facts of the role and
even if some of these things are the case, they could, at hiring stage, be up for
discussion.’“
Susie also believes that quite often the system also holds them back.
“I call it a ‘benevolent bias’ - the macho phrase of 'oh you probably wouldn’t
want to be out a few nights a week anyway.'. We are looking at the systemic
stuff that goes on, as well as the women piece.”
“This whole ‘be more assertive, speak up, be direct, be decisive’, which is really
just an attempt to make us more like men! It happened in the 80s, 90s and so
on but we really need to focus on what the system is doing.”
Susie has a leadership level of control in this area and doesn’t take it lightly.
“We are looking at how we are recruiting, how we are promoting, what
messages we are getting early on in people’s careers that cause the drop off.
Like most banks we have lots of women in our non-management grade, but as
soon as it gets to that first level of management it drops right off and it continues
to drop off as you go further and further up. My view is the glass ceiling starts a
lot lower and at a senior management level, it gets exacerbated.”
Like many things in life, Susie thinks there is true importance in being aware
and thinking about these kinds of issues. Adjusting behaviour, thought process,
language is only half the battle.
“All I will say is, for the next generation, just because things were great at school
and university, that’s not necessarily what the workforce will be like. Don’t be
complacent. It’s not bad, it's just tougher than you think.”
What’s the best piece of advice you have received as a woman in a
leadership role that you would pass on to others hoping to get there?
Susie has two clear pieces of advice. The first being career management.
“A boss once told me ‘no one will care about your career as much as you do.’ It
was such a good piece of advice. It's moving away from that victim or waiting to

12
“A boss once told me ‘no
one will care about your
career as much as you do.’
It was such a good piece of
advice. It's moving away
from that victim or waiting
to be picked mentality. It’s
being the picker, the person
who goes out there and
says ‘well it’s my career, I
have to manage and own
it.’”
Susie Babani
ANZ
be picked mentality. It’s being the picker, the person who goes out there and
says ‘well it’s my career, I have to manage and own it.’”
The same boss gave Susie the second piece of advice she chose to share:
“Don't dwell on your mistakes for days on end, because no one else will. Pick
yourself up and move on. Again for women this is particularly relevant, we tend
to dwell for ages. ‘I made a mistake so my boss must hate me.’ Well no, he
might hate the piece of work you did, but he doesn't hate you. The mistake is
not about you, it's about what you did. We beat ourselves up privately and it
really has to stop. Don’t keep making the mistake obviously, but get over it,
move on and keep growing.”
It was my true pleasure to interview Susie; an insightful, moving and
inspirational interviewee and I hope you enjoyed this Women in Leadership
piece.
To read the full Women in Leadership series and all past Australian Retail
Banker editions, feel free to visit to archive centre on our website.

13
“When I first moved to
Australia my view of the
broker was that they got
you the best deal, now, I
have completely changed
my view. They facilitate the
whole thing. The good deal
and taking care of you
during the process, giving
you the peace of mind that
you are prepared and have
ticked all the boxes.”
John Arnott
Executive Director – Customers
ING Direct
RFi Group Interview
Chloé James’ interview with John Arnott, Executive Director – Customers,
ING Direct
On the eve of RFi Group’s biggest ever Australian Mortgage Innovation Summit,
Chloé James sat down with John Arnott, Executive Director – Customers (a
most fitting job title, which we will come to later) at ING Direct, to discuss all
things mortgages.
John is one of the key speakers at the 2016 event and we felt it pertinent to pick
his brains about the mortgage market, the industry’s response, as well as his
perceptions and advice for those working in the space.
Amidst a most timely week, John arrived for our interview straight from one of
his own, having just purchased a new home and ‘going through the same
motions’ as many of his customers. The first words from his lips: “This process
is not easy!”
John echoes many customer’s sentiments that a mortgage is going to be hard
work, with a sense that one must “brace themselves for the challenge.” And
herein for John, lies the challenge for banks to see how they can make the
process easier.
In the past, the Australian mortgage market had been one where credit growth
was so strong, he feels that for some time, there hadn’t been a need to focus
greatly on the mortgage product, and even more so, the experience that came
with it.
“In years gone by, business just kept coming through the door. But in today’s
climate, if you look at putting the customer back into the home buying
experience, it’s not just around the design of products anymore, but the
experience you go though in selling or buying a home – it’s a really complicated
process.”
We know that home lending takes time, is emotionally heavy and undoubtedly
one of the most significant financial decisions a person will make and John can,
through his own experience, understand why the broker value proposition is
incredibly compelling.
“When I first moved to Australia my view of the broker was that they got you the
best deal, now, I have completely changed my view. They facilitate the whole
thing. The good deal and taking care of you during the process, giving you the
peace of mind that you are prepared and have ticked all the boxes.”
John explains that if he didn’t sit where he does (surrounded by numerous home
lending experts), the broker would absolutely be his first port of call. But – he
challenges – what can the industry do to make the other channels as attractive?
“The product may be technical, but the process isn’t. My feelings are that the
industry has not made it easy. A broker makes it simple, they take the
complexity away. Now, to me, although I obviously advocate the broker
channel, there’s no reason why we as an industry shouldn’t be able to simplify
this process.”
He continues on to say that the entire industry has a lot of room for
improvement.
“From a very simplistic view, banks have relied heavily on medium to high levels
of credit growth and with that, has come a continual flow of new business
through the door.”

14
“In my view, when you buy
a home you want it to be an
exciting process. Yes, it’s a
huge financial commitment
but it’s also the place where
your kids are going to grow
up, where you can decide
what kind of BBQ you’re
going to buy. This industry
should be focused on
making the experience of
going through that process,
at least on some level,
enjoyable. That’s where I
truly feel the industry is
lacking and if someone can
get that part right – it is just
a massive opportunity.”
John Arnott
ING Direct
An area he feels needs more attention at an industry level is catering to existing
customers. “I will say that there has been a significant lack of focus in this area.”
He believes that the level of engagement is low, with far too much focus on
winning new customers. The question then is, how do banks maintain growth
and also deliver for their existing customer?
“Thus far, the churn has been more than offset by new business. Where I feel
there now needs to be a true focus, is on standing up and looking at what we
can do for our existing customer base. How do we deepen and lengthen those
relationships? There’s a danger for many organisations that once you have
provided a home loan, there can be a supremely low level of customer
engagement – it becomes the ‘sell and forget’ product, which I feel absolutely
has to change.”
At ING Direct, John explains, it’s about providing customers with financial
empowerment and giving them the facts about their loan or their investment,
balanced with correct levels of engagement. When a customer chooses their
lender, they choose based on peace of mind, so John and his team are fine-
tuning where on the spectrum the level of communication should sit.
“It’s a fine line between giving customers’ choice and making it easy for them.”
With this in mind John points out that in the service sector, pretty much
everything else in life is easy and if banks don’t make what they do ‘easy’,
“someone else will”. He believes that it’s about creating simplicity and forcing
the industry to look at the way they do things.
“Regulation and legislation also play a large part in making sure customers are
protected, and where other sectors of the industry have done a good job of
creating simplicity, I do think in the home buying business, it’s just not there yet.”
Speaking of his own experience:
“In my view, when you buy a home you want it to be an exciting process. Yes,
it’s a huge financial commitment but it’s also the place where your kids are going
to grow up, where you can decide what kind of BBQ you’re going to buy. This
industry should be focused on making the experience of going through that
process, at least on some level, enjoyable. That’s where I truly feel the industry
is lacking and if someone can get that part right – it is just a massive opportunity.
In plain English and to be honest with you, there is a lot of jargon in this industry
which indicates to me the industry designed the process around themselves,
not the customer. That needs to change.”
For ING Direct, digital of course continues to be an area of focus for the lender.
“Such a large proportion of our customers are savers, and they save in a digital
way. We are looking closely at how to engage via the right channel, at the right
time.”
John explains how the use of mobile has increased the opportunity for
engagement exponentially, as these customers are - by nature of the channel -
far more engaged with their personal finances and their lender.
“For us it is about leveraging these multiple touch points in the right way, to
engage these customers with compelling offerings that are relevant to them and
their needs. My focus is offering the right deal, at the right time, at the right
price.”
In terms of the customer, I wonder where John sees the pockets of opportunity.
“While it’s true that credit growth is slowing, our country’s population is certainly
not. Sydney’s population alone has predictions of up to 6 million people over the
next few years. Pockets of cultural immigration centres are absolutely of

15
“While it’s true that credit
growth is slowing, our
country’s population is
certainly not. Sydney’s
population alone has
predictions of up to 6 million
people over the next few
years. Pockets of cultural
immigration centres are
absolutely of interest, but
for me, the inter-
generational transfer of
wealth is really, really
interesting. Especially for
ING Direct.”
John Arnott
ING Direct
interest, but for me, the inter-generational transfer of wealth is really, really
interesting. Especially for ING Direct.”
As Baby Boomers mature, John speculates about how their wealth will transfer
through generations, creating a new cohort of customers who, with inflation, will
potentially have higher levels of deposits than their predecessors.
“I’m interested to see how this will affect the mortgage industry in particular. If
so much advocacy is now via word of mouth and based on customer
experience, at ING Direct for example, we are seeing more and more of our
saver customers growing up, buying houses with us, and can only hope their
children are our future customers. People who joined 17 years ago for example,
with our hugely successful savings product, chances are they have bought a
home, maybe got married, had kids – in 20 or so years these children will start
to think ‘where’s my first home loan coming from?’.”
John knows full well that the socially connected world we live in today means
advocacy is one of the most important, if not the most important, factors in
retention and acquisition.
“Word of mouth goes a long, long way. Far beyond that what we probably even
think. A few years ago, talking about your financial product was unheard of. But
as attention has moved from product to experience, across varied industries,
people are more than happy to talk about their experiences, and this includes
their banking experiences. I’m absolutely sharing my views around my own
home buying experience with people. Not rates etc., but the experience I’m
having - 100%!”
John has been with ING DIRECT for 9 years. He was in fact, the very first client
I met when I began working at RFi Group and his energy has always caught my
attention.
We therefore close with what gets him out of bed every day, and what it’s like
to work for a steadily growing challenger.
“I really feel I am at an organisation where I can make a difference.
Accountability and empowerment is heavily promoted and readily available to
those who seek it. I love the freedom of driving innovation. ING Direct is not
afraid to try things. It’s ‘Give it a crack. Fail fast. Learn.’. I’ve always really
enjoyed that. Also, variety. In nine years I’ve had six different roles, allowing me
the opportunity to try new things and stretch my capabilities. It’s knowing you
can throw yourself into the unknown, with the knowledge that you’ve got a strong
support network to back you.”
“It’s not a typical “bank-like” environment. We feel more like a disruptor and we
revel in that space. I also like our global element. We have the privilege of global
advice and the ability to export ideas. Being a global organisation with local
autonomy is an exciting place to be.”
“Finally, customer centricity. It’s a well-used and well-talked phrase, but I’m not
convinced how true that is of the industry. I believe we have and have always
had, a true customer focus and I’m really, really proud of that. Our products and
service are designed around the customer as opposed to around a P&L or
balance sheet. Of course we acknowledge that our business needs to be
profitable, but the balance between the business and the customer winning is
truly equitable. We strive to achieve sustainable profit growth without
compromising the customer experience.”
Lastly, John comments on his obsession with continuously trying new things.
Doing the right thing by the customer and trying and failing, is a business
attribute and is in line with the core value around simplicity, true to ING Direct.

16
“It’s not a typical “bank-like”
environment. We feel more
like a disruptor and we
revel in that space. I also
like our global element. We
have the privilege of global
advice and the ability to
export ideas. Being a
global organisation with
local autonomy is an
exciting place to be.”
John Arnott
ING Direct
“To sum it up, I think ING Direct has got the right mix of understanding where
technology and customer needs collide; the sweet spot. I believe we have the
understanding of embracing technology without losing site of these core
hygiene customer moments of truth.”
We look forward to hearing more from John in a few weeks. Secure one of the
last remaining tickets to the Australian Mortgage Innovation Summit today.
Follow @RFiMediaGRB on Twitter to keep up to date with the latest information
and news at RFi Group.

18
“During periods of changing
housing market conditions it’s
important for us to constantly
challenge ourselves that we
are continuing to offer
customers the
right products to meet their
needs through the channels
where they want to interact
with us.”
Sue Coulter
General Manager
Business Transformation & Technology
(CIO)
CUA
RFi Group Interview
Chloé James’ interview with Sue Coulter, General Manager, Business
Transformation & Technology (CIO), CUA
On the eve of the Australian Mortgage Innovation Summit, RFi Group thought
it pertinent to sit down with CUA’s Sue Coulter, one of the key speakers at the
Summit, who joined the customer-owned financial institution in 2010 to take
ownership of their technology and business transformation.
With a new core banking platform in place and performing well, one of Sue’s
focus areas is on leveraging this investment through the delivery of a
continuous program of customer service and product enhancements. She is
also responsible for replacing the remaining legacy systems and enhancing
CUA’s digital and data technology solutions.
With over 30 years’ financial services experience across a broad range of
senior management and executive positions within Australia and the UK, ahead
of the 2016 Summit, we requested Sue’s view on the ‘state of play’, if you like,
of the Australian housing and mortgage market.
With the current unstable state of the housing market in Australia, particularly
in Sydney and Melbourne, we wondered how Sue suggests banks can survive
and thrive.
“Much like our fellow financial institutions, we are not expecting the same
results as last year in Sydney and Melbourne. However, from a CUA
perspective, we continue to experience steady growth in other areas. We were
delighted in the first three months of FY2016 to deliver a 9.8% annualised year
to date balance growth in home loans, compared to 7% system growth. During
periods of changing housing market conditions it’s important for us to constantly
challenge ourselves that we are continuing to offer customers the
right products to meet their needs through the channels where they want to
interact with us. Selling our loans through brokers is also an advantage given
the popularity of the channel however, we are also focused this financial year
on enhancing the loan origination experience in our 59 branches.”
Sue continued that if your products are competitive then there is only one area
left to compete in, and that’s service. So CUA have tended to focus on what
they are in control of and what they can do better.
Sue revealed some clearly focused initiatives:
“We are focusing a lot of attention on internal processes such as streamlining
various steps which are unnecessary in the end-to-end home loan process, in
areas such as verification. There are often so many steps that have built up
over a period of time that need to be challenged!” she exclaims.
Focusing on efficiencies in the back office to help speed up what can be such
a lengthy process is CUA’s focus this year. They clearly know it is no secret
that the faster you can make an offer and facilitate an approval, the higher the
likelihood of retaining that yield.
And they’ve had some pretty impressive results. In FY2015, CUA achieved
significant growth in new home loans – the $3.35 billion in new loans issued
during the year was up by 55% from the previous year. Sue continued to say
“that was a very good year for us – a record in fact, and I believe it had a lot to
do with our focus on improving our back office processes, an area we could
control. Anything to shave some time off can be a lengthy and often arduous
process.”
If the processes are speeding up, what is CUA’s view on the consumer? Their
customers, behaviour, habits, and trends.

19
“P2P isn’t particularly
threatening the home loan
space yet, but in terms of
personal loans and the
potential knock on impacts to
credit cards, the threat from
P2P is already very real.”
Sue Coulter
General Manager
(CIO)
CUA
“Over the past 10 years the biggest shift has been the greater and greater use
of the broker channel. Going forward I think Positive Credit Reporting will drive
another shift in lending and consumer behavioural change. This will not only
provide institutions with the ability to price more reliably for risk and tailor our
products and services at an individual level. Perhaps most importantly, it will
give customers much greater insight into their own credit score and how they
can positively and negatively influence it as well as giving them the power to
potentially negotiate their own deals based on their credit score. I absolutely
see this changing consumer borrowing behaviour.”
In terms of lower value lending, Sue’s eye is sharply set on P2P lending. Not
only in changing consumer behaviours, but in changing their expectations. “It’s
the speed at which the P2P lenders are rattling through an online application
and getting funds in customers’ accounts that are making the larger more
traditional players sit up and realise we’ve got to try to compete in that market
too. P2P isn’t particularly threatening the home loan space yet, but in terms of
personal loans and the potential knock on impacts to credit cards, the threat
from P2P is already very real.”
As Sue rightly points out, P2P lenders and other new entrants don't have to
deal with the same legacy constraints that larger, more established
organisations do. They have the opportunity to work in a truly Greenfield way,
which will put more and more pressure on established banks. “We need to be
constantly cognisant of that,” Sue added.
“I think from a customer experience perspective, customers are wanting and
expecting a more frictionless, omni-channel experience, where they can move
seamlessly between applying online, to picking up the phone, or going in to a
branch. They also then want to be able to transact and service that product in
a way that works best for them.”
To tackle the task, CUA are about to embark on Phase Two of their new Loan
Origination Platform, which will incorporate a process that will allow customers
the ability to do precisely this. “The home loan process can be complex enough,
particularly if you’ve never done it before, so we are doing everything in our
power to streamline and make the process easier. This involves a seamless
experience from browsing on the web to completing an application - whilst
technically we might move from one system to another, the experience is
seamless for our customers”.
Sue explains this involves going back to basics - not asking for the same
information twice, giving customers a decision as quickly as possible and really,
just making the process simple for them end-to-end. If a customer wants to do
everything online, then make that possible. “From the uploading and submitting
of documents, to electronic verification and so on, Phase Two is about trying to
build one, single origination interface which will work for any product. It is about
streamlining as much as possible, making systems available in any form a
customer wants and it’s absolutely about stripping out anything you don't need,
particularly around documentation. It goes right down to the contract, trying to
make contracts simpler to understand - it is truly simplifying the full end-to-end
process.”
Simplifying processes, Sue explains, is enhanced exponentially with the right
technology and digital applications. Although it has never been more important
for the financial services industry to ensure they are operating in a digitally
savvy way, they also need to continue to offer choice.
“What’s really interesting is when you survey 20 to 30 year olds who might be
looking for their first loan, you will see that although some want to conduct this
all online, others absolutely want to talk to someone. It’s a complex product for
some. I think it all comes back to tailoring products and services based on the
needs of individual people in a digital world, as well as face-to-face. I don't think
there's a ‘one size fits all’ approach and when you look at the research, it is

20
“A few years ago we took on
the most complex project you
can do in banking, replacing
our core system in two and a
half years and we are now
reaping the rewards. We are
now able to tailor products and
roll them out quickly so we are
really seeing the benefits of
that investment.”
Sue Coulter
General Manager
(CIO)
CUA
certainly showing a varied desire for a totally online experience, especially with
products such as a home loan.”
Sue is clearly driving significant change at CUA and we closed with her joy and
obvious passion in doing so.
“What I love most is the diversity of my role. I look after technology as well as
business transformation, so my team and I are involved in every project in the
organisation. When you blend technology and transformation, it’s incumbent on
me to look at opportunities in non-traditional areas that might provide improved
experiences for our customers or staff via external innovators or partners.
She described a current “passion project” with ‘River City Labs’, an initiative
where CUA sponsors desks in the thriving Brisbane start-up community.
“Sponsoring desks so that new starts-ups have somewhere to go and work
within an environment to foster their ideas is amazing.”
And it’s a two-way street. In the process, CUA has been approached by a
number of bright young start-ups (and vice versa) to discuss joint opportunities.
Because CUA is smaller than the regional and major institutions, Sue enjoys
agility and being able to do things more quickly, with less red tape.
“A few years ago we took on the most complex project you can do in banking,
replacing our core system in two and a half years and we are now reaping the
rewards. We are now able to tailor products and roll them out quickly so we are
really seeing the benefits of that investment.”
CUA has a true customer focus, of which Sue is extremely proud. “For me, it
really is about the customer, it is what we can do for them, what we can do to
make their life easier and simpler so they have more time to focus on what
makes them happy, whilst having confidence their finances are with an
organisation they can trust. That truly is CUA's ethos. We are a customer-
owned banking institution, not driven by shareholders, and our conversations,
thinking and strategic planning will always remain focused on that.”
We look forward to hearing more form Sue at the AMIS 2016. Be sure to secure
your ticket today.
Follow @RFiMediaGRB on Twitter to keep up to date with the latest information
and news at RFi Group.

21
Source: RFi Group
Transactions news
CBA opens ‘innovation lab’ in HK
CBA has launched an ‘innovation lab’ in downtown central Hong Kong, which
is based on the bank’s innovation lab in Sydney. According to KC Chan,
Secretary for Financial Services and the Treasury of Hong Kong, "Financial
institutions in Hong Kong are adopting the innovations and I see a lot of
collaborative opportunities between financial institutions and start-ups." CBA
utilises a “partnership model”, unlike other Big Four banks who have taken
equity stakes in FinTech start-ups, whereby CBA collaborates on particular
bank projects and particular consumer problems. According to Kelly Bayer
Rosman, CBA Group Executive of Institutional Banking and Markets, CBA does
not apply a one-size-fits-all rule when dealing with FinTech start-ups. “As the
partnerships evolve, we will negotiate the right terms and basis [to] suit that
specific partnership.” CBA also plans to open a similar facility in London in July.
Ms Bayer Rosmarin indicated that the opening of the new labs is a valuable
means of both engaging with the FinTech community and keeping CBA staff
engaged with creative ideas FinTechs could bring to the table, and not merely
a marketing ploy. The importance of keeping up with FinTech innovations is
supported by RFi Group data, which shows around 1 in 7 Australians under 35
years old define their main bank as the bank that has the best mobile banking
offering.
Growth in New Zealand transactions
Earlier this year, New Zealand payments firm Paymark said December activity
showed strong growth, with the number of card transactions up by 8.2% from
a year earlier. There were 106.05 million transactions conducted on the
Paymark network in December, which accounts for more than three quarters of
New Zealand’s EFTPOS terminals. Figures, subsequently released, from
Statistics New Zealand also indicate that the number of electronic card
transactions rose 6.2% year-on-year in December to 143 million. Additionally,
the average value per card transaction rose to $54 in December, up from $51
in November. Statistics New Zealand figures also indicate that an increasing
number of card transactions are being made on credit cards at the expense of
debit cards. In December, 54.3% of transactions were made on debit cards
compared to 55.6% a year earlier, and 45.7% on credit compared to 44.4%
over the same period.
Basel committee eases global bank capital build
While global banks will still need to lift the amount of capital they hold against
their trading books, the increase required by the Basel Committee on Banking
Supervision will be lower than originally proposed. Rather than an increase of
75%, as suggested by the original consultation paper, the Basel Committee has
released revised minimum capital requirements for market risk, that will see the
average global bank needing to increase the amount of high-quality capital held
against trading books by an average of 40% come January 2019. According to
industry analysts, the softening stance is an indication regulators are moving
away from punishing banks for the impact of the global financial crisis, and
allowing them to focus more on lending and generating economic growth. An
easing in the global capital build may see Australian banks more easily achieve
‘unquestionably strong’ status – the capital adequacy measure put forward by
the Financial Systems Inquiry in 2015. For banks to be regarded as
‘unquestionably strong’, they would need to have capital ratios that position
them in the top quartile of internationally-active banks.
17%
14%
15%15%
5%
8%
0%
5%
10%
15%
20%
25%
Under
35 yo
Above
35 yo
Total
What makes you define
your main bank ?
It has the best internet banking
offering
It has the best mobile banking
offering

22
Source: RFi Group
Savings news
Retirees spending less to leave nest egg
According to RFi Group data, only 5% of over 65 year olds are saving for a
comfortable lifestyle, compared to 40% who have no savings goal. This may be
explained by a new study by the Commonwealth Scientific and Industrial
Research Organisation (CSIRO), which found that Australian retirees are
spending modestly to leave behind a nest egg for their children and family
instead. According to behaviour economist, Andrew Reeson, “It does seem far
from ideal… that so much of the savings people have built up may end up being
enjoyed by others.” “It seems no matter how large a person’s superannuation
balance, they stick to the minimum drawdown rates mandated by the
government [for tax and pension purposes],” said Reeson. Politicians have long
encouraged retirees to spend their superannuation savings instead of counting
on pension payments. “It is not unreasonable for people who have benefited
from tax concessions to build up sizeable superannuation balances to then be
expected to draw down on those balances in retirement, rather than draw on a
taxpayer-funded pension," said then Minister for Social Services, Scott
Morrison at a press conference last year. Since becoming Treasurer of the
Federal Government, Scott Morrison could be looking into cutting tax
concessions for those who retire wealthy. In November last year, he spoke at
the Association of Superannuation Funds Australia and hinted at potential
superannuation changes for the future generations of retirees.
Share market threatens superannuation savings
The volatile share market is becoming an increasingly dangerous risk to
retirees’ superannuation savings. Economist Mike Rafferty from the University
of Sydney Business School told the ABC's AM program that, while there is
always risk in the share market, some retirees are more exposed than they
think. "Over the last 20 years we've forced more and more people into the stock
market through compulsory superannuation," Dr Rafferty said. "So suddenly
people have woken up after the global financial crisis and found out that their
retirement expectations are very highly exposed to movements in the stock
market." According to Dr Rafferty, up to 90% of the returns on superannuation
funds are linked in some way or another with stock market returns. "Australia's
probably the most highly-exposed in terms of putting its retirement savings in
the stock market and events like the last week or two really bring that risk home
again," he warned.
Two out of three Aussies short on retirement savings
According to the latest MLC Wealth Sentiment Survey, two out of three
Australians do not think they will have enough savings to fund their retirement.
The study also found that almost half of Australian women consider taking a
career break to raise children. This represents a barrier to saving sufficient
retirement funds, with around two thirds of women taking more than two years
out of the workforce to have kids. Australians, on average, expect to retire with
about $471,000, but women believe they will have only $390,000 while men
project they will have $538,000. In addition, households with kids rated all
barriers to retirement higher than those with no kids. Only 30% of Aussies with
children believed they have enough funds to invest in retirement. “The survey
results highlight that more needs to be done across the board to ensure a
comfortable retirement – particularly for families with kids. It’s important for
families to not only consider their immediate budget, but also their future cash-
flow,” said NAB’s general manager, corporate super, Lara Bourguignon.
40%
16%
13%
10%
5%
0% 20% 40% 60%
I have no
savings goal
Retirement
savings
Unexpected
expenses
Travel/ holiday
To have a more
comfortable
lifestyle
Top 5 savings goals
65+ year olds

23
Source: RFi Group
Source: RFi Group
Source: RFi Group
NZ Program Research Data
Mortgage news
Tighter lending policies have created a reduction in “borrower
power”
New data shows that the major banks have become stricter in their home
lending controls and reduced the amount they are willing to lend home
buyers. Mortgage broker, Homeloanexperts.com.au, reported that a couple
with a combined income of $120,000 can now borrow up to $80,000 less on
an investment property than they could a year ago, and up to $65,000 less
on an owner-occupied loan. The fall in "borrowing power" is attributed to the
tighter bank credit policies, which were introduced during 2015 amid the
Australian Securities and Investments Commission’s (ASIC) concerns that
mortgage lending had become too risky. Christina Parnham, a mortgage
broker at Homeloanexperts.com.au, believes that as a result of the new
regulations banks are testing prospective borrowers on how they would cope
with higher interest rates, despite the current cash rate being at an all-time
low. Additionally, Parnham believes banks have adopted more conservative
assumptions about customers’ living expenses, after ASIC claimed that
many lenders were incorrectly assessing these costs.
Yellow Brick Road brand gets a facelift
Yellow Brick Road (YBR), an ASX-listed mortgage and wealth management
franchise, has rejuvenated its brand, with Chief Commercial Official Scott
Graham saying, “The old branding had served us well for some time but over
the years our business has grown and developed. While the old look was
fashion forward at the time it has grown tired. It was time for an update.” YBR
will move away from the traditional six year old yellow and brown logo to a
new brighter yellow and charcoal look that better demonstrates YBR’s
desired image. The franchise has also opted for a more engaging interior
design, with trendy furnishings and wall graphics. The new brand look will
be rolled out in a staged approach to over 250 branch licensees across
Australia.
First NZ home loan rate cuts in 2016 by SBS Bank and BNZ
Non-major lender SBS Bank has cut its ‘special’ three year fixed home loan
rate by 14 basis points to 4.65%, making it the lowest offer currently on the
market. The new rate will be available in January for existing SBS Bank
customers; new customers may qualify if they take out new lending of at
least $100,000 and also take up at least one SBS insurance product. The
SBS Bank ‘special’ requires borrowers to have a minimum of 20% equity in
the property, with salary or wage payments to also be made into an SBS
transaction account. The SBS offer was quickly followed by Bank of New
Zealand (BNZ), which unveiled its own 4.49% special offer for 3 year fixed
loans. BNZ also lowered its two year fixed rate to 4.39%. Bruce McLachlan,
Chief Executive of The Co-operative Bank, which currently leads the market
across one year to five year fixed term categories – without ‘specials’ –
personally believes the current rates are certainly at the bottom of the cycle.
“I would expect that over time we will see them edge up," he said. According
to RFi Group New Zealand data, in September 2015 81% of mortgage
holders had a fixed or partially fixed rate loan on their most recent loan, up
from 78% 12 months ago.
78%
81% 81%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Sep-14 Apr-15 Sep-15
What type of interest do
you pay on your most
recent loan?
Fixed rate or part fixed
rate

24
Source: RFi Group
Cards news
Push for transparency on credit card rates and fees
A Senate committee has recommended that Australian financial institutions
include the interest rate and the continuing annual fee on monthly credit
card bills. In its recommendation to the Government, the committee said it
believes “there is strong and compelling evidence to suggest that part of the
reason credit card interest rates are so high is that card providers know
consumers often pay little attention to their significance.” The committee
argued that by drawing attention to the interest rate and ongoing fees,
Australians would become more aware of the unnecessary costs they are
footing and seek to switch their to lower-cost alternatives.
New year, new credit card deals
RFi Group data shows that 12% of credit cardholders chose their most used
card because of the rewards program attached to the card, with air points
being considered the most appealing type of reward. In order to attract new
customers in the New Year, many credit card providers are offering bonus
Qantas Frequent Flyer points to new cardholders.
American Express (AMEX) has released two promotional deals to
accompany its Platinum Charge Card and Qantas Premium Credit Card.
New customers who apply for the Platinum Charge Card will receive
100,000 Membership points which can be converted to 100,000 Frequent
Flyer points, with an ongoing offer of 2 Frequent Flyer points per dollar spent
on airlines, hotels tours and travel agents in Australia. AMEX is also offering
82,500 Frequent Flyer Points when a new customer takes out a Qantas
Premium Card and these customers will continue to earn 2 Qantas Frequent
Flyer Points for every dollar spent at major supermarkets and at petrol
stations in Australia. In addition to AMEX, ANZ, Citibank and NAB are also
offering promotional deals, with new cardholders receiving at least 60,000
Frequent Flyer points when signing up to the Qantas Frequent Flyer Black,
Prestige Visa Infinite and Qantas Rewards Premium cards, respectively.
Card spending rises while ATM withdrawals fall
Credit and debit card spending rose sharply in the lead-up to Christmas,
according to the latest RBA data, which also shows a decline in ATM
withdrawals over the same period. The number of cash withdrawals
declined by 5.2% to 765.7 million in the year to November 2015, while the
total value fell by 1.6% to $152.4 billion. Over the same period, the value of
credit card transactions rose by 9.2% to reach $325.5 billion and debit card
spending rose by 8.5% to $263.2 billion.
The rise in card payments is widely attributed to contactless card payments.
"Anecdotally, I can say we have seen a move towards credit in the lead-up
to Christmas which has been higher than in previous years," said Australian
Retailers Association executive director, Russell Zimmerman. "I think it is
due to [the popularity] of tap and go, and it is to do with people feeling a little
bit more confident," he added.
Visa and MasterCard have reportedly said that contactless payments
account for between 60 and 70% of all their transactions in Australia. RFi
Group data also records the growing popularity of contactless with over 60%
of Australians are now making contactless card payments.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Contactless card usage
Ownership
Usage
Activation Rate

25
Source: RFi Group
Personal loan news
A rise in interest rates could threaten P2P lending
The booming peer-to-peer (P2P) lending market has been helped by a
period in which interest rates have dropped to a historic low, as well as
struggling equity markets that have made fixed returns of more than 10%
attractive to prospective investors. However, in 2016 the sector may face its
biggest test yet. When US Federal Reserve chair, Janet Yellen, raised rates
for the first time in nine years in December 2015, American analysts started
speculating that customers of P2P lending start-ups such as SocietyOne,
RateSetter and MoneyPlace, would return to more traditional banking
institutions which now offer healthier margins to investors. If the RBA lifts
the official cash rate in 2016, analysts believe the pressure on the P2P is
likely to be worse than it is overseas, given that the big banks are still trusted
in Australia. While the financial crisis severely undermined trust in banks in
the US and Europe, that hasn't been the case in Australia.
CBA does referral deal with OnDeck
CBA has forged a deal with lending start-up OnDeck to refer customers to
each other after a year assessing suitors from an explosion of lending start-
ups. CBA said it will refer selected small businesses from its 500,000
customer base that it can't lend to because they do not meet strict
requirements – including the need for security, such as a family home – to
OnDeck, which set up in Australia in April 2015 and began lending in late
November. Clive van Horen, CBA's head of small business and retail
banking services said the bank has spoken to a large number of potential
partners among the numerous start-up business lenders, but decided
OnDeck – which has loaned US$3 billion ($4 billion) since starting in 2006
at interest rates of between 5.99 and 9.9% – has the proven track record it
required. Westpac is considering forming a similar partnership with lending
start-up Prospa, after initiating a trial in December 2015.
Females more likely to take out a loan for travel
CUA recently released insights from its personal loan data which revealed
that women are more likely than men to take out a personal loan to travel,
but are more conservative about the way they borrow. A study of more than
1,600 personal loans issued by the credit union that were taken out for
holidays and travel shows that 54% were taken out by women. However,
while men account for a smaller proportion of travel loans, they tend to
borrow in larger amounts. Although RFi Group data shows that men and
women are equally likely to take out a loan for travel, it supports the finding
that males tend to borrow more than females – at an average of $37,136
compared to $24,714. CUA also reported that men above the age of 40
borrow more than younger men, with older men being lent an average of
$13,250 for travel loans – around $900 higher than the average loan amount
of $12,323 for men under the age of 40.
$37,136
$24,71
4
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Male Female
Average initial loan size
By gender

26
Source: RFi Group
Payments & digital news
Samsung Pay coming to Australia in 2016
Samsung recently announced it will be bringing its Samsung Pay system to
Australia in 2016. Australia's banks are likely to be drawn to Samsung Pay
over Apple Pay, given that it will not be charging a commission. The goal of
Samsung Pay is to help Samsung sell more phones. Thomas Ko, the global
co-general manager and vice president of Samsung Pay, said "We don't
charge a fee to the banks, and so far that has been one of the reasons why
the banks are very receptive to our propositions." Samsung says it has
already signed up at least two Australian banks to support Samsung Pay.
None of the major banks have yet announced a deal with Apple Pay, which is
currently only available in Australia via American Express (AMEX). RFi
Group data suggests Apple Pay adoption is likely to remain low in Australia
– just 9% of smartphone and/ or tablet owners surveyed in December 2015
are likely to use Apple Pay, while an even lower proportion are likely to apply
for an AMEX card to use Apple Pay.
Big jump in mobile banking in 2015
Bank customers are increasingly using mobile apps as a way of checking
their finances on the run, with NAB reporting that the number of
account logins using smart phones grew by 26% in the 12 months to
December 2015. This figure is up by 92% compared to three years ago and
is in line with RFi Group data, which shows that the proportion of smartphone
owners that use mobile banking apps has increased from 38% to 49% over
the 2 years to December 2015. NAB's general manager of digital, Todd
Copeland, said there is also a growing shift towards customers logging in for
sessions of less than 30 seconds. As a response to this trend, NAB has this
month become the latest Australian bank to target customers seeking quick
access to information on their money by launching an app for Apple watch.
It will allow customers to check their balance more quickly without entering
a password, a feature also available on its mobile app.
UBank relaunches with ‘Just the Bank You Need’ rebrand
In the last week of January 2016, Australia’s online-only bank UBank
unveiled its new brand identity ‘Just the Bank You Need’.
UBank believes the rebrand and ethos behind the phrase will allow them to
better service customers by offering them only what they ‘need’ from a bank,
and nothing they don’t. The bank’s new philosophy will challenge customers
to take a look at the life they’re leading and question what they really need,
versus what they want, in effect encouraging them to borrow less, have less
debt and subsequently live more.
UBank CEO Lee Hatton said of the new rebrand “It’s about asking the
question – could you borrow less and live a happy, or even happier, life? We
want our customers to have a healthy relationship with their finances, and
that can come down to taking out a smaller mortgage, reducing credit card
limits, or simply switching to a higher interest rate bank account.”
Lee will present more on this at RFi Group’s upcoming Australian Mortgage
Innovation Summit where she joins us a speaker.
9%
4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Likely to use
Apple Pay
Likely to
apply for
AMEX card to
use Apple
Pay
Proportion of
consumers likely to use
Apple Pay

Australian Retail Banker - February 2016

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