The big four ASX banks could come under pressure from Google, Apple and other tech giants soon.
What’s Going On?
National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and Commonwealth Bank of Australia (ASX: CBA) all have a lot of competitors that would love to take some of their revenue and profit.
Just think of the local ASX competition like Bank of Queensland Limited (ASX: BOQ), Suncorp Group Ltd (ASX: SUN), Macquarie Group Ltd (ASX: MQG), MyState Limited (ASX: MYS) and Bendigo and Adelaide Bank Ltd (ASX: BEN).
There is also growing competition from foreign lenders such as ING, HSBC and others. Plus, there are a few unlisted large local competitors such as ME Bank.
But now there’s another group of businesses that want to get in on the banking competition.
The Australian Financial Review has reported that investment bank Morgan Stanley has calculated there is $22 billion of big ASX bank revenue that could be challenged by smartphone digital wallets from Google, Apple and others.
The investment bank said that around 30% of Commonwealth Bank’s banking revenue, approximately $6.7 billion, could be stolen by global technology giants wishing to win retail customers.
Samsung Pay, PayPal, Apple Pay and Google Pay could be more attractive to consumers because it allows them to link a while suite of accounts and cards, but obviously CBA only offers CBA cards.
Morgan Stanley warned that if people no longer had as much loyalty to their bank, which could also lead to less loyalty related to mortgages and other bank products.
What Can Banks Do?
With global tech companies and local digital banks wanting a piece of the pie, the only thing that the big ASX banks can do is invest in technology.
I think the long term decline of the big bank market positions is almost inevitable because loans are becoming more like commodity products where borrowers can compare a large range of potential options.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.