‘A global bank can enter NZ without investing in bricks and mortar’

The ongoing technology race in the financial services industry isn’t ending anytime soon, and if harnessed correctly, will drive better customer experiences and outcomes.

On the flipside, technology also lowers entry barriers for competitors, according to PwC’s latest New Zealand Banking Perspectives report.

“Should a global bank want to enter our local market, it is possible without the need to invest in bricks and mortar,” says Sam Shuttleworth, partner and banking sector leader, PwC New Zealand.

“A global bank could leverage its brand and establish a presence through an online branch targeting a niche segment of our market.”

A global bank could leverage its brand and establish a presence through an online branch targeting a niche segment of our market Sam Shuttleworth, PwC NZ

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“Against the backdrop of technological enhancement, while any possible changes to the market will not be extensive in the short-term, it will have an impact across the New Zealand market in the longer term.”

“Like any sector or organisation, technology can be seen as a challenging disruptor or viewed as the key to unlock future value. From the perspective of New Zealand’s major banks, which side of coin will be face up when this finally lands?”

Related:‘Disrupt digital businesses before you get disrupted!’

The report focuses on the performance of the five major banks – ANZ Bank New Zealand, ASB, Bank of New Zealand, Kiwibank and Westpac – for the first half of their 2015 financial years with reference to the previous six months.

The report notes the five major banks are experiencing another strong performance off the back of good lending growth to both household and non-household sectors.

They reported core earnings of $3,480 million in the first half of their 2015 financial years (1H15), up from $3,281 million for the previous six months (2H14). This was driven by increases in net interest income (up by $184 million) and a reduction in operating expenses (down by $49 million), while other operating income decreased by $34 million. F

“Looking forward, it will be a question of whether this performance can be sustained,” says Shuttleworth.

The strong economic conditions experienced over the last two years are predicted to slow in the short to medium term, but nevertheless are comparably positive on a global scale, he says.

“This, combined with a hot property market in Auckland and difficult trading conditions for our rural community and those who service it – we are about to embark on an interesting journey.”

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