Challenger banks: still a challenge?

Challenger banks: still a challenge?

FEATURES, steve worthington
In 2015 I wrote a chapter for a textbook entitled “Challenger banks! Are they for real?” The book questioned, in a UK context, whether new entrants into the banking market could really disrupt the status quo. The Australian and UK banking markets have many similarities. Both are dominated by a ‘Big Four’ of incumbent banks whose presence was and maybe still is a challenge for those seeking major disruption. "So where are all these so-called challenger banks now?” In the UK, the Big Four are Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS). Collectively they hold over 70 per cent of the cheque/current accounts, mortgages and SME lending business. In 2015 their ’challengers’ were Virgin Money, Tesco Bank and Metro Bank.  The challengers The Virgin Group was a ‘disrupter’ brand, it…
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Exaggerating the death of cash

Exaggerating the death of cash

FEATURES, steve worthington
Consumers hear a great deal about the projected demise of cash and paper cheques in the new digital payments world. The Reserve Bank of Australia (RBA) Governor, Philip Lowe, has even talked of cash becoming a “niche payment instrument” while banknotes will be “used for relatively few payments”.It’s a decent niche: Australia has over $A76 billion polymer banknotes in circulation, the vast majority (93 per cent) by denomination accounted for by the $50 and $100 notes, according to the RBA."Countries with different cultures and experiences reveal why and how cash remains a useful and ever-popular payment option.”However this disconnect between forecast and reality in payment trends is not confined to Australia. Other countries with different cultures and experiences can also reveal why and how cash remains a useful and ever-popular…
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Why bother surcharging?

Why bother surcharging?

News, steve worthington
A decade and a half ago the Reserve Bank of Australia introduced fundamental changes to fees and charges involving payment cards with the aim of lowering charges for merchants and consumers. But the RBA also allowed merchants to add a surcharge to a transaction, the theory being merchants would price in a way to encourage usage of the lowest cost system. "More than 5,000 of the circa 6,500 final submissions to the FSI were concerned with surcharging on card payments.” Reality has proved to be different – as indeed many warned at the time. As a rule, rather than surcharge on economic efficiency grounds, merchants have surcharged based on market power. For consumers, surcharging is annoying and confusing because there are no set rules and little enforcement of over-charging. Merchants…
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The ATM celebrates 50 years but we’re using it less

The ATM celebrates 50 years but we’re using it less

News, steve worthington
As the Automatic Teller Machine (ATM) celebrates its 50th birthday, it’s actually being used less and less to withdraw cash in Australia. There are currently more than 32,000 ATMs across Australia and cash withdrawals in February 2017 were A$9,924 million, down 10% from the previous year and just above the total of February 2005. ATM’s (Automatic Teller Machines) were first introduced at the end of June 1967 and were welcomed by both bank customers and the banks themselves. This “hole in the wall” enabled customers to access their cash 24/7. The ATM’s self-service nature enabled the banks to reduce their costs, by closing bank branches, reducing opening hours and laying off staff. But the Reserve Bank of Australia’s 2016 Consumer Payments Survey reported that cards were used more often than…
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Will demonetisation become de rigueur?

Will demonetisation become de rigueur?

News, Publications, steve worthington
Steve Worthington is a Visiting Professor at the Business Research Institute The world is going cold on cash. Successive moves by global governments to consider or act on a reduction of banknotes in a bid to, among other things, clamp down on illicit purchases. Digital payment methods are of course the beneficiaries. It’s not all straightforward however – in India’s case especially, there have been unforeseen consequences. There are lessons in the experience for others around the globe. And, as an aside, even though we haven’t even dispensed with cash, the global payment schemes like MasterCard already talking about the end of cards – within a decade – as the technology behind them migrates to smart phones, watches and other wearables. The Indian Government’s announcement in November 2016 it would demonetise…
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Mobile payments and tap and go might not mean the end for tellers

Mobile payments and tap and go might not mean the end for tellers

Publications, steve worthington
Article by: Steve Worthington Adjunct Professor, Swinburne University of Technology Consumers are drawing out less cash and using other methods to pay for things such as contactless payments, but this doesn’t necessarily signal the end of bank tellers or their automated counterparts. There is conflicting evidence on whether or not banks are moving away from providing customers with a human face or an ATM. Looking internationally, in 2016, Lloyds Banking Group in the United Kingdom announced that it was closing 200 branches and planning to cut 3,000 jobs, as a result of changing customer behaviour. The number of transactions carried out in branches has continued to drop and Lloyds has continued to invest heavily in digital banking instead. In contrast to this, Metro Bank, a new UK bank, has made the branch…
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Will mobile banking be an Atom bomb or damp squib?

Will mobile banking be an Atom bomb or damp squib?

Publications, steve worthington
Article by: Steve Worthington Adjunct Professor, Swinburne University of Technology The launch of Atom Bank in the United Kingdom in 2016 as a new mobile bank regulated by the Bank of England (BoE) heralded the onslaught of a variety of mobile-only banks in that country. Given Australian bank customers are among the world’s fastest adopters of mobile banking, many observers consider Australia a prime target for this new type of disruption in traditional banking. However, in the past decades we have seen the launch of a number of internet-only banks we were told would take the place of bank branches and break the existing business models of the mainstream banks. In the UK ambitious online based banks were launched with names such as Egg(Prudential); Intelligent Finance (Halifax) and Smile (Co-operative Bank) all…
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Charging for credit and debit card use may become the norm under new rules

Charging for credit and debit card use may become the norm under new rules

Publications, steve worthington
Article by: Steve Worthington Adjunct Professor, Swinburne University of Technology New standards on how much businesses can surcharge their customers for credit or debit card purchases start in September. However, it’s not clear how the rules will be policed and whether this will lead to all businesses enforcing a surcharge, rather than just those who choose to. The Reserve Bank of Australia (RBA) has revised the regulations, aiming to limit the amount merchants can surcharge customers for paying by credit or debit cards. The new rules will initially apply to large merchants, defined as those employing over 50 staff, as these businesses are seen to be overcharging the most. Businesses have been able to add on surcharges to these type of purchases in Australia since January 2003. This was part of RBA…
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