Friday 21 December 2018
There’s no doubt about it - 2018 was a seriously busy year in the Australian banking world.
With the introduction of the New Payments Platform (NPP), compulsory Comprehensive Credit Reporting (CCR), and last but certainly not least, the ongoing saga that was the Banking Royal Commission, the innovations and fallouts from 2018 are likely to shape the banking landscape for years to come.
But enough looking back, what about the year ahead? 2019 is already looking like another stellar year of banking innovation and reform, so read on as we lay out some near-certainties and potential prophecies for the year ahead.
Xinja, 86 400, volt bank. With so many digital banking players in the final stages of testing and tinkering their products, 2019 looks set to be the year when Australians finally get to put the neobank hype to the test.
“We’ve been hearing a lot about neobanks over the last year, but we should actually be able to use their accounts in 2019 and watch them emerge into the market properly,” said Mozo’s Product Data Manager, Peter Marshall.
“I can’t wait to see how they differentiate themselves from the traditional banks and what their pricing is going to be like. Are they really going to compete on price, or are they more about service and technology?”
By the time the Reserve Bank Board meets for their next scheduled meeting on February 5, 2019, it will have been over 29 months since the last change to the official cash rate back in August 2016.
And while there’s always a multitude of factors that could precipitate a rate change, punters shouldn’t hold their breath in 2019.
“I think that there’s a pretty strong recognition now that the RBA’s very unlikely to lift rates in the next year,” said Marshall.
“They’re most likely going to sit on their hands throughout the year again, but there is a chance of a rate cut or two. We’ll have to wait and see how things pan out in terms of the U.S and China trade war which has a lot of people concerned about where the global economy is headed.”
If 2018 taught us anything it’s that Aussies love alternative payment methods like Apple Pay, Google Pay, Samsung Pay and the ever-expanding host of wearable payment devices now available from banks and other financial providers.
And now that the Commonwealth Bank has jumped on the Apple Pay bandwagon, don’t expect some of Australia’s other major banks to be far behind in 2019.
“It would be very surprising if NAB and Westpac didn’t follow ANZ and the Commonwealth Bank in introducing Apple Pay. When you’ve got a choice of two major banks which are offering it versus two who aren’t, the two who aren’t would seem to be the ones on the losing side,” said Marshall.
From the midpoint of 2018, we witnessed a host of lenders hiking their variable home loan rates in response to increased funding pressure - including the big four banks. And while rate increases may have eased off for the time being, mortgage holders may want to keep their ears open for changes in 2019.
“Funding costs are still building. They sort of eased off over the last few months, but they’ve begun ramping up again. As a result there might be a case for the banks to increase rates out of cycle again - potentially in the first first half of the year,” said Marshall.
“Because the banks are going to be spending extra on compliance and remediation as the fallout from the Banking Royal Commission continues to flow through, they’ll be looking at their costs very closely. That’s why they won’t be wanting to absorb any funding cost increases that they don’t have to.”
Australians have already been able to secure personalised rates on personal loans for years, with a number of lenders tailoring interest rates based on an individual’s credit history. But with the rollout of mandatory Comprehensive Credit Reporting (CCR) last September, don’t be surprised if more lenders start offering more personalised rates on a wider range of products next year.
“The comprehensive credit reporting system is likely to mean that we see more risk-based pricing for products in 2019,” said Marshall.
“I don’t think that we’re going to see it on mortgages this year as that’s probably further along down the track. But more personal loans are likely to become risk-based, and it's even possible that we’ll start to see credit cards with different pricing for different people as well.”
Interested in even more future insights? Make sure you’re up to date with these six banking changes you’ll need to know about in 2019, or keep a tab on the Mozo fintech hub for the latest news and guides on banking innovations and technology.