Introduction

The Australian retail banking market is undergoing difficult times with a number of adverse conditions developing both locally and abroad. Higher funding costs, lower credit growth, new regulations and evolving consumer preferences will challenge even the most stable bank. This report examines the key trends affecting the market over the next year and the steps banks can take in response.

Features and benefits

• Identifies the most important trends that will affect retail banking in 2012.
• Assesses the impact of macroeconomic, consumer, strategic, and technological developments on the retail banking industry.
• Details what actions competitors will undertake in 2012 to protect and improve their market position.

Highlights

One key feature of the Australian retail banking market in recent years has been the erosion of net interest margins on their lending business. While the net interest margins of the banks had been on a long-term decline before the financial crisis, the environment since the crisis and its immediate aftermath has been decidedly negative.

The outlook for 2012 and indeed funding conditions in the Australian market are greatly influenced by what is happening in Europe, and an outright global recession remains a very real possibility. Australian banks are exposed to the continuing crisis facing Europe and its banks.

In Australia the overall lending environment – both commercial and personal – was up from 2010. While 2011 was an improvement on 2010, which represented a recent low in credit flowing into the Australian market, average monthly lending remained below the peak the market recorded in June 2007.

Your key questions answered

• What shape will the Australian retail banking market take over the next 12 months?
• What impact will macroeconomic, regulatory, and technological developments have on the retail banking sector?
• How will providers respond to the changing banking environment in 2012?