Superfund-owned bank ME has shelved plans to launch new credit cards after witnessing the success of “buy now, pay later” players like Afterpay and Zip.
The bank posted its full-year results this week, which showed that statutory net profit after tax fell by nearly 25 per cent to $67.1 million, down from $89.1 million the previous year. The lender recorded $14.4 million of impairment losses in its credit card business.
ME CEO Jamie McPhee said the bank halted its work in bringing more credit cards to market after recognising a structural shift away from cards and was therefore focusing its work on digital wallets.
He explained: “Our work on digital wallets is progressing. We wanted to bring that forward, and we’ve taken the opportunity to relook at the credit card market, and what we’ve been seeing is that the number of credit cards are in decline, while we’ve seen a significant increase in the buy now, pay later entrants Afterpay, Zip, Flexi,” he said.
“We think that the credit card market is being structurally disrupted, so we’ve decided that we don’t think that is the right environment for the bank to go forward in.”
Mr McPhee added that while the bank will continue to have its low-rate credit card, it has revised its strategy regarding a wider product range.
“We were thinking of coming to market with a broader range of credit cards, including reward cards, etc. but having had a look at the market, we don’t think that is the right thing to do, strategically, going forward,” he said.
“So, that has obviously impacted the statutory earnings this time around.
“There is no way we will be diverting our attention away from building out the customer digital ecosystem like the digital wallets, NPP (national payments platform), until we get that right up to a very, very market competitive offerings.
“That will be our focus for the foreseeable focus. Anything else would be a distraction.”
It is expected that ME will be releasing its “digital ecosystem” progressively from 2020.
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