Digital disruption is fast approaching the global financial system, but the Australian banks have a competitive advantage, says veteran equity researcher Paul Schulte.
Speaking at the ASIC Annual Forum in Sydney on Monday, Mr Schulte – a former adviser to the China Construction Bank, White House National Security Council, Credit Suisse and Lehman Bros – said “profound disintermediation” is afoot in the financial services and investment banking sectors.
Unlike many banks worldwide – which are preparing for redundancies in their research and trading operations – the major Australian institutions have been early adopters of innovative strategies on big data, automation and financial technology tools, he said.
“Despite being one of the more heavily regulated banking sectors in the region, [the Australian banks] really are leading the way in financial technology,” Mr Schulte said. “Banks like CBA, ANZ and NAB are way ahead of any regional bank [in responding digital disruption].”
Mr Schulte said these three banks in particular have an advantage not only over the family-owned banks in emerging Asian markets, but also the established banks domiciled in Hong Kong and Singapore.
“A lot of banks already have the architecture, they have the data sitting around but they don’t know what to do with it,” he said. “They’re just not with the program.”
By contrast, the Australian banks have “changed their DNA” to be more adaptive to market disruptors such as Alibaba and peer-to-peer lending sites.
However, addressing the same audience, Jacob Hook, a partner at management consultancy Oliver Wyman, said that overzealous regulation in Australia may be thwarting start-up disruptors from threatening the banks.
“Heavy regulatory burden can fall much more heavily on start-ups,” Mr Hook said.
“It is important that we have innovation outside the incumbents.”