Following the news that troubled wealth giant IOOF could face several class action lawsuits, GlobalData believes the damage to public trust in the financial services industry will have significant long-term implications for how Australians invest.
Andrew Haslip, head of banking content for Asia Pacific at GlobalData, said superannuation has a prized place in the heart of many Aussies and allegations of misuse of client money in this area are particularly damaging on top of a string of other banking and wealth-related scandals. It has given the impression that the entire industry is suffering from a conflict of interest and corruption.
‘‘The clutch of neobanks waiting in the wings in Australia will have no better time to launch recruitment drives, while a range of robo-advisors, none of which have yet broken out into the mainstream, will have the best conditions yet to draw in new money,” Mr Haslip said.
‘‘Incumbents need to act fast to shore up tarnished brand images. As of yet there is no indication that consumers are keen to switch. But all it will take is a sudden change in interest rates, putting attractive APRs for savings out into the market (unlikely in the short term to be sure), or a big downturn in the share market causing portfolio values to tumble (already underway by some measures), to galvanize the market.
‘‘With these trends already in play, disillusioned consumers will bite the bullet and switch to the new untested but unsullied providers.’’
Financial services technology provider Decimal Software, which was acquired by Sargon Capital last week, expects demand for technology platforms to grow.
“As we move through the concluding stages of the royal commission into banking and financial services, we expect to see a sharper focus from institutions on the potential for technology platforms such as Decimal’s to help deliver automated, compliant and conflict free financial advice to more Australians," Decimal CEO Damon Watkins said.
The royal commission will release its final report in February.