Australian Retail Deposits - Market Insight

Introduction

This report provides statistics on market size, competitor market shares and forecasts on Australian retail deposits. It also provides an overview of regulation, competitor activities, issuer strategy and product innovation including developments in both transaction and savings accounts.
Features and benefits

* Detailed market data, market shares and forecasts are an invaluable guide for Australian deposit-taking institutions.* In depth insight into product developments and highlight future opportunities for all industry stakeholders.* Stay competitive by understanding shifting market dynamics and learning how key players are adapting to a challenging environment.
Highlights

It will be some time before wholesale funding returns to the state it was in prior to the global financial crisis, Datamonitor expects Australian retail deposits to remain competitive over the next few years. The increasing cost of wholesale funding has caused all Australian banks to revisit their retail deposit strategies.Datamonitor believes that there is little differentiation on pricing strategies across transaction accounts in Australia. From a consumer perspective, pricing is still the key decision factor. However, where there is less pricing differentiation between accounts and providers, consumers are likely to look at some secondary factors.Throughout 2010–15, Datamonitor forecasts Australian household deposits will experience moderate growth relative to the compound annual growth rate (CAGR) of 11.78% recorded over the last seven years. Household deposits are expected to reach A$694bn by 2015, which is equivalent to a CAGR of 8.79%.
Your key questions answered

* Which deposits segments are forecast to grow the fastest in the Australian market and why?* Who are the key players in Australia and their market share?* What can Australian FS providers learn from product innovation overseas?
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Executive Summary
Market Context
Household deposits have dominated growth in the last 12 months
Strong competition has led to a low margin on retail deposits
Online savings accounts have the largest share
Product Focus
Transaction accounts are too similar within the major banks
Competition on non-pricing benefits is set to dominate Australian product innovation
Competitor Focus
The four major banks control the Australian retail deposits market
Foreign banks are one of the fastest growing segments in Australian household deposits
Future Focus
Datamonitor forecasts strong growth in Australian retail deposits over the next five years
OVERVIEW
Catalyst
Summary
MARKET CONTEXT
Household deposits have dominated growth in the last 12 months
Australian retail deposits have doubled within five years
Household deposits have grown strongly in the last seven years
Strong competition has led to a low margin on retail deposits
Major focuses are MFI customers and savers
A$116bn of deposits from households are in the form of transaction accounts
The interest rate margin has dropped significantly due to strong competition
Government regulations have changed Australian retail deposits
The Australian government's guarantee scheme has provided extra capital to most Australian banks
First Home Saver Accounts need to be more flexible in order to attract first home buyers
Future tax breaks on savings accounts will provide a boost to deposit providers
Consumers have changed the way they bank
Online savings accounts have become the main way to save
The role of transaction accounts has changed
PRODUCT FOCUS
Australian deposit providers must be innovative in order to attract new customers
Australian deposit providers are focusing on interest rates
Products launched in the last 12 months which do not compromise profit margins
New products provide consumers with flexibility
New products are aimed toward specific consumer segments
FS providers should differentiate through non-pricing benefits
Transaction accounts are too similar within the major banks
Competition on non-pricing benefits is set to dominate Australian product innovation
COMPETITOR ISSUES
The four major banks control the Australian retail deposits market
ANZ, CBA, NAB, and Westpac dominate Australian household deposits
Household deposits: CBA still leads in terms of market share but others are closing the gap
The Australian Government Deposit Guarantee scheme did not create an even playing field
Foreign banks are one of the fastest growing segments in Australian household deposits
Foreign banks only hold 6.70% of market share
Australian consumers tend to favor domestic banks
Foreign banks need to emphasize their competitive advantage in order to attract Australian consumers
Deposit providers need to focus on their long-term growth strategies
FS providers need to focus on increasing customer loyalty
NAB created its own competitor in deposits to grow its business
FUTURE FOCUS
Datamonitor forecasts strong growth in Australian retail deposits over the next five years
Australian retail deposits will be a A$1.8 trillion market by 2015
Deposits from households will reach A$694bn by 2015
FS providers can learn from product innovation overseas
Australian deposit providers should leverage the potential of first home buyers
Australian deposit providers should reward their deposit customers
APPENDIX
Supplementary data
Definitions
Bonus savings account
Cash management account (CMA)
Direct charging fee
Main financial institution (MFI)
Mortgage offset account
Online savings account
Retail deposits
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

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