Studie - Bundling in Retail Banking in Australia

Introduction

Mortgage packages, which combine a mortgage with a credit card and transaction account at the same institution, have become very common in Australia. This report analyzes the ever changing market for mortgage packages in Australia, identifying factors determining growth, and forecasting future developments.

Scope

Draws upon a survey of 2,000 Australians to provide insight into consumer attitudes on mortgage bundles. Analyzes the emergence and growth of mortgage packages, identifying the key drivers of this market. Incorporates interviews with leading mortgage executives in Australia. Covers the major lenders' product offerings.

Highlights

Mortgage packages have gone from being niche products only offered to the top end of the market, to being mainstream products available to most mortgagors. The current proportion of new lending commitments that are attributable to packages are around 50%. From the financial institution’s point of view, mortgage packages offer a number of advantages. Mortgage packages can be used to attract new customers, to increase loyalty of current customers, and to increase share of wallet. Different components of the mortgage package play different parts for these strategies. Some observers believe that packages will develop into customizable products suitable for a wide range of niches. For example, a provider might offer a first home buyer’s package or a package suitable for elderly customers. However, for this to occur, banks need to collate substantial data about suitable pricing of different package structures.

Reasons to Purchase

Keeps you up-to-date with the dynamic mortgage package market by providing you with in-depth analysis of the major issues. Plan your strategy with confidence using Datamonitor's forecasts of future developments in mortgage packages. Provides in-depth analysis of lenders' products allowing you to reassess your product strategy.

DATAMONITOR VIEW 1

CATALYST 1

SUMMARY 1

ANALYSIS 2

Bundled retail banking products have become more common 2

Professional packages were first offered in the late 1990s 2

An estimated 50% of all new mortgages are now part of a package deal 2

Mortgage packages offer discounts in return for signing up for other products 3

Mortgage packages most often consist of mortgages, accounts and credit cards 3

Mortgage packages offer three main benefits to consumers 3

Package deals are appealing to customers who focus on the mortgage rate 4

The bigger the mortgage, the more of a saving a package can entail 5

Customer acquisition, retention and cross-selling can all be improved with packaged products 5

Mortgage packages can be used to attract new customers 6

Customers with a package deal are less likely to switch provider 7

Banks use packages to cross-sell products 7

Banks use mortgage packages to compete with non-bank lenders 9

Banks are well-positioned to benefit from offering mortgage bundles 9

Most Australians would first go to their bank when acquiring new financial products 9

As packages became more common, bank package deals have become standardized 11

There is a wide range of competing mortgage package options in the market 11

All the major Australian banks offer mortgage packages 11

ANZ 12

CBA 13

NAB 13

SGB 13

WBC 14

Smaller banks and building societies also offer mortgage packages 15

AMP Banking 15

Bank of Queensland 16

BankWest 16

Heritage Building Society 17

Suncorp 17

Mortgage package offerings will keep evolving 17

Eligibility requirements for professional packages may become even more relaxed 17

More products and features will be available in a package 18

Banks may re-evaluate package pricing in light of recent changes in the mortgage market 18

Mortgage packages will continue to be prevalent 19

The global credit crisis will continue to drive borrowers back to the banks 19

As more institutions offer diversified retail banking services, packages will increase 19

When replacing mortgage packages, consumers often choose another mortgage package 19

APPENDIX 21

Supplementary data 21

Definitions 23

Cash rate target 23

Lending commitments 23

Non-bank lender 23

Methodology 23

Further reading 23

Ask the analyst 23

Datamonitor consulting 23

Disclaimer 23

List of Tables

Table 1: Different bundle strategies use different product components 5

Table 2: The major banks' package offerings, 2008 12

Table 3: Interest rate discount schedule for the ANZ Breakfree package, 2008 12

Table 4: Interest rate discount schedule for the CBA Wealth package, 2008 13

Table 5: Interest rate discount schedule for the SGB Advantage package, 2008 14

Table 6: Interest rate discount schedule for the WBC Premier Advantage package, 2008 14

Table 7: Package offerings of smaller banks, 2008 15

Table 8: Interest rate discount schedule for the AMP Professional package, 2008 15

Table 9: Interest rate discount schedule for the Bank of Queensland Home Loan Privileges package, 2008 16

Table 10: Interest rate discount schedule for the BankWest Lite Plus package, 2008 16

Table 11: Interest rate discount schedule for the Suncorp My Home package, 2008 17

Table 12: Most Australian consumers expect a preferential rate in order to bundle products, 2007 21

Table 13: 19% of Australian mortgagors chose their home loan provider partly based on bundling, 2007 21

Table 14: 57% of Australians would first go to their bank when taking out a new product, 2007 22

Table 15: A majority of Australians prefer established domestic providers of banking products, 2007 22

Table 16: Bundling options affect provider choice, 2007 22

List of Figures

Figure 1: Most Australian consumers expect a preferential rate in order to bundle products, 2007 4

Figure 2: 19% of Australian mortgagors chose their home loan provider partly based on bundling, 2007 6

Figure 3: 57% of Australians would first go to their bank when taking out a new product, 2007 10

Figure 4: A majority of Australians prefer established domestic providers of banking products, 2007 11

Figure 5: Bundling options affect provider choice, 2007 20

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