Bundling in Retail Banking in Australia

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Bundled retail banking products have become more common
    • Professional packages were first offered in the late 1990s
    • An estimated 50% of all new mortgages are now part of a package deal
  • Mortgage packages offer discounts in return for signing up for other products
    • Mortgage packages most often consist of mortgages, accounts and credit cards
      • Mortgage packages offer three main benefits to consumers
    • Package deals are appealing to customers who focus on the mortgage rate
    • The bigger the mortgage, the more of a saving a package can entail
  • Customer acquisition, retention and cross-selling can all be improved with packaged products
    • Mortgage packages can be used to attract new customers
    • Customers with a package deal are less likely to switch provider
    • Banks use packages to cross-sell products
  • Banks use mortgage packages to compete with non-bank lenders
    • Banks are well-positioned to benefit from offering mortgage bundles
      • Most Australians would first go to their bank when acquiring new financial products
    • As packages became more common, bank package deals have become standardized
  • There is a wide range of competing mortgage package options in the market
    • All the major Australian banks offer mortgage packages
      • ANZ
      • CBA
      • NAB
      • SGB
      • WBC
    • Smaller banks and building societies also offer mortgage packages
      • AMP Banking
      • Bank of Queensland
      • BankWest
      • Heritage Building Society
      • Suncorp
  • Mortgage package offerings will keep evolving
    • Eligibility requirements for professional packages may become even more relaxed
    • More products and features will be available in a package
    • Banks may re-evaluate package pricing in light of recent changes in the mortgage market
  • Mortgage packages will continue to be prevalent
    • The global credit crisis will continue to drive borrowers back to the banks
    • As more institutions offer diversified retail banking services, packages will increase
    • When replacing mortgage packages, consumers often choose another mortgage package
• APPENDIX
  • Supplementary data
  • Definitions
    • Cash rate target
    • Lending commitments
    • Non-bank lender
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Different bundle strategies use different product components
    • Table 2: The major banks' package offerings, 2008
    • Table 3: Interest rate discount schedule for the ANZ Breakfree package, 2008
    • Table 4: Interest rate discount schedule for the CBA Wealth package, 2008
    • Table 5: Interest rate discount schedule for the SGB Advantage package, 2008
    • Table 6: Interest rate discount schedule for the WBC Premier Advantage package, 2008
    • Table 7: Package offerings of smaller banks, 2008
    • Table 8: Interest rate discount schedule for the AMP Professional package, 2008
    • Table 9: Interest rate discount schedule for the Bank of Queensland Home Loan Privileges package, 2008
    • Table 10: Interest rate discount schedule for the BankWest Lite Plus package, 2008
    • Table 11: Interest rate discount schedule for the Suncorp My Home package, 2008
    • Table 12: Most Australian consumers expect a preferential rate in order to bundle products, 2007
    • Table 13: 19% of Australian mortgagors chose their home loan provider partly based on bundling, 2007
    • Table 14: 57% of Australians would first go to their bank when taking out a new product, 2007
    • Table 15: A majority of Australians prefer established domestic providers of banking products, 2007
    • Table 16: Bundling options affect provider choice, 2007
  • List of Figures
    • Figure 1: Most Australian consumers expect a preferential rate in order to bundle products, 2007
    • Figure 2: 19% of Australian mortgagors chose their home loan provider partly based on bundling, 2007
    • Figure 3: 57% of Australians would first go to their bank when taking out a new product, 2007
    • Figure 4: A majority of Australians prefer established domestic providers of banking products, 2007
    • Figure 5: Bundling options affect provider choice, 2007