A new frontier for banks has formed in recent years, one that blurs the line between banking and technology. Now, banking constituents of the S&P/ASX 200 Index (ASX: XJO) are all racing to tap into a younger demographic, one that demands digital prowess.
In the past, a bank might have persuaded customers with friendly service. However, in the modern era physical branches are becoming a thing of the past. Instead, people are opting for all their financial frivolities to be placed at their fingertips.
The insatiable appetite for zippy application approvals, swathes of data insights, and savvy tech tools have led ASX 200 banks into a new competitive tech landscape. So, how is this modern era of banking beginning to shake out?
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Battle brewing between ASX 200 banks
Each of Australia's big four major banks has been making an effort to cater to a more tech-oriented audience. However, the progress between each of the publicly-traded banks varies.
For instance, the Commonwealth Bank of Australia (ASX: CBA) is considered to be at the front of the pack. The largest bank in the country boasts a range of technology-centric offerings to its customers, including an AI-powered claims assessor; a buy now, pay later product (StepPay); smart EFTPOS terminals; and a comprehensive app.
In February, Commonwealth Bank announced plans to hire up to 150 technology specialists to further spearhead its campaign of tech innovation.
On the topic of hiring, in April, National Australia Bank Ltd (ASX: NAB) revealed its own intentions of hiring 1,500 specialists this year. At the time, the ASX 200 bank highlighted that approximately 60% of its applications were now hosted in the cloud.
More recently, a Westpac Banking Corp (ASX: WBC) executive described how the 205-year-old bank is keeping with the times. Westpac consumer and business banking chief executive, Chris de Bruin said:
I think it [mobile app] is a crucial battleground. The reason is simple. If you think about how we interact with our customers – we interact 30 times more with customers using digital assets than physical assets.
Furthermore, Westpac intends to roll out the ability to view and manage accounts with other banks directly in their app sometime in the future.
What about ANZ?
The smallest of the big four, Australia and New Zealand Banking Group Ltd (ASX: ANZ) is making moves of its own. As reported by The Motley Fool Australia previously, the ASX 200 bank share is focusing on tech to enable a return to growth for the business.
So far, ANZ Plus — a digitally revamped bank offering — has captured over $500 million in funds under management. Although, ANZ chair Paul O'Sullivan has made no secret that it hasn't come without some teething issues.
For now, the battle rages on between ASX 200 bank shares. As interest rates continue to be ratcheted up, there will be a greater need for banks to distinguish themselves with more than competitive rates — that is, if they want to maintain their margins.
