Bundling in Retail Banking in Australia

Published by: Datamonitor

Published: Feb. 20, 2008 - 24 Pages

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

Abstract

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