CBA Broadens Its Digital Strategy
The bank is hoping its fresh plan will bring them closer to the customer.
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The Commonwealth Bank of Australia (CBA) will be the first big four bank to allow customers to view account information from rival banks within its app – adding functionality to its digital offering.
“We aim to be the most trusted partner at the centre of our customers’ financial lives by saving them money, giving them more control over their finances, and by making banking simpler and easier,” said CBA CEO Matt Comyn.
The move increases the bank’s usage of the ‘consumer data right’.
Further, the bank aims to increase its use of data and disruptive tech-focused business to improve its digital offering to the customer.
“We are integrating new services into our platform to customise and personalise the digital experience in ways that will increase engagement and bring greater value to our customers,” added Mr Comyn.
The statement is made evident through CBA’s 25% shareholding in Amber, a new energy retailer providing direct access to wholesale energy prices for a monthly subscription of $15.
Consumer data right will soon be extended from banking to energy and Amber will provide CBA with relevant consumer behaviour when buying energy.
“Purchasing a home is a time when customers look for ways to save money, and electricity is a large expense in a household budget. Our partnership with Amber will help to differentiate our home buying proposition …”
Also announced today is a 23% shareholding in Little Birdie, an online shopping start-up designed to help customers find deals online.
“Deals and offers, integrated with CBA’s goal savings products, will help customers save for a special purchase in a completely different way.”
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In a decision that will surprise few economists – or borrowers – the RBA announced a further 0.25 percent rise in interest rates when it met earlier this afternoon. This brings the current interest rate up to 3.35 percent, a 3.25 percent increase since May last year.
Prior to today’s announcement, when the interest rate was still 3.1 percent, research by Roy Morgan released at the end of last month revealed that 23.9 percent of Australian mortgage holders were ‘at risk’ of mortgage stress in the three months to December 2022. Mortgage stress is where one third or more of weekly household income is going towards mortgage repayments.
In a tight rental market, mortgage pressure has also lead more landlords to pass rate rises onto tenants.
Research director at CoreLogic, Tim Lawless, says the latest rate rise moves beyond the ‘serviceability assessments’ some borrowers passed when applying for their loans.
“Since October 2021, lenders have assessed new borrowers on their ability to service a mortgage under an interest rate scenario that is at least 300 basis points above their origination rate,” he said. “The latest lift in the cash rate will push these recent borrowers beyond their serviceability tests.
“Considering most lenders were showing mortgage arrears to be around record lows last year, it’s likely some evidence of rising mortgage stress will start to emerge in 2023 under such substantially higher interest rate settings, with the potential for a more noticeable lift as further fixed rate borrowers migrate over to variable mortgage rates.”
Today’s decision signals the RBA’s continued efforts to use the cash rate to manage inflation, which sits at 7.8 percent annually. Time will tell whether it has been successful in curbing spending or whether, as many predict, there are more rate rises on the way. Mr Lawless said overseas economies could offer some hope to borrowers.
“Global inflationary pressures are easing, and domestically, a relatively weak December retail spending result could be the first clear sign that consumers are reigning in their spending,” he said. “Additionally, the housing component of CPI, which has the largest weight of any sub-group, dropped sharply through the final quarter of 2022, albeit from the highest level since the mid-1990s (outside of the impact from the introduction of GST in 2000).
“Mainstream forecasts for the cash rate reflect the uncertainty around inflation outcomes, ranging from the RBA holding the cash rate at 3.35 percent, through to another 75 basis points of hikes. However, a recent survey from Bloomberg puts the median forecast at 3.6 percent, implying one more hike of 25 basis points in the wings.”
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