Day 443: 'A bit alarmist’
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 443.
Today in summary: Fintechs are fast becoming global investor magnets; Suncorp investors are unlikely to get a distribution from a residential mortgage bond worth A$120 million after 3% of borrowers entered arrears; and the small credit sector wants to continue its controversial practice of “screen scraping” when the open banking regime kicks off in July.
-- Alex
@AlexESampson
Current banker panic level: 🤑 😲 😡
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1. Fintechs are becoming investor magnets globally, The Australian is reporting. Consultancy firm Accenture has revealed a US$55.3 billion (A$78.2 billion) dump of funds into the sector. Accenture’s latest global analysis showed fintech start-ups in Australia raised US$756.7 million (A$1.07 billion) last year, more than double the US$322.3 million (A$455.6 million) raised in 2017. China, the US and UK were making the majority of the sector’s deals.
Accenture’s Australia and New Zealand banking head Alex Trott said:
“With the Australian banking industry experiencing challenging times, suffering from diminished trust and against a demand for greater customer experiences, there’s a significant opportunity for financial technology firms.”
2. Suncorp investors are unlikely to get bang for their buck after the bank announced a residential mortgage bond worth A$120 million slumped with 3% of borrowers in arrears. The Australian is reporting this will put distributions in doubt, with this believed to be the first local mortgage bond to encounter difficulty since the global financial crisis in 2008. But the Australian Financial Review is reporting that corporate bond analysts have warned not to interpret the event as an early warning of rising home loan stress.
3. The small credit sector wants to continue its controversial practice of “screen scraping” for data once new open banking legislation takes force in July. The Economics Legislation Committee spent the day in Melbourne hearing from regulators and businesses about the Treasury Laws Amendment (Consumer Data Right) Bill 2019.
Representatives from the Australian Retail Credit Association and credit bureaux Equifax and illion argued screen scraping could even to be used as part of measures to ensure responsible lending and that it would prove more reliable than the contentious benchmarking methods used now. The ACCC, which also presented to the committee, did not support the move, saying responsible lending provisions were “completely separate” and set by ASIC. The UK phased out screen scraping after its own banking inquiry.
Today’s burn prize: AFR political editor Phil Coorey
🔥🔥🔥
“You don’t think it’s a bit alarmist?”
At the AFR Business Summit Coorey asked Prime Minister Scott Morrison whether his comments that the economy will be weaker under Labor are overkill. Morrison was inferring the Opposition’s economic policy could lead to a recession.
The Commentariat
Companies, markets and the economy commentator Elizabeth Knight writes in the Sydney Morning Herald that ANZ chair David Gonski made a measured appearance at yesterday’s Australian Institute of Company Directors’ conference after mastering “near invisibility”.
“Gonski has a remarkable ability to support (largely) the status quo but do so in such a reasonable and measured way that it doesn’t sound self serving. The Institute of Company Directors, whose members have been bruised by the community backlash against the business sector, are now beginning to throw around some ideas to lift their game and their broader standing with smaller shareholders. The idea of yearly re-election of directors was one issue being debated.”
Australian Financial Review banking and finance columnist Karen Maley writes that banks have largely escaped the “Hayne pain”, having avoided the commission's harshest punishment, which was doled out to financial institutions dependent on financial advice and wealth management.
“There is, of course, a key reason the big four banks have proved so remarkably immune when it comes to Hayne pain. Banks are basically in the business of lending money – to businesses and to consumers – and trust simply isn't a hugely important issue when you are in the position of being a borrower and taking money from a financial institution.”
The Australian’s economics editor Adam Creighton argues the government has failed to govern in the public interest when it comes to superannuation, demonstrating “how little can be achieved, even when the case for reform is overwhelming”. He believes politicians are scared to do anything to anger the increasingly powerful industry funds.
“It’s worth pondering why, more than 25 years after superannuation became compulsory, the allocation of new members to super funds remains a dog’s breakfast for members and a Michelin-star feast for super funds, especially industry funds which benefit so richly from their $30 billion a year flow in default contributions.”
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