CBA in loyalty push, as new lending plans unveiled

The banking major is betting on its sticky relationships with customers to drive its lending growth, with new savings options expected to see more businesses lock up cash.

CBA’s Michael Vacy-Lyle in Sydney. Picture: Nikki Short

Small changes are expected to yield big wins for Commonwealth Bank’s business banking strategy, with Australia’s biggest lender unveiling plans to take on rivals and pinch part of Macquarie’s share of a $20bn real estate market.

Speaking on Monday, CBA business bank boss Mike Vacy-Lyle revealed the bank’s refreshed strategy that sees it deploying in-house AI loyalty programs for commercial customers, as well as pushing into new lending opportunities to grow market share.

As part of the push, CBA said it was introducing its CommBank Yello loyalty scheme for small and medium businesses, allowing them to receive special offers and discounts on business-related purchases.

This comes after a trial run of the loyalty program, with plans to roll out the platform broadly across the business bank in coming months.

CBA said it would also push into health billing, with the launch of its Smart Health platform for pharmacies, allowing customers to fulfil and pay for prescriptions in one system.

The bank said it would launch Smart Health in the first quarter of the 2025 financial year, after an 18-month pilot at 22 pharmacies.

CBA, which revealed double-digit growth across its loans and deposits, since March 2020, is looking to strip business from key market rivals.

This comes as competition in the broader business banking sector looks set to only further head up, with all market rivals signalling in the last round of results the space would be a key priority in the year ahead.

But Mr Vacy-Lyle said CBA was banking on its sticky relationships in business banking, noting it was “incredibly difficult to switch a main bank” for companies.

Mr Vacy Lyle said CBA was adding almost 5000 new business accounts a week, as customers opened one or more new accounts, with overall business growth outstripping attrition as companies closed or changed their banking partner.

This has allowed CBA to build a big book of business deposits, lending the bank a wealth of low-cost funds to lend against.

But competition is hotting up in business banking, with CBA revealing plans to launch “flexible” term deposits for its commercial customers.

These “flexible” accounts would allow business customers to crack open term deposits, which would normally be untouchable for their term, to access up to 20 per cent of their balance without fees.

Mr Vacy Lyle notes many businesses “are probably not great at managing cash flow”, with the account offering an answer for companies that get into strife.

The business bank boss, who took on the job in February 2020, said CBA also wanted to more than just lending against property, pointing to plans to expand its asset financing business as well as lending against reliable and predictable cashflows.

Agribusiness, manufacturing, wholesalers, and trading businesses are all key priority markets for CBA in the year ahead, with Mr Vacy Lyle noting they were “now the fastest growing part of our portfolio”.

Invoice financing platform Waddle, which CBA snapped up from accounting giant Xero, has proven a key driver for the bank with more than $120m in loans, a figure expected to surge in coming months.

CBA has also taken aim at the residential real estate sector, which historically has been dominated by rival Macquarie.

MRI Software and CBA revealed they had inked a deal, which sees the bank set to deploy its payments systems into MRI’s Property Tree software.

This is aimed at growing CBA’s real estate business, offering property managers a system to receive, manage, and distribute rental incomes.

A temporary waiver of valuation fees for rent rolls will form the tip of CBA’s push into the sector, with the bank offering to finance up to 60 per cent of the acquisition value of residential rental rolls.

Originally published as CBA in loyalty push, as new lending plans unveiled