ANZ chief Shayne Elliott: Afterpay customers not a good fit
ANZ has downplayed the threat posed by Afterpay, saying the BNPL group’s customers were generally not high savers motivated to buy their own homes.
ANZ has downplayed the immediate threat posed by Afterpay, saying the “buy now, pay later” group’s 3.5 million customers in Australia were generally not high savers motivated to buy their own homes.
“That may change, but it’s certainly not the customer cohort that we see today,” ANZ chief executive Shayne Elliott told analysts in a conference call.
The implications of a strategic partnership announced this month between Westpac and Afterpay has been a hot topic of debate in the banking industry.
Westpac, attracted to Afterpay’s fast-growing but hard-to-crack millennial customer base, announced that the fintech had joined its new 10X technology platform.
Afterpay will seek to broaden its appeal by offering transaction and savings accounts.
Mr Elliott stressed that he was not dismissive of Afterpay, saying the company had been “enormously successful in a part of the market”.
“I think, though, that when you look at its customer base, and I accept it might change, there is not a high correlation with people who are saving for a home loan and higher, saving-oriented customers,” he said.
ANZ data, which picks up customer payments to BNPL operators, showed that such customers were younger and riskier.
They were also twice as likely to fall behind in their repayments to the bank, and generally did not have a credit card or a personal loan.
Mr Elliott said there was a bigger issue than the specific impact of Afterpay, and that was the momentum of industry disruption. “Yes, there’s going to be disruption,” he said.
“Regulatory barriers are lowering, there are more technology solutions, banking is being disaggregated in payments, non-bank lending, asset finance, and even in home loans, and there are more and more new entrants offering better customer outcomes and easier ways of dealing with financial institutions.
“We have a very large, mostly loyal customer base, but you can’t take it for granted, which is why we’re talking about shaving annual costs to $8bn and continuing to invest.”
ANZ, he said, would have more to say at its interim result next year about a range of contemporary and engaging products that would help the bank to stay competitive.
On loan deferrals, Mr Elliott said the outcome was “better than many feared”.
Of the bank’s 1 million home loans in Australia, 95,000 were granted initial, six-month deferrals, which were now expiring.
As at October 15, 55,000 customers had completed their deferrals or advised the bank of their intentions, with 79 per cent of that number returning to full repayments and 20 per cent requesting more time, half of whom were in Victoria. The remaining 1 per cent had moved to interest-only or directly into hardship. The data for small businesses was also “very positive”.
More than half of small business deferrals had finished by mid-October, with 86 per cent choosing to return to full repayment, 4 per cent opting for restructuring and 9 per cent seeking a further deferral.
Of those seeking an extension, 60 per cent were in Victoria and 70 per cent were fully secured.
“If these trends continue with no rebound in Victoria, less than $1bn of small business loans will remain on deferral and we are well-resourced to work with these customers individually,” Mr Elliott said.
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