Macquarie Group takes digital path in ‘deposits war’

Macquarie Group is ramping up an assault on the traditional retail banking market by learning from digital leaders.

Macquarie Bank’s Luis Uguina, left, and Ben Perham. Picture: Hollie Adams

Macquarie Group is ramping up an assault on the traditional retail banking market of deposits and mortgages through new digital banking functionality modelled on digital leaders such as Netflix and Facebook rather than rival banks.

The new e-bank offering, which Macquarie claims has features that are “firsts” for the Australian market, has been launched alongside a swag of offerings to drive customer growth, including no fees at any ATMs and a 50c rebate on cash withdrawals over $100 in stores.

Amid a renewed “war for deposits” among banks trying to meet new funding regulations, Macquarie has also introduced “stepped” interest rates of savings accounts, which, for example, pay 2.3 per cent on between $25,000 and $5 million — just below the 2.55 per cent on a one-year term deposit.

“We’re a relatively small player so I think the opportunity to grow is substantial,” Ben Perham, the head of personal banking in Macquarie’s banking and financial services division, or BFS, told The Australian.

“(But) when we think about competition, we really think of the last app you used ... and that’s really the bar we’ve set ourselves in terms of customer experience. We’ve looked beyond financial services to digital companies leading in (this) as our benchmark.”

BFS is one of Macquarie’s six operating divisions and is run by Greg Ward, who is overseeing a five-year, $250m update of its core banking system with the modern SAP platform that will deliver real-time capability, with deposits and mortgages already transferred over.

BFS is one of three “annuity style” divisions alongside asset management and corporate and asset finance that have been growing and make up more than 70 per cent of revenue, in contrast to pre-2008, when the investment banking operations dominated.

In the first quarter to June 30, BFS grew deposits 2 per cent to $41.4 billion, while mortgages edged up to $28.8bn.

While Mr Perham would not reveal the cost of the new digital offering, he said the new core banking platform was crucial to enable functionality such as opening and closing accounts with just one click.

He added that Macquarie’s team, led by chief digital officer Luis Uguina, had the advantage of building “from the ground up”, rather than being burdened with “legacy” headaches.

But the bank was also leveraging its agility from being smaller than the “big four” domestic banks, allowing customers to test products so they could tweak the ones they liked. Mr Perham said Macquarie was trying to get as “close to the fintech mindset and way of doing things” as possible, referring to new financial technology companies increasingly entering the financial services sector.

“I know a lot of people use the customer word, but we’ve really tried to live that — what do customers really want,” he said.

“We looked at the technology being used by modern digital companies like Netflix and we saw an opportunity to bring that same level of personalised and intuitive customer experience to banking.”

Features on the new site ­include search-how-you-speak technology, the ability to upload receipts and automatically cat­egorising spending through ­machine learning technology.