Facebook, Apple and Google pose threat to big four dominance, says RBA

After acknowledging a fall in banks’ return on equity over the past decade, Dr Kearns said the increased amount of data, and ability to process it, was “facilitating the emergence of new, technology-driven competitors to banks, which could potentially impact their dominant position in the financial system”.

Among banks’ potential rivals, Dr Kearns noted that Google, Apple and Facebook already collected valuable data that could be used in financial services. PayPal and Amazon held “substantial” data on their business customers, while how people behaved on social networks could be used to predict how well customers repaid loans, he said.


“Technology firms for which collecting and analysing data is in their DNA are a new type of competitor for banks that have historically struggled to take full advantage of the private data they hold. How well individual banks respond to technology challenges will no doubt influence their relative success,” he said.

Fintech businesses are awaiting the start of the government’s “open data” regime, which starts in February. The new policy will allow consumers to share their personal banking data with a rival, and Dr Kearns noted this could be used to encourage people to switch to more suitable financial products.

His comment comes after some of the country’s bank bosses have in recent years warned of the disruptive threat from technology firms. Former National Australia Bank chairman Ken Henry in 2017 warned banks could be “challenged beyond our ability to cope” by large information technology platforms such as Google or Apple.

Dr Kearns said other big issues that could affect banks were the effects of tighter regulation and the need to strengthen governance and management of “non-financial risks”.

Despite the challenges facing the industry, Dr Kearns said banks still had a “special role” in the economy, including having access to low-cost funding from deposits and being at the core of the payments system.


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