THE financial sector is refocusing on higher-margin businesses, such as wealth management, with Westpac and National Australia Bank announcing new initiatives in the area.
Westpac is planning to expand its wealth management business to capitalise on growing demand for financial advice as the population ages.
With more customers tipped to seek financial expertise as the baby boomers retire, the bank aims to increase the number of advisers on its books over the next five years.
There are about 1000 financial planners working for Westpac and its wealth management arm, BT.
However, executives are finalising plans to raise this number markedly, with a focus on providing "scaled" financial advice that is narrower in scope and hence lower in cost.
CommBank this month opened a new platform for retail investors. And NAB is revamping its branch network as more customers do transactional banking online, which allows the bank to focus on the more lucrative business of wealth management and cut operating costs.
NAB will gradually replace tellers with "smart" ATMs and phase out features such as security screens. New branches will have an open-plan layout and encourage customers to talk to NAB about more complex financial products. Westpac unveiled a similar plan in December.
"A lot of over-the-counter transaction are high in volume and they actually take high costs to serve as well," NAB's executive general manager of retail, Vicki Carter, said.
"In the future many of those transactions will be done at different places ['smart' ATMs and internet]."
Ms Carter said the new NAB business model was in response to this trend and allowed customers to conduct simple transactions on machines but "still give them access to people when they want to have deeper conversations".
With profits from lending tipped to come under pressure from slower credit growth, banks are focusing on wealth management for its potential to generate big profits. In a sign of the industry's growth trajectory, the value of superannuation is projected to balloon from $1.4 trillion at present to about $6 trillion by 2030.