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NAB to make muscle felt in online share trading

NATIONAL Australia Bank is looking to take on its bigger rivals through its own online share trading platform, rounding off the banking majors' wealth management push.
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By InvestSMART · 19 Sep 2012
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By InvestSMART ·
19 Sep 2012
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NATIONAL Australia Bank is looking to take on its bigger rivals through its own online share trading platform, rounding off the banking majors' wealth management push.

While NAB will offer day-to-day online broking services through its nabtrade arm, the bank will target investors in the self-managed superannuation fund space.

It faces a battle to make some inroads in the online market given the dominance of entrenched players including ANZ's E*Trade and Commonwealth Bank's CommSec, which controls more than half the online broking market with 1.7 million clients.

Even after being a relatively late entrant, NAB Wealth group executive Steve Tucker declared nabtrade will "change the game" in the online broking space.

"We've had some incumbents in there that have got some pretty big market shares and having their own way and what we've been quietly doing behind the scenes is creating a state-of-the-art technology platform," Mr Tucker told BusinessDay.

Until now NAB has offered limited online trading services through a trading platform provided through a third party, IWL. However, the unusual situation emerged where IWL was acquired by CBA late last decade, prompting NAB to start thinking about its own in-house system.

The nabtrading platform will be integrated with NAB's customer bank accounts, so funds moving in and out of the trading account takes place in real time. Mr Tucker also promised the quality of stock research would eclipse rival offers.

He said the offering of an online trading platform complemented rather than worked against the bank's existing full-service brokerage arm, JBWere.

"What we've been able to do now is complete the jigsaw puzzle in terms of the wealth battlegrounds we want to win," he said.

Even so, the prospect of another aggressive player in the online stockbroking space represents a headache for traditional full-service brokers, with many feeling the financial squeeze from the slump in trading volumes.

In its monthly figures released this week, the Australian Securities Exchange said the total number of cash market trades continued to fall in August, down 26 per cent on the corresponding month last year. The value of the trades was down 38 per cent to $167.5 billion.

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Frequently Asked Questions about this Article…

NAB is launching its own online share trading platform called nabtrade. The platform is designed to provide day-to-day online broking services and is part of NAB’s wider wealth-management push.

Yes. While nabtrade will offer everyday online broking, NAB is explicitly targeting investors in the self-managed superannuation fund (SMSF) space as a key customer segment.

Nabtrade will be integrated with NAB customer bank accounts, so funds moving in and out of a trading account will occur in real time, improving cash flow between banking and trading.

NAB says it has built a state-of-the-art technology platform and will offer high-quality stock research to challenge incumbents. However, it faces a tough market: CommSec controls more than half the online broking market (about 1.7 million clients) and ANZ’s E*Trade is also well established.

NAB previously offered limited online trading through a third-party platform provided by IWL. After IWL was acquired by the Commonwealth Bank (CBA) late last decade, NAB began developing its own in-house solution.

According to NAB Wealth executive Steve Tucker, nabtrade is intended to complement NAB’s full-service brokerage arm JBWere rather than replace it, helping complete the bank’s broader wealth offering.

The article notes that another aggressive player in online stockbroking is a potential headache for traditional full-service brokers, many of whom are already feeling financial pressure from a slump in trading volumes. NAB’s move may increase competitive pressure, though the article doesn’t specify fee changes.

The Australian Securities Exchange reported that the total number of cash market trades fell 26% in August year‑on‑year, and the value of those trades was down 38% to $167.5 billion. Lower trading volumes make the online broking market more competitive and can squeeze revenue for brokers.