THE DISTILLERY: Bank tactics

Jotters reveal how Westpac and CBA will bank on markets and technology respectively to meet the challenges in the slowing sector.

Westpac is poised to seek a larger chunk of the deposits, SME lending and wealth management markets, while Commonwealth Bank is ready to enjoy the fruits of a technology upgrade that will set it apart. These are the conclusions offered to us this morning by The Age’s banking expert Eric Johnston and The Australian’s Richard Gluyas. Also in this edition of Distillery, perhaps the most prominent watcher of the latest industrial relations jostling, Matthew Stevens, says Fair Work Australia is poised to better establish precisely what the word ‘impasse’ means to Australian employers. And The Australian Financial Review’s Tony Boyd brings word from telco SingTel, owner of Optus, that it is determined to remain relevant in a world with Apple, Google and Facebook.

But firstly, The Age’s banking writer, Eric Johnston, shows us what Westpac has in store strategy-wise for its upcoming first-half results.

"Westpac will make a play for a bigger slice of the market in deposits, small-to-medium business lending and wealth management as a strategy to deliver revenue growth in the face of a rapidly slowing banking environment. The plan to boost the bank's share of key markets is expected to be mapped out by chief executive Gail Kelly when she hands down her bank's first-half profit result early next month. It also forms the heart of the strategy for Westpac's newly formed Australian financial services unit that houses the bulk of the bank's domestic retail banking and wealth businesses.”

Meanwhile, The Australian’s Richard Gluyas says Commonwealth Bank of Australia boss Ian Narev is straddling a bank that’s about to benefit from revolutionary technology that will distinguish it from Westpac and the other two big banks.

"Modernisation of its critical infrastructure will deliver real-time banking and the prospect of building on an underweight position in business banking. CBA-aligned merchants, for example, will be able to deposit funds on the day before Good Friday and get immediate use of their money. Merchants tied to other banks will have to wait for batch processing the following Tuesday before accessing their funds on the Wednesday. In peak periods CBA, which already handles about half the nation's transactions through the bank itself or its network of merchants, will be able to process 600 transactions a second with vastly improved reliability.”

The Australian Financial Review’s Matthew Stevens has had his eye on the confusion in industrial relations circles about current legislation. Some of this confusion could be about to come to an end.

"Next Friday Fair Work Australia will conclude three days of hearings that will better define its understanding of the meaning of the word ‘impasse’. In ruling on the coal union’s application to stop a secret ballot of its members by BHP Billiton Mitsubishi Alliance, FWA is expected to provide some clarity on the makings of an impasse and what options might be open to employers and unions when that state is formally recognised. Given the notional deadlock reached this week in separate landmark disputes in the Queensland coalfields and across the container terminals of the Patrick Stevedores nation, this more certain definition will be very useful indeed.”

And The Australian Financial Review’s Chanticleer columnist Tony Boyd reports from Singapore, bringing word of a shift away from geographical structures at SingTel. The telco’s management doesn’t want technology to consign it to the history books.

"One result of the changes being made by SingTel is that lessons learnt from serving the world’s most concentrated smartphone markets – Australia and Singapore – will be used in Asia as millions of people access the internet for the first time… SingTel has to adopt the techniques of Google, Apple, Facebook and Twitter – companies that are using the telco infrastructure to provide their customers with services that are not normally offered by telcos. One of SingTel’s weapons in that battle with the world’s technology giants is a specially formed subsidiary, SingTel Innov8 Ventures, which is the largest corporate venture-capital business in Asia. It is run by Edgar Hardless, a former mergers and acquisitions expert who is now investing up to $US200 million in emerging technology companies.”

Just for a moment we’ll return to banking for the rest of this morning’s business commentaries. In a separate piece, Gluyas argues that ANZ puts itself under unnecessary pressure by going alone on rate calls and this means their movements are more conservative. Broadly speaking, the Herald Sun’s Terry McCrann agrees in his column. The Australian’s David Uren says the most recent labour force data has made it a little harder for the Reserve Bank to cut interest rates next month. True, but ANZ’s out-of-cycle interest rate hike could also make it easier. The Australian Financial Review’s Alan Mitchell explains that the Reserve Bank of Australia cannot stop the forces producing the structural changes on the economy it oversees. Business, at some stage, must adapt. And The Sydney Morning Herald’s Elizabeth Sexton writes that the corporate regulator’s case against Storm Financial could answer the question of how far consumer laws protect bank customers.

The Sydney Morning Herald’s Clancy Yeates says some stern warnings are about to emerge from the International Monetary Fund for nations hitched to the commodities boom (us). Though, the writer does note sceptically that the IMF is prone to such utterances. The Age’s Michael Maiden uncovers some pressure on Spanish bond yields and spots two elections on the horizon that will rekindle fears that Europe’s economic woes could once again be exacerbated by politics.

The Sydney Morning Herald’s Jessica Irvine delivers an amusing and fascinating insight into how the unmistakably awful British-Irish boy band One Direction (our latest Logies headliner) has achieved its superstardom – using the principles of economics.

And finally, The Australian’s Robin Bromby gets stuck into new Greens leader Christine Milne and reveals little more than his disdain for her party.

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