In the always iconoclastic Crikey today, the erudite, fearless, and sometimes idiosyncratic chief political correspondent, Bernard Keane, yields a cracking scoop on the evolving "AussieBank" saga. Even if the purported scoop proves wide of the mark, Keane's thought-provoking analysis makes a valuable contribution to the debate and is well-deserving of a careful read. Here is an excerpt:
"Ever since Ahmed Fahour was appointed Graeme John’s replacement at Australia Post – he starts on Monday - there’s been speculation about whether he would pursue an expansion of Oz Post into banking. So far Fahour has declined to give a detailed response to the speculation beyond suggesting he has higher priorities than setting up a bank – like continuing the company’s long effort to raise the price of stamps.
However, Crikey can reveal that the Rudd Government commissioned a scoping study into the establishment of a publicly-owned banking capability by Australia Post, with positive results...
A postal service offering its own banking services is hardly novel. The French La Poste runs La Banque Postale, offering banking and insurance to individuals and business. Swiss Post runs Post Finance. Post Italiane has expanded from being a pension-collection and bill-paying outlet to full banking. Prior to being broken up and sold off, Japan Post ran one of the biggest banks in the world. And in December, Peter Mandelson announced that the British Post Office would start offering full banking services later this year...
And of course there’s the example just across the Tasman of Kiwibank, which was bought by NZ Post and established as a locally-owned competitor to NZ’s Australian-owned banks in 2002, offering personal and business banking services. Kiwibank started with the aim of undercutting the majors in lending rates, and quickly forced them to match it.
Last July the “six economists” – John Quiggin, Christopher Joye, Joshua Gans, Stephen King, Sam Wylie and Nicholas Gruen – suggested the Kiwibank idea was worth considering, as part of a call for a wide-ranging inquiry into finance sector reform. One of the key attractions of an "AussieBank” proposal – which ended up distracting from the substance of the economists’ letter – was that it would offer a no-frills sets of financial services: savings, payments, and even wealth management, an area increasingly dominated by the big banks.
Crikey understands that Rudd Government commissioned former Westpac consumer banking head Mike Pratt to undertake a scoping study to explore whether Australia Post could replicate the KiwiBank model in Australia. Pratt’s findings were apparently very positive. However, Australia Post's Graeme John wasn’t interested in pursuing the idea.
And so, enter former NAB exec Fahour...
The consistent overseas experience is that a postal-based bank can work well. In Australia, the branch infrastructure is there, the branding is there – Australia Post is one of the country’s most trusted brands - and so is the need for greater competition. With Fahour, it now has a flying start with the expertise."
