- Slow policy progress toward a solution
- Potential for a disorderly resolution,
In America
- US recession fears have eased but the economy remains vulnerable to European developments and the domestic political resistance to stimulus package
- The US economy grew at 2.0% annual rate in 2011, taking the level of output past its 2008 peak.
Industry Environment
Threats of new entrants
- The New Zealand banking industry has maintained a relative open policy on the entry of new registered banks since its de-regulation
- Low product differentiation
- Low switching costs between competitors
- Substantial capital requirements
Bargaining power of suppliers
- 5 large Banks 19 in total
- Low switching costs between competitors
- Multiple substitutes
- Reliant on customers
- Low bargaining power of suppliers
Bargaining power of customers
- High bargaining power of customers
- Intense competition in the industry means more options and substitutes available
- Reputation, service quality and customer satisfaction will impact customers commitment
Intensity of Rivalry
- Largest Banks in New Zealand
- ANZ
- Bank of New Zealand
- ASB
- KiwiBank
- Westpac
- Constant interest, home loan, mortgage and term deposit rates are matched, compared and challenged
- Customer retention is dependant not only on services and products but quality and customer satisfaction of these products
- Intense level of rivalry between competitiors
- 3 of the 5 largest bank are placed in NZX50
- All 5 provide very similar services and products
Competitor Analysis
Westpac
Objectives
- Helping customers and staff be confident about the financial decisions they make, and about achieving what they want in life
- Work with Sir Peter Blake Trust to develop civic leadership capability and utilise their alumni.
- To introduce tertiary based financial education programmes tailored for small-medium businesses that carry nationally recognised qualifications
- Engaged in the support of non traditional infrastructure such as affordable housing and water
Current Stategy
-
Reported cash earnings $210 million
- Transferring from the NZ Branch to Westpac New Zealand Limited. provideds the Westpac group with the regulatory framework and capacity to meet the growth of banking requirements into the future.
- Restore confidence in the New Zealand economy and pull the recovery forward.
Assumptions
- Westpac New Zealand Chief Executive Officer, George Frazis, belives that “the strong momentum Westpac continues to achieve in a subdued environment is further evidence the bank’s customer focused strategy introduced over the last 18 months is delivering good results.” (Westpac.co.nz)
Strengths
- Strong community ties with providing major community services such as the Westpac Rescue Helicopter
(Westpac.co.nz)
BNZ
Objectives
- Aim to become a long-term trusted adviser to all New Zealanders on the financial realities of life and business.Our dream is for each and every business and individual to be better equipped to realise their own potential and the potential of New Zealand as a whole.
Current Strategy
- Reported cash earnings of $612 million for last year
- BNZ CEO Andrew Thorburn said, “This is an excellent result for BNZ amid tough local trading conditions and ongoing global economic fragility.” This strong full year result is built on our continued support of customers, solid revenue and deposit growth and prudent cost management.”(BNZ.co.nz)
Assumptions
“While we’re seeing a local economy that’s struggling to gain growth momentum we remain optimistic about the long term economic outlook with favourable stimulus to come from the eventual Christchurch rebuild, solid export volumes and continued global demand for our commodities” (Andrew Thorburn, 2011)
- Believes that New Zealand needs to move from caution to confidence to get the economy moving again
Strengths
BNZ’s continued drive to enhance its customers’ experience has led to a number of innovative developments. Earlier this year BNZ became the first New Zealand bank to develop and deliver mobile banking across all three mobile platforms; the mobile web, iPhone and Android
(BNZ.co.nz)
KiwiBank
Objetives
We’re banking heroes delivering straightforward banking for New Zealand
Current Strategy
- Kwiwbank reported cash earnings of $21.2 million, a decrease of 54% from previous year
- Increased loans and advances by 10% from $10.4 billion to $11.5 billion
- Increased retail deposits by 14% from $6.9 billion to $7.9 billion
Assumptions
Kiwibank Chief Executive Paul Brock said “the strong underlying financial performance of the bank has been reduced by the remaining effects of the global financial crisis and the Canterbury earthquakes. He said provision for bad debts at year end is $87.1 million, compared with $19.5 million for the previous year.” (Kiwibank.co.nz)
- Looking to the future, Mr Brock said he strongly believed the worst was behind them and there are positive signs for growth and an improved financial performance.“The Global Financial Crisis compounded by the earthquake has made things tough, but the bank is in strong shape and has weathered the storm,” ( kiwibank.co.nz)
Strengths
- Aggressive short-term fixed and variable rate offers.”
- Focus on growing its small and medium enterprise business banking client base.
- Sunday Star Times Cannex Canstar Best Value Bank for 5 years running
- NZ Bank of the Year by the international "The Banker" magazine for the second year running;
- Winner of the banking category in the Readers Digest NZ's Most Trusted Brand 2010 Awards
ASB
Objective
- Unbeatable team, unbeatable service
Current Strategy
- Reported cash earnings of $372 million
- ASB’s ongoing branch expanision and improvement programme saw the opening of 5 new branches over a six month period
- Along with a number of branched being upgraded to include the latest self-service and personal service layouts
- 5 more branches planned to be opened this year
Assumptions
- “Looking ahead, the current global economic uncertainty is a cloud on the horizon with the potential to jeopardise New Zealand’s fragile recovery. We are closely watching overseas markets as the European debt crisis unfolds, particularly the degree to which this will impact funding costs and business confidence over the next few months.” (Asb.co.nz)
Strengths
- Tertiary and Graduate packages
- Rated number one overall on customer service from 1998-2003,05,07
Following an external environment analysis for ANZ Banking group I have identified that there a several strategic concerns within the Banking industry within New Zealand that should be brought to attention. Firstly, within the general external environment the country’s economy is just starting to recover from the turbulent past few years due to the most recent recession. However, in terms real GDP we have nothing to show for the past 7 years are it is the same level as it was in 2005. Societal attitude is focused on sustainability not only on an individual level but puts emphasis on persuading corporations to limit their carbon footprint. Technological advancements mainly with the Smartphone and its constant developments on functions such as apps should be an issue that should be observed seriously. The ability to provide customers service without being remotely in proximity to a branch is unparalleled, could be seen as Internet banking 2.0. Within the industry an apparent problem for the industry is the close proximity of rivals following the substantial de-regulation of the industry. The philosophy of greater competition leading to greater efficiency and innovation is apparent. The launch of the ANZ goMoney app late last year is a good sign that ANZ recognizes importance in innovation and efficiency. High intensity of rivalry, especially between ANZ and the other 4 big banks will be a significant factor. Customer retention should be in the forefront of a company’s agenda as the industry is increasingly competitive. New Zealand has maintained a relatively open policy on the entry on register banks, however even though there is relatively low product differentiation and low switching costs between competitors the Banking industry in New Zealand is a good industry to compete in if there is capital and demand for services and products. In saying that, creating the demand for services and retaining those customers is an issue for new entrants. ANZ is in a comfortable position per se being the largest banking group in the country and amongst the top 50 banks in the world.
Reference List
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Figure 1. Inflation [Graph] Retrived from
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