Google scares Aussie banks

Google scares Aussie banks

Summary: Google could be the biggest threat to the big four banks because of the trust online users place in it and its ability to engage with customers, according to banking executives.

TOPICS: Google, Banking, Security

Google could be the biggest threat to the big four banks because of the trust online users place in it and its ability to engage with customers, according to banking executives.

Google Bank

(Credit: Darren Pauli/ZDNet Australia)

Managers from Commonwealth Bank, Westpac, GM Bank, Rabobank and Spain-based Bankinter chaired a panel discussion at FST media's Future of Banking and Financial Services conference last week where they were challenged by members of the financial sector on their apparent slack innovation efforts.

RaboDirect general manager Greg McAweeney told an audience from the finance sector in Sydney last week that companies such as Google and PayPal are more responsive and trusted than banks.

"If Google got up and said we are going to offer a savings account, for me, that would be very difficult and confronting," McAweeney said.

"They are a non-traditional bank yet they have great reach, access, distribution and trust — they probably have more trust than most of the banks.

"Innovation will come from that side of our industry."

Panellists cited emerging technology with an emphasis on online applications as a means for the credit unions to challenge the position of incumbent banks.

Commonwealth Bank executive general manager Kelly Bayer Rosmarin said that an online-only upstart bank may challenge the position of banks by appealing to young customers and reacting faster to trends.

"There could be an interesting play to be made in a completely virtual bank that is appealing to a different generation customer who is comfortable with a new form of interaction — a virtualising of services and new ways of managing and accessing money," Rosmarin said.

But Westpac chief technology officer Sarv Girn said innovation is not about gadgets.

"Banks can think all they want about whether they are innovative or not: at the end of the day it's what the customer thinks and it doesn't have to be the latest whizz-bang technology, iPhone or iPad," Girn said.

He said that the lion's share of innovation at Westpac is dedicated to security and resilience. The bank has tipped millions into improving IT security and redundancy around its internet banking and ATM networks, which has led to a 90 per cent reduction in critical security problems.

McAweeney said that a lack of cooperation between banks is preventing some of the best innovations such as centralised account aggregation across rival financial institutions.

"Online and token-based security can make the experience a bit clunky. I might want to see all of my accounts, but if I have a token with each it doesn't lend to the best customer experience."

Rosmarin said that privacy demands and a lack of publicity has grounded account aggregation.

According to CSC Australia director of banking Simon Millet, banks are not natural innovators.

"[Barack Obama] is famous for using the phrase 'lipstick on a pig'. I think we need to be conscious when, in reality, what is going on is a lot of creativity but not a lot of innovation," Millet said.

"Very little money is spent on [research and development], but it is the individuals in the banks that bring value."

Topics: Google, Banking, Security

Darren Pauli

About Darren Pauli

Darren Pauli has been writing about technology for almost five years, he covers a gamut of news with a special focus on security, keeping readers informed about the world of cyber criminals and the safety measures needed to thwart them.

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  • McAweeney gets it. Yes, it *is* inconvenient to have to have a pocket full of token access devices, when one would do. I suspect it is the token makers that push the idea of not allowing multiple providers to use the same keys, for obvious reasons.
  • Security token companies want to make a lot of money. No doubt about it.

    All of us carry a powerful device nowadays - our mobile phones. It is not that difficult to incorporate the features provided by the "security tokens" on this device. (I know one bank who is successfully using this idea). Also, it is possible to implement multiple tokens on the same device. Thus, you don't need to carry yet another device.
  • Banks were never about customer service in the first place. Most banking "creativity" is expended in "accounting".
  • I'sn't most of the world still in dire straits thanks to too much "creativity" in banking? I think statements like Google inspires more trust than Australia's 4 largest banks are sensationalist and I'd like to see the evidence for it ( could be true about US and UK banks though- they were the dodgy ones! . However, as a provocative statement to get people thinking differently, its useful, but no thanks, don't trust Google more than any of the 3 banks I deal with here in Australial. Google and Paypal are still in their "founder" years. When their founders have retired and left the company in the hands of hired executives, things will change. Read Columbia Law Professor Tim Wu 's book "The Masterswitch: The Rise and Fall of Information Empires" to see this honeymoon pattern that accompanies dominant players in new technologies.
  • Maybe you should all come and listen to Venessa Meimis, who will be speaking as a non-banker but a designer on The Future of Money at AMP's Amplify Festival of Innovation & thought Leadership from 6-10 June 2011 see